IF WE have to have special pleading by specific industries, last week’s meeting between representatives of the steel sector and the government was the way to go. Indeed, if we are keen on social compacts and genuine partnerships, the industry may have provided us with something of a model — even if it took a crisis to get the parties together.
Friday’s talks had a trade union general secretary — Irvin Jim of the National Union of Metalworkers of SA — leading a delegation that included all the unions along with the CEOs of all the producers to meet the relevant government ministers.
SA has, since the advent of democracy, had the National Economic Development and Labour Council (Nedlac) for government, business and labour to meet at a macro level to review policy.
And there are tripartite structures such as the one in the mining industry that staged joint protest action in 1999 by labour and corporate leaders over the global gold price when central banks sold off the metal.
It must be unprecedented, however, for labour leaders to take the bosses along to a negotiation with the government over the fate of a particular sector.
No doubt the trade unionists involved were hoping the joint action might stave off the retrenchment notices that every one of the steel producers plans to issue, if they haven’t already. But whatever the motives, this kind of accord within a sector is a welcome development, as is the list of demands to the government the two sides managed to agree on. It showed a maturity on the part of labour and corporate leaders that is sorely lacking in other sectors. Whether the talks will succeed in saving the plants and the large number of jobs that are at risk is as yet unclear.
One of the more controversial demands will surely be the 10% import tariff to which the government is said to have agreed. The steel producers had applied to the International Trade Administration Commission a while ago for the tariff, which would be within the "bound" rules allowable by the World Trade Organisation. There is also a process of applying for anti-dumping protection from Chinese imports, but that is more complex and could take much longer.
China is flooding global markets with cheap, subsidised steel in a bid to sell the huge excess it is producing now that domestic demand has fallen. Steel producers all over the world have been imploring their governments to impose tariffs to help their industries survive and many governments have implemented tariff protection.
If SA is going to do so, it should act speedily, instead of procrastinating until it is too late. And if there is a indeed a case to impose protection to save SA’s domestic steel industry, the government must do so without getting stuck on the troubled history between itself and ArcelorMittal, which made a great deal of money out of its South African investment and didn’t plough back nearly enough of it.
As our sister publication the Financial Mail says in this week’s issue, ArcelorMittal SA is "effectively an errant citizen that played truant when the times were good and is now seeking assistance in the bad times".
But it is 70% of the industry: other smaller players making up the rest need to be considered. And the combination of weak South African domestic demand and cheap Chinese imports puts the survival of all of them at risk.
Whether SA needs a domestic steel industry is a question worth asking — industry figures show it affects the fortunes of sectors that collectively account for 8-million jobs and 17% of the economy. But tariff protection affects costs for customers. And the question to be asked is whether the benefit is worth the cost.
Steel coils. Picture: BLOOMBERG
IF WE have to have special pleading by specific industries, last week’s meeting between representatives of the steel sector and the government was the way to go. Indeed, if we are keen on social compacts and genuine partnerships, the industry may have provided us with something of a model — even if it took a crisis to get the parties together.
Friday’s talks had a trade union general secretary — Irvin Jim of the National Union of Metalworkers of SA — leading a delegation that included all the unions along with the CEOs of all the producers to meet the relevant government ministers.
SA has, since the advent of democracy, had the National Economic Development and Labour Council (Nedlac) for government, business and labour to meet at a macro level to review policy.
And there are tripartite structures such as the one in the mining industry that staged joint protest action in 1999 by labour and corporate leaders over the global gold price when central banks sold off the metal.
It must be unprecedented, however, for labour leaders to take the bosses along to a negotiation with the government over the fate of a particular sector.
No doubt the trade unionists involved were hoping the joint action might stave off the retrenchment notices that every one of the steel producers plans to issue, if they haven’t already. But whatever the motives, this kind of accord within a sector is a welcome development, as is the list of demands to the government the two sides managed to agree on. It showed a maturity on the part of labour and corporate leaders that is sorely lacking in other sectors. Whether the talks will succeed in saving the plants and the large number of jobs that are at risk is as yet unclear.
One of the more controversial demands will surely be the 10% import tariff to which the government is said to have agreed. The steel producers had applied to the International Trade Administration Commission a while ago for the tariff, which would be within the "bound" rules allowable by the World Trade Organisation. There is also a process of applying for anti-dumping protection from Chinese imports, but that is more complex and could take much longer.
China is flooding global markets with cheap, subsidised steel in a bid to sell the huge excess it is producing now that domestic demand has fallen. Steel producers all over the world have been imploring their governments to impose tariffs to help their industries survive and many governments have implemented tariff protection.
If SA is going to do so, it should act speedily, instead of procrastinating until it is too late. And if there is a indeed a case to impose protection to save SA’s domestic steel industry, the government must do so without getting stuck on the troubled history between itself and ArcelorMittal, which made a great deal of money out of its South African investment and didn’t plough back nearly enough of it.
As our sister publication the Financial Mail says in this week’s issue, ArcelorMittal SA is "effectively an errant citizen that played truant when the times were good and is now seeking assistance in the bad times".
But it is 70% of the industry: other smaller players making up the rest need to be considered. And the combination of weak South African domestic demand and cheap Chinese imports puts the survival of all of them at risk.
Whether SA needs a domestic steel industry is a question worth asking — industry figures show it affects the fortunes of sectors that collectively account for 8-million jobs and 17% of the economy. But tariff protection affects costs for customers. And the question to be asked is whether the benefit is worth the cost.
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