The great labour battle: unions, bargaining councils win first round

2013-12-01 06:00

The South Gauteng High Court this week dismissed the argument that it is “unconstitutional” for unions and employers to force their wage deals on entire sectors – the exact argument the Free Market Foundation (FMF) is planning to make in its high- profile campaign against South Africa’s collective bargaining system.

The FMF announced its own court challenge to “restrictive labour laws” in March, but its main argument has meanwhile crept into a separate case brought by the country’s labour brokers against the Motor Industry Bargaining Council (Mibco).

As part of their case, the brokers argued that the bargaining councils’ ability to have the minister of labour “extend their wage deals to all non-parties” in their sectors was unconstitutional.

The argument was that the councils, consisting of employer groups and unions, are “private actors that exercise public power” in their own interest in a way South Africa’s constitutional order cannot allow.

This is precisely the argument advanced by the FMF and its vocal chairperson, haircare mogul Herman Mashaba.

He and his foundation have argued that this system causes unemployment and gives larger employers in the bargaining councils the power to “eliminate competition” by forcing unaffordable wages on competitors.

The court, however, ruled that bargaining councils are in fact “organs of state” acting to realise constitutional rights.

If they failed to extend their agreements it “would undermine the constitutional right to engage in collective bargaining”.

“As far as considerations of public interest are concerned, the role of collective bargaining in advancing the interests of employees and industrial peace should not be underestimated,” the judge continued.

Section 32 of the Labour Relations Act, the contentious section that lets bargaining councils extend their deals to non-parties, is also an “integral part” of the whole labour system, the court found.

A labour broker source close to the case told City Press he never really expected the high court to find in their favour.

“All these matters will go to the Constitutional Court,” he said.

“The FMF case is the important one as it focuses narrowly on the constitutional issue.”

He also criticised the judgment as “superficial”.

It’s entirely possible that the FMF’s case, which will also first go to the high court, could have a different outcome from this week’s judgment, says Faan Coetzee from Cliffe Dekker Hofmeyr.

It is practically a given that it will then proceed to the Supreme Court of Appeal and ultimately the Constitutional Court.

Various think tanks, analysts and economists have presented this essential mechanism in the country’s bargaining system as one of the main causes of unemployment and the decimation of small businesses.

The first major legal attack on Section 32 was the widely publicised case in the clothing sector that was decided on a technicality in March this year.

That case, backed by Capitec chairperson Michiel le Roux’s philanthrophic Millenium Trust, asked the court to force the labour minister to at least formally weight the pros and cons of extending a wage deal.

Like the FMF case, it also has the testimony of top-notch academics, mostly UCT’s Professor Nicoli Nattrass, and was vocally supported by the liberal think tank Centre for Development and Enterprise.

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