Unions - Harmony vs. Conflict?

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Unions can have a devastating impact on your production due to a protracted dispute or stay-away One of the biggest fears for small business is the potential for conflict with labor union representatives or members. This is, unfortunately, a reality for any business, but especially threatening to small businesses. Unions can have a devastating impact on your production due to a protracted dispute or stay-away, or because you are bound by agreements made at a central bargaining level. These types of high-level agreements may suit the larger enterprises that are able to pass increased labor costs on to the market, but they could seriously hamper your survival as a small business. These threats are obviously biggest for businesses in highly unionized sectors, such as manufacturing and construction.

It is therefore important to bear these risks in mind if you operate in these sectors. And, while the solution may appear to be to ban union membership by your employees, this is not allowed under the Labour Relations Act. As a small business, it is also quite likely that you will be employing younger, less experienced staff. This could play to your advantage in being able to select employees who are not union members or who value the security that a job offers. The introduction of the youth wage subsidy in 2014 goes a long way to opening the door for younger employees to enter the workplace.

How this works is that employers can claim the incentive for any employee between the ages of 18 and 29 who receives a monthly salary lower than R6 000. The scale of the benefit ranges according to a number of different criteria and salary brackets. SARS has provided this useful guide and automated calculation page to determine the extent of the rebates that apply. As an employer, it is always going to be difficult to avoid the effects or threats that unions may hold over your ability to run a lean, profitable business.

Adopting a confrontational approach to union membership or representatives is a sure way to raise this threat level to the extent that your viability is at risk. At the very least, ensure that you comply with all labor regulations in your industry. Better yet, build an understanding and relationship with union members and representatives. Should you operate in an industry that is subject to union action, it always pays to cover your back by contracting expertise in the form of a labor lawyer or consultant who can advise you. Key takeaway: Labour unions are a reality in many industry sectors. Ensure you are aware of the labor regulations and workers’ rights and that you remain compliant. The investment in a labor lawyer or consultant during salary negotiation periods will stand you in good stead.

