Bring back old school remuneration - SME owner

Labour Q&A with Terry Bell

If South Africa wants to keep small businesses going, we need to slacken the regulations for small business and the foothold which unions have, says Fin24 user Tyron Mansfield.

He was responding to a debate about whether centralised bargaining is still appropriate or if is it a relic of apartheid.

Mansfield writes:
My brother and I have recently made a move into the family business to assist it through the tough times ahead. Being a relatively small steel manufacturing concern, I can't help but agree with the sentiment of in-house bargaining and wage negations. Please bear with me:

The steel industry has some of the highest minimum wages (currently a sweeper earns roughly R3 000 less than a BCom honours graduate per month). With such high wages, it becomes incredibly important to manage resources and their utilisation.

Small businesses ultimately need multi-skilled employees to fulfill a variety of tasks, which, in the eyes of the bargaining council, inherently earns them a higher grading.

Factoring in all the current increases, including the fact that it decreases our level of competitiveness in the market place to quite a large degree, our ability to absorb the coming increases becomes quite a challenge. So to overcome this, we basically have only one thing in our control: plant efficiency.

We are forced to pay 13th cheques, which if we do not properly recover through precise cost accounting, becomes a dangerous affair.

As most of our labour is wage based (like many small businesses), overtime rates become a large factor in the equation - so you become reluctant to work overtime (when lots of work is on the table), as those rates also go up accordingly with wage increases and ultimately your margins get nailed.

To nullify this, you attempt to hire contract staff, who are eventually forced to become permanent staff after their contracts have been renewed successive times - so you become reluctant to employ and train new people, as you can't absorb them when it suits the business, but rather are eventually forced to due to our current labour laws.

So one way around this is to drive plant efficiency. This will have to be done  to the point where management systems occupy every corner of the business - something very few small businesses (still owned by the old school generation) have or know how to implement, but you can only get so far when doing this.

The only other option is to turn to remuneration, and in-house bargaining and negotiations.

If there is one thing I believe should happen in small businesses, is that at some point or another, employees will need to go the extra mile for their company. During these tough times, I am convinced this is almost going to be the single most important factor that will pull companies through in the next few months.

However, it is not sustainable, as ultimately morale will slack, and productivity will decrease, which will only be compounded when the performance management system becomes aware of this ... and so the vicious cycle starts where employees are put under immense pressure to produce.

So yes, good bosses in highly regulated environments go bust, as they want to reward those who work, and not reward those who don't - something we cannot 'just do' today.

So if we want to keep small businesses going (in which most of South Africa's labour resides), we need to slacken the regulations around small business and the foothold which unions have, as with an honest old school approach to remuneration, most small businesses will keep their employees happy, and be able to grow to employ more people.

It will then be up to an independent body (perhaps the bargaining council?), who will ensure employees are kept happy and that bosses don't get greedy.

* Share your take or just drop Terry a labour question.
- Fin24

* Follow Terry on twitter @telbelsa.

Disclaimer: All articles and letters published on Fin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders