Economic downturns and other crises can genuinely affect businesses and strip away or diminish the material gains trade unions might make through collective bargaining. Yet difficult times provide an opportunity for unions to renew their negotiating tactics and strategies. In that spirit, we asked a group of trade unionists (a mix of worker representatives, union officials and office bearers) at an LRS negotiators event to consider a crisis situation in collective bargaining where a company claims it’s performing poorly due to a downturn. Management is proposing a wage freeze or retrenchments.
The scenario
Report of union crisis commission
How can you interrogate the company's claim that it's in crisis?
The members of the commission suggested several means of interrogating the company’s distressed claim. The union should gather the following information:
- audited financial statements over the last three years
- the company’s budget and plan for the next three years
- remuneration of top management and salary scales.
The union can declare a dispute in terms of Section 16 of the Labour Relations Act, if an employer refuses to provide the relevant information.
Analyse the information
Analyse the company’s claims of a crisis in conjunction with information specific to its competitors, the sector within which it operates, as well as its supply and demand situations to establish if the company is in genuine crisis. Also consider things like the government’s budget and projections and inflation and GDP growth projections.
If the claims are true, what can you get for exercising wage restraint?
The union commission suggested you do the following:
Get a guarantee of no retrenchments in return for the wage freeze. Prior to accepting the company’s proposal of a wage freeze, the following should happen:
- Establish what measures have been put in place to alleviate or end the crisis. Examples would include a moratorium on the payment of dividends to shareholders and the cancellation of executive bonus payments, cutting unnecessary expenditure (such as flights, extravagant lunches and dinners with clients)
- Implementing a wage freeze on top management
- Disposing of company assets to boost cash flow
- A moratorium on recruitment
- Putting growth strategies in areas affected by the crisis on hold
- Termination of labour broking arrangements
If those measures don’t contain costs sufficiently then consider the following before agreeing to a wage freeze:
- Look to reduce the headcount in top/senior management
- Offer early retirement to those staff who are nearing retirement age
- Cancel bonus payments to staff
Only where retrenchments are unavoidable and all other efforts to reduce expenditure have failed to address the situation, would the union resort to accepting the company proposal of a wage freeze. In the event that the union does agree to a wage freeze, the agreement should include a clause that allows the union to revisit the agreement, to renegotiate salary increases for its members, and to make up for lost increases to keep up with inflation when economic conditions improve.
What kind of ‘non-cash’ demands could you bring into this bargaining situation?
- Demand a more aggressive stance by the company on skills development, multi-skilling of staff, transformation and employment equity.
- Place a group-wide ban on overtime, or where overtime can’t be avoided compensate staff with paid time off.
- Increase limits to commutation of leave to reduce the negative impact of the wage freeze.
- Ask management to be more flexible in the approval of staff loans to assist workers in meeting financial responsibilities (rental, food, transport, electricity, etc)
- Demand that a task team be put in place that assesses the company’s performance, developments in the sector and the economy at large, but also to deal with any teething problems that may arise in the implementation of agreed cost-cutting measures.
- Insist on a moratorium on retrenchment for a specified time period, with consequences if the company breaks the agreement.
- Have clauses that either prohibit or limit the use of labour brokers, but equalise conditions of employment between workers inside and outside the company, thereby establishing disincentives for atypical employment.
- Ask for more leave days for shop stewards (for union work).
- Ask management to establish (office) facilities for shop stewards in the workplace, and
- Ask for full-time shop stewards in the workplace.