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48 comments
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  • Sarah Murray
    Those are fascinating stats thanks for sharing. What jumped out at me straight away is that the smallest percentage of employment across the board per sector is the agriculture and mining sector! Surely and correct me if I'm wrong as I don't know much about this but agricuture should be a much larger portion considering we are in South Africa? I thought it was one of our largest trading commodities?
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  • Antoinette Prophy
    @NB82and @Marang I know that China is probably the worst example to use when it comes to human rights but I'm simply asking what do we want as SA? Our current unions and labour laws stifle mass employment it is choking the system. Do we keep on this path of no growth and mass unemploymnet or do we get serious about addressing unemploymnet. If it's the latter then we need to shake up our labour laws and unions.
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  • Sarah Murray
    Yes indeed Mike lets all hope that they can stabalize the situation before it is too late! Out of interest what is the trading environment like throughout the rest of africa?
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  • Antoinette Prophy
    Over the past seven months in Cape Town I have been exposed to entrepreneurs from various sectors but I am mostly concerned for the manufacturing businesses. We know that employment opportunities abound in this space but the possibility of having to deal with unions as an entrepreneur is a scary thought. An article cites: The late Margaret Thatcher is an extremely polarizing figure in the United Kingdom. One huge factor in this is the way the Iron Lady crushed the UK's trade unions during her reign. A shrinking economy and unemploymnet on th eincrease year on year in SA where is our Thatcher?
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  • Antoinette Prophy
    Something's Gotta Give always.
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  • Mike Chilewe Jnr
    Thank you for the invite @Antoprophy My take as an investor in SA especially in FMCG companies which is most of the times labor intensive. We come in companies who are looking at selling their business cause of lack of growth capital or retiring. When we get in we always have to change a few things and most of the times the labor law in South Africa makes it hard on most things South African workers also demand pay rises all the time this is first hand experiences if inflation goes up immediately people are striking for raise. I think its better that the law should also protect the employers because if they close their businesses people will be unemployed completely The government should work on making sure that the economy is going the right direction so that things are say affordable for people which gives less pressure on the employer On Xenophobia for us it’s a Big issue we have a few transactions that are hanging because our funders don’t want to put money when factories usually employ foreigners. Because foreigners usually accept say less than what locals want. These foreigners have proper papers and permits but when they take the money back home it’s a lot of money It’s also a big threat for even me lately I haven’t been moving freely especially visiting new prospective ventures which are usually right in town or out of town because of fear It also bothers an investor like me that my fellow brother is being punished for being a foreigner how do I employ the same person who is doing that to my home brothers? The government of South Africa has so much to do in terms of creating a balance and working on the economy otherwise if all foreigners could leave tomorrow South Africa would be in serious problems
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  • Marang Setshwaelo
    For sure - we really need a more welcoming attitude towards investors from other countries acrossthe continent the benefits are obvious and often immediate! And as you say Mike there are other markets who are more cooperative and welcoming to outside investment will surely attract those who want user-friendly accomodating investment destinations....
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  • Marang Setshwaelo
    Where indeed? My perspective is slightly different….We’re a fairly small company (9 staffers including owners) and as such don’t really have the administrative muscle to handle issues with unions. Because we’re in the services sector (PR brand activations events) it’s not a heavily unionized space but we have had to enlist the services a fellow small business in the industrial relations space when we were dealing with retrenchments a few years ago.
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  • Nicole Bodenham
    This isn't at all simple and I wouldn't want to come across as a liberal idealist but in my experience with global companies seeking competative environments to work in there is often a trade off where leaves those most vulnerable worse off. Individual lives matter and this can get lost when trying to attract global players into the economy.Even in SA where we have sound and ethical labour laws most professionals have a vague understanding of their rights andthere are a considerable number of international players operatinghere to effectively source slave-labour and they can afford to discard our labour laws. In this context there is a role for ethical unions to provide needed support.
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  • Mike Chilewe Jnr
    @TheTastyChef the situation in the rest of Africa is different to South Africa. Its very free and less restrictive Its only that governments are playing catchup to good policies that will develop the countries but its never too late. Otherwise its a free world out there where you operate your business in peace without fear of being a foreigner and the governments always protects foreigners. I hope South Africa will change on this one
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  • Antoinette Prophy
    We have a long way to go and it starts with facing our truth through conversations like this one. Thanks Mike.
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  • Antoinette Prophy
    Hey love yes people are our most valued asset and heaven knows it is not the easiest part of the businesses. We must handle with care I think I can write a book on my many leassons that slapped me in the face over the past 12 yearsfrom just the people side of business. I do think as the business landscape changes drastically year on year the labour/union space must evolve too.
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  • Sarah Murray
    So I'm wondering is that not the more important issue here? How do we keep production in SA? What steps do we need to take to make it more viable for business to continue here? What are the obstacles preventing us from doing this?
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  • Mike Chilewe Jnr
    We should be united as Africans and have a proper balance which will help everyone both locals and those who are coming in Investors shouldn't feel threatened or their investment threatened at anytime. A lot of African countries are booming and if government doesn'tlook into this seriously investments will go to other countries. We shouldn't take them for granted
