South Africa extends clothing sector wage agreement

The agreement was signed in early October last year, after negotiations between the Southern African Clothing & Textile Workers’ Union (SACTWU) and seven clothing employers’ organisations represented on the National Bargaining Council For The Clothing Manufacturing Industry (NBC).

The gazetted extension of the agreement has the effect of making its terms legally binding on all clothing employers and all clothing workers in all parts of South Africa nationally, and empowers the bargaining council to prosecute those employers who do not comply with the agreement’s provisions.

The summary key provisions of the now extended agreement are as follows:

-it increases the minimum wage by 6.5% in metro areas and by 10% (rounded) in non-metro areas such as Newcastle;

-it abolishes the previous “new entry rate” which permitted employers to employ new workers on a lower wage rate  of 75%  of the qualified rate in metro areas and on 80% of the qualified rate in non-metro areas;

-it replaces the abolished “new entry rate” with an “incentivised wage rate”, which permits the employment of new workers on 80% of the qualified rate but supplemented with a compulsory incentivised wage component which shall allow such workers to earn up to 100% or more of the qualified rate;

-it restricts access to the  newly introduced “incentivised wage rate” by making it not applicable to employer organisations which have not signed the agreement and those non-employer association companies which have not implemented the new wage increases (the Natal Clothing Manufacturers’ Association [NCMA] is the only one of the seven NBC party employers’ associations which has not signed the agreement);

-it prohibits employers from retrenching older workers and to replace them with new workers on the incentivised wage rate;

-retrenched employees are given the right to preferential re-employment in their same previous job category and wage rate;

-all employers (including those not represented at NBC level) are in future required to implement all agreements negotiated at NBC level, failing which an automatic 10% wage increase shall become applicable to them with effect from 1  September each year;-the wage gap between metro wages and non-metro wages shall automatically be narrowed as follows (it is currently at about 68%):

- To 71% from 1 September 2013;
- To 73% from 1 September 2014;
- To 75% from 1 September 2015.

-it encourages compliance with the new wage agreement by affording current non-compliant companies an opportunity to lift their non-compliant rates immediately to a minimum of 80% of the wage rate and to phase in to 100% of the rate over an 18 month period, in equal 6-monthly increments; companies who honour this term of the agreement will be accorded “Level B” compliance status and are automatically exempted from bargaining council prosecution;