Trade unions have the power to push business and government to take action to create jobs and prevent retrenchments. Unions also have the power to develop and adopt plans to save jobs. Here are some strategies for unionists to consider.
1. Save jobs before a section 189 notice is issued
The trade union can take several steps to tackle problems in the company and prevent job losses.
Step 1: Take the early warning system test for detecting companies in distress.
Step 2: Understand why you are seeing red flags: Problems in the company can be due to internal or external challenges or a combination of the two. The trade union can bring knowledge of the business from the ground up.
Step 3: Decide on the most important interventions: Identify one or two important problems that can help save jobs and try to solve those first.
2. Save jobs using organising and campaigning
Workers collectively have a lot of experience and knowledge of companies and their operations.
- Create spaces where officials and worker leaders across different companies or sectors can share experiences and ideas.
- Create specialised units to support officials and workers dealing with struggling companies and retrenchments.
- Develop alliances with worker-friendly NGOs and academic units and do your own research.
- Use resources to train worker leaders and officials dealing with struggling companies and retrenchments.
- Develop the skills in the union to use online technologies.
3. Save jobs by understanding retrenchment law and processes
The Basic Conditions of Employment Act (BCEA) and the Labour Relations Act (LRA) deal with dismissals. The LRA – specifically Sections 189 and 189A – deals with retrenchments.
Employers may dismiss employees based on operational requirements, according to Section 213 of the LRA.
The law also requires that employers:
- consult with workers about the proposed retrenchments
- prove there is a real “need” to retrench based on operational requirements
- try to identify ways to prevent or reduce the job losses
- issue a written notice to the affected workers and their representatives
- conduct meaningful consultation and joint consensus-seeking process with the employees, and/or unions.
Length of the retrenchment process
Section 189A of the LRA indicates that, for large retrenchments (above 50 employees), the process should take a minimum of 60 days and should include at least four consultation meetings. The CCMA can be approached to mediate. The consultation process can be longer (or shorter) if agreed upon by the parties. It is also possible to meet much more regularly with the company in parallel to meetings with the CCMA. On average, across all retrenchments which use mediation by the CCMA, it seems this can often help to save around 40% of jobs.
The LRA does not define a minimum period for consultation for smaller retrenchments (under 50 employees), except that any discussions must be meaningful.
The outcomes of a retrenchment process
Retrenchment outcomes can be challenged if they are procedurally or substantively unfair. The LRA provides workers with tools to challenge retrenchment processes and outcomes, such as industrial action and legal processes (the CCMA or Labour Court).
4. Save jobs through business turnaround or improvement solutions
Companies may need external assistance to identify or find solutions. These may include public and private sector job-saving initiatives and bargaining councils. The union and workers need to pay careful attention and ensure that external expert plans are job-saving or jobs-supporting, and not job-shedding plans.
5. Save jobs by increasing the revenue of the company
Customer orders (also known as demand) help businesses to thrive. There are many ways companies can try to find orders, for example, by doing more sales or improving the marketing and customer service. The trade union can also assist in finding business, but first, evaluate whether or not the company has explored their options properly.
6. Save jobs by finding finance
A sustainable business should earn at least the same, but preferably more money than it spends. Businesses sometimes struggle to earn enough money to run their operations, or to invest, grow and stay competitive. Some sources of finance for such companies include distressed funding, state funding and business support opportunities, and private sector financial backing.
7. Save jobs by reducing company expenses
- Improve processes and reduce waste – The union can play a role by participating in initiatives for solving such issues. For instance, collaborative productivity interventions ran by companies and designed with the help of workers and unions. Any interventions should benefit both the company and the workers. Interventions should advance decent work, use workers’ knowledge and expertise, and make the production processes at the company more efficient.
- Labour costs – Businesses in distress can consider reducing the salaries and benefits for executives and senior management, or reducing the number of managers and executives. The union can monitor the executive pay of JSE-listed companies through annual reports, or the LRS Director’s Fees Report. You might also like this step-by-step approach to using company information when preparing for bargaining processes. Other options to save on labour costs are placing a freeze on hiring new employees and putting workers on extended short-time or layoff. Workers affected by the layoff can claim support from the UIF without being retrenched through the reduced work provision of the Fund.
- Tackling corruption – Corruption adds to the cost of running businesses. The union has a role in monitoring and combating.
8. Save jobs through shareholder activism
It may be possible to use shareholder activism as a tool to save jobs if the affected business is owned by one or more major shareholder/s. For instance, you could write to the shareholder/s and urge them to support their subsidiary in the interests of preserving jobs.
Check if the company or its shareholders are members of a business association and a signatory to the 2018 Jobs Summit agreement. Under the agreement, organised business committed to “do everything in their power to avoid retrenchments”.
9. Save jobs through business rescue and liquidation
An insolvent business endangers the financial well-being of its workers, customers, suppliers and support organisations. Companies in this position can either enter business rescue or liquidation.
The objective of business rescue is to restore the company to a healthier position so that it is solvent again.
The objective of liquidation is to sell the assets of the company and use the money to pay the creditors in terms of an order of preference.
Business rescue and liquidation have been heavily abused by employers (to avoid paying creditors like workers) and consultants (simply seeking to make money without apparent concern for workers and their jobs). However, the reality is that business rescue and liquidation will increasingly be used in the current and future economic crises. Trade unions must use their power to contest and shape the processes to benefit workers.
Read about these strategies in more detail: A trade union guide to saving jobs
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