We speculate about the future of the trade union movement in the wake of statistics showing declining membership in other developed economies. We argue that unions should be given representation on operational decision-making Boards or committees in relation to remuneration policy decision-making.
Trade unions and unionism have lost ground in most developed countries due to their declining level of influence on pay and pay policy within the system (down in the UK to 50%, to 12% in the US; still below 30% in Japan).
This decline is not apparent in SA yet – but may well occur if the unions do not grasp the opportunity which they have to entrench themselves as the primary front for employees in our formal sector.
That is not to say that we are questioning the important role that they play in SA, which is acknowledged too we believe by all major employer organizations. They appreciate being able to negotiate cost of living increases with one representative body - in itself a useful role.
The point that we are making, however, is that, if all unions press for increases of 10% every year when recent cost of living indicators point to 6%, nothing will be gained for employees at all – since employers will simply raise the price of consumer goods by 10%. The inflation rate will rise then to 10% as well – completely negating the wage increases.
This so-called ‘wage-push’ form of inflation is in fact not new and is a particular characteristic of the SA economy. It is attributed in its origin to a particular set of significant wage increases that were introduced by the Anglo American Corporation in 1973 to ‘close the wage gap’. These initiatives have not been successful, nor can they be where there is not a matching increase in productivity (or commensurate rise in the GDP), which has not occurred at a matching rate. In the result, we have had an endemic or structural form of inflation ever since that year. It is furthermore being driven on today, as we have said, by the collective initiatives of the trade unions.
The truth of the matter is probably that the unions have to become involved on behalf of employees in a more significant way if they are to hold on to their power. They need in short to achieve real increases for employees, which most will accept is only going to be possible if they become involved in remuneration policy decisions. They should not confine their influence to cost-of-living increment negotiations and CCMA confrontations.
Certainly in SA they have a far stronger foundation today – in the form of enabling legislation - than they did fifteen years ago. There is not only the Labour Relations Act itself, which gives them access to information and procedural powers, but also the Employment Equity Act, which counters unfair discrimination, and the Skills Development Act, which provides for individual employee training and development.
Where specifically can the unions play a role, and what falls under the heading of ‘remuneration policy’ today? This term includes and covers –
There are two barriers possibly holding back or blocking the unions from becoming involved in these areas –
One – the debate over ‘pay for the job’: Here the unions have always historically had a leaning towards the principle that pay should be for the job. This is however probably due to the fact that they do not wish to be seen to be representing or favouring one employee over another – preferring a collective group approach.
Two – lack of representation in decision-making structures: This is undoubtedly the more serious constraint on the role of the unions currently.
The question may be raised in this context as to how specifically they can practically engage at this level.
Consider here that in Germany union representatives are conventionally appointed to all operational directorates under a two-tier board system, and have a direct say in decisions which impact employees. Unionism is strong as a result of this; and the need for industrial action rare. However, in SA, the ‘unitary board’ is the recommended board structure.
Despite this apparent major difference, frequently in practice in SA there is a holding company board and also different subsidiary company or divisional boards within a typical group corporate structure. Then, under each board there is an executive or management committee.
The point is that there is in fact then a de facto two tier system in place in structures of this kind. The differentiating feature is that the board responsible for strategic decisions does not make the decisions on remuneration policy, and leaves this to the board or committee below.
If, for example, the remuneration policy decisions are being made at the subsidiary board level, then that is where union representation should be invited. If at the holding company executive committee level, then that is the forum. Representation in either case should be by invitation and ex officio.
What is achieved by union representation is in the first place greater transparency; secondly, more meaningful interaction between management and staff.
An increasing number of employers in SA in our experience are indeed allowing for board and committee representation by trade unions on a more meaningful basis. This is a positive development in our opinion, and surely the right path for all organizations in SA in the future – giving unions a stronger platform, but at the same time looking to them for more support in driving productivity and long-term sustainability.