As more economic activity resumes during level 1, employers are caught between a rock and a hard place as they navigate between union demands for higher wages — affecting thousands of workers — and resuscitating their businesses to claw back losses incurred due to Covid-19.

Analysts have warned that employers could be forced to retrench so as to accommodate worker demands for improved working conditions and better salaries.

The six-month lockdown has had a devastating effect on SA’s already weak economy, with the economy shrinking at an annualised rate of 51% during the second quarter, the worst quarterly collapse on record. If the second-quarter results are not annualised, GDP contracted by 16.4%.

The economy is forecast to contract 7% or more during 2020, leading to huge job losses. But this has not stopped unions from tabling their demands for improved wages and declaring disputes and embarking on strikes when the parties fail to find common ground.

Andre Kriel, general secretary of the Southern African Clothing and Textile Workers’ Union (Sactwu) said it has declared 18 disputes in six sectors, including textiles and clothing, affecting more than 74,000 workers. The affected sectors include carpet textiles, non-woven textiles, worsted textiles, general goods and handbags, and laundry services, among others.

Kriel said that while wage negotiations had been difficult under the lockdown, “the biggest general problem that has led to these wage disputes is employer demands for downward variations in conditions of employment of our members”.

“These destructive, opportunistic efforts by employers include proposals to cut members’ wages, taking away their annual bonus entitlements, wage freezes and reductions in shift and other allowances,” said Kriel. “While we acknowledge that the lockdown has been difficult for our industry, we will not just sit by and meekly accept these brutal employer attacks on our members’ standard of living.”

Sactwu clothing industry national sector co-ordinator, Bonita Loubser, said the dispute in the clothing sector — affecting about 60,000 employees — will be heard at the National Bargaining Council for the clothing manufacturing industry on Monday.

She said it is demanding a 15% wage increase and that there is no counter offer from employers represented at the bargaining council.

Johann Baard, executive director of the SA Apparel Association, a member of the bargaining council, said he hopes “good sense will prevail” at the meeting on Monday.

“We as employers are very mindful of the plight of our employees and, circumstances permitting, we will be sympathetic in considering a wage adjustment. However, what we have said to unions is that given the devastating impact the lockdown has had on businesses, we are not in a position to make any offer for a wage increase,” said Baard.

“We propose that we postpone negotiations for six months and that we reopen talks early in the new year, as we will be in a far better position to evaluate the state of the industry and the extent to which our members are able to absorb wage increases. We want to get the industry to normality as soon as possible, but rushing it won’t help.”

The clothing and textiles industries contribute an estimated 8% to GDP and are responsible for about 80,000 jobs.

At the embattled Passenger Rail Agency of SA (Prasa), the United National Transport Union (Untu) declared a dispute after the parties could not reach an agreement on the proposed multi-term wage offer for employees of 5% for 2020, 5% for 2021, and 4.8% for 2022.

Untu general secretary Steve Harris said: “The crucial issue is that we wanted a one-year deal. The offer is not much of an issue. We don’t know what’s going to happen because the government signed a three-year deal and is reneging on it because there’s no money.”

Harris said the biggest fear is that “we could find ourselves in a similar situation”.

The government and organised labour have been on a collision course since finance minister Tito Mboweni penciled in cuts to the public sector wage bill in his Budget Review in February. After that, the state reneged on implementing the last leg of the wage increase agreement it had signed with the unions three years ago. The matter is now subject to both arbitration and court proceedings.

Harris said Untu has already received a certificate of non-resolution from the Commission for Conciliation, Mediation and Arbitration, allowing it to strike over the matter. However, he said it would seek a mandate from employees on whether to accept the Prasa offer or down tools.

Labour consultant Tony Healy said: “I think many trade unions are under the impression that it’s business as usual under level 1, which is clearly not the case.”

He said there are many industries significantly affected by Covid-19 and “they will continue to be affected for some time to come”.

“We had a weak economy, and we were in recession around the time we went into Covid-19. It can’t be business as usual. Sooner or later trade unions will have to come to terms with that.”

Healy said the trade unions’ focus during this period should be on job preservation rather than on what he described as “unrealistic wage demands”, saying, “If employers are coerced into paying wage increases they can’t afford, then retrenchments happen.”

On September 23, the labour court interdicted the Communication Workers Union (CWU) from picketing at the premises of JSE-listed ICT supplier Mustek, where workers are demanding a 20% wage increase; a R3,000 housing subsidy; a provident fund; and that the company contribute 50% to their medical aid.

The 20% demand is way above inflation. Inflation, as measured by the annual change in the consumer price index, accelerated 3.2% year on year in July from 2.2% previously, marking the first time the inflation print was within the SA Reserve Bank’s 3%-6% target band since April. Mustek spokesperson Nicole Orr said CEO David Kan will hold discussions with the CWU leadership on September 30 regarding the way forward.

The CWU is also demanding higher wages for workers at the SA Post Office (Sapo). CWU president Aubrey Tshabalala said Sapo is reneging on implementing a 6.5% wage increase as part of the last leg of a signed two-year wage agreement.

Sapo acting CEO Reneilwe Langa said it has informed unions that the organisation is not in a financial position to afford salary increases at this time “owing to the financial impact of the Covid-19 lockdown period”.

“The company will honour its agreement with the trade unions and will pay increases when it can afford to do so, and we are in continued discussions with the union on these issues,” said Langa on Friday. “A number of employees at Witspos sorting office downed tools for two days. The principle of no work, no pay applies and disciplinary procedures will be followed in terms of SA Post Office policies.”

Labour analyst Michael Bagraim said workers should be grateful they still have jobs. “One would expect the unions to say: ‘We will spend our time to try to stop the retrenchments instead of generating higher wages for the few.’ This is simple: if an employer agrees to a wage increase, they will have to balance that by retrenching some of their staff.”

“One would expect unions to understand that you can’t push for an increase now. They should be protecting jobs and not put them under risk by asking for an increase.”