Union owns stake in sweat shop

2010-09-19 15:20

The South African Clothing and Textile Workers’ Union’s (Sactwu’s) role in enforcing minimum wages while it is heavily invested in a company that operates in Lesotho’s low-wage economy has been slated as hypocritical.

Thousands of textile industry jobs in South Africa are on the line and hundreds of factories might close as a result of the Clothing Manufacturing Bargaining Council enforcing minimum pay agreements.

Sactwu has condemned non-compliance and it has called for prosecutions.

Fashion economist and analyst Renato Palmi, of The ReDress Consultancy, said that Sactwu was the only union represented on the bargaining council and it would have an interest in seeing competition fold.

“It owns shares in Seardel, a major manufacturer which has been bleeding jobs and has a subsidiary in Lesotho.

“At the best it is a conflict of ­interest. To an outsider it looks like hypocrisy,” Palmi said.

He explained that Sactwu, through its 40% share in investment company Hosken Consolidated Investments (HCI), which owns 71% of Seardel, owns the subsidiary NyeNye Clothing in ­Lesotho.

Cosatu’s provincial secretary in the Free State, Sam Mashinini, ­recently described wages in ­Lesotho as “pitiable”.

“A South African worker should earn R1?296 a month, while the minimum wage in ­Lesotho is ­between R660 and R710 a month, depending on the job. That is not on,” Mashinini said.

Seardel CEO Stuart Queen said NyeNye’s employees in ­Lesotho represented less than 5% of the group’s labour force, which had reportedly dropped to just above 10?000 from the 15?000 Sactwu had sought to preserve.

Through investment company HCI it had rescued the Seardel group from getting “perilously close to being closed down altogether”, said Seardel chairperson John Copelyn.

In Seardel’s 2009 annual report, Copelyn said “the general view in the market” that textiles might not be profitable in the future made it nearly impossible to raise funds except through HCI, at the behest of Sactwu, in 2008.

Sactwu general secretary Andre Kriel said that the investment, worth around R250?million, when no-one else was prepared to invest, had saved jobs.

“The point was not to make a profit. We remain proud and unapologetic,” he said. “NyeNye Clothing was established by the previous Seardel management prior to the takeover, so Sactwu cannot be accused of betraying local jobs,” said Kriel.

“It pays above the legal minimum wage and complies with all other Lesotho labour laws. Our role, together with our Lesotho counterparts, is to advance our agenda for decent work in southern Africa, including in Lesotho.”

Kriel said that “diminishing volumes, ever lower prices demanded by retail customers and customs fraud perpetrated by importers” were causing Seardel’s ongoing struggles.

The company announced in July that another division, Intimate Apparel, would be closing down, shedding another 800 jobs.

Queen confirmed that Seardel was in a 60-day consultation to see if a solution was possible. Seardel has, however, been widely quoted in the financial press as saying that retailers importing cheap products were making it impossible to continue profitably.

The division was likely to close by year-end.
The Bargaining Council’s Leon Deetlefs defended the bargaining process as “sincere” and said there were too many role players on the council for any one to influence the direction of decisions.

Alan Jarvis, chief executive director of Tern Sportswear, a division of Formosa Holdings, said it had shifted production to Lesotho and more factories would be forced to do so not only because of pay, but also productivity.

Earlier this year the massive Foschini Group moved its business to Swaziland to take advantage of lower labour costs to compensate for a drop in sales during the recession.

Jarvis said the government in Lesotho was supportive and the union had engaged in shop-floor ­negotiations.
In Lesotho no-one pays below the minimum wage – but that minimum is R160 a week, whereas in South Africa the same job would pay R460 a week.

Trade and industry Minister Rob Davies this week launched the Clothing and Textile Competitiveness Programme, which has a production incentive that is aimed at improving competitiveness in South Africa as well as abroad.

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