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  • Ifriky Tadadjeu
    Interesting article. Through the eyes of a non-SA citizen I would start by mentioning that the work force mentioned includes non-SA citizens who may or may not enjoy all the benefits offered by unions. Granted nations need to look out for their citizens. However consider that this (among other) constraint makes the foreigner more appealing to the employer because he is the more likely to stay during stormy days and go the extra mile. God knows in small businesses especially in early stages stormy days are the norm. This brings me to the sad xenophobic rhetoric that had become quasi-seasonal in S.A... It confuses me. My first question is Why me?. Indeed if I simply handed over my research work to the first willing and able S.A citizen I would probably be as lonely as I am now even while I actively look for S.A citizens to train. As an entrepreneur the reality is that while the laws may allow a permanent resident to get into business the people do not always like it. I have had this experience unfortunately where it did not seem to matter that my business offered employment possibilities... It only seemed to matter that I as the owner was not born here. Laws are laws but we do live with people and people decide. Despite these hurdles we still push through and make things happen. Why? Because we look past cultural barriers and when we do look at these barriers we see opportunity. It would be beautiful if South Africa could do the same because: 1- Companies would listen to their workers before union action is necessary because they would really care. 2- Workers would see the bigger picture and chose accountability mechanisms that do not harm the business because they would really care. 3- Both employers and employees would work towards the economic growth of the nation because they would really care. Finally I would not feel so unwanted even while I contribute to the economy of a nation whose citizens (granted it is a minority) tell me they do not want me in their midst.
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  • Antoinette Prophy
    I guess the Wiki explanation is: As an employer one of the advantages of dealing with a labor union is that it simplifies the negotiations process. When you deal with a labor union you do not have to negotiate with multiple employees. You simply talk to the head of the labor union and the head of the union speaks for all of the workforce. By doing this you can negotiate faster and more efficiently without having to worry about meeting with many different employees. This certainly helps in a multinational global context my fear is for the scale-up moving from 20 to 100 employess and having to deal with the pain and agony of union disruptions. We need to review this space bring it into this century.
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  • Antoinette Prophy
    The drought seems to be affecting the agri space. This recent article cites: The number of South African households engaged in agricultural activities decreased between 2011 and 2016. There were 550 000 (19 1%) fewer agricultural households in 2016 (2 33 million) than in 2011 (2 88 million).This decline was mainly due to the drought experienced throughout the country during 2014 and 2015. There has also been a decline of 6 6% in the proportion of households engaging in agricultural activities nationally. A fifth (19 9%) of all households in the country were agricultural households in 2011 this declined to only 13 8% in 2016. http://www.statssa.gov.za/?p=9468
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  • Mike Chilewe Jnr
    @TheTastyChef I think the best advice I can give at this point in time is that maybe its better to partner with locals who are willing to work and make small businesses work maybe if we bring this type of collaborations the community people will feel they own part of the businesses this is not a BEE type of things but something where everyone involved brings in the money and works in the business together with the foreigners. They should always work on providing solutions to the masses in the communities they are based Cause these foreigners who are attacked dont even have a bank account I think right collaborations and partnerships will help I have heard of one organization which was formed by foreigners but its not effective yet because the government is not acting
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  • Antoinette Prophy
    Dr. Ifriky wow this breaks me especially given that as a black South African woman I could easily and effortless expand my business to East Africa and I was respected as an investor. I was welcomed with open arms and never had to question being African. To quote you: Finally I would not feel so unwanted even while I contribute to the economy of a nation whose citizens (granted it is a minority) tell me they do not want me in their midst. Have you found that your business growth has been impeded by this risk that you now have to mitigate?
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  • Sarah Murray
    I centainly see the value of unions from an employees perspective and in certain industries a very neccessary component however what are the benefits for employers? There are so many horror stories out there from loss of productivity to complete shutdowns of entire industries which causes small business owner to avoid unions at all costs. Am I missing a point here or would you be able to enlighten me as to the benefits?
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  • Marang Setshwaelo
    My take is that unions wield extraordinary power in today’s context – if anything my appeal would be to them to use this power very carefully so much stands and falls on how they choose to engage – whether it’s negotiation or bullish confrontation.
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  • Sarah Murray
    Sure it must be much more complicated than it is made out to be in the media. But on your second point if you create a culture of openness and transparency within your organisation and have people in place to stand as mediators and spokespeople between workforce and management then does that not negate the need for unions? Is the way forward maybe to do away with them and internalize these negotiations? On the surface I could see it as a real solution one that could possibly circumvent the negative connotations of unions and theabuse which we see fairly often nowadays force companies and workers to sort out theirproblems themselves?
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  • Ifriky Tadadjeu
    Thanks for the question Antoinette. Actually from a business point of view it only gets in the way when I need to take a firm stand on a view. Recently again I pulled out of a contract because despite attempts to correct my name it was spelled wrongly and posted on facebook. In defence of my brand and to make a statement that it cannot be taken for granted I pulled out. One of the comments I got was you should not antagonize these people because you are not from here. I have learned that it is part of business in SA but this is my case. I know a number of entrepreneurs from elsewhere who thrive no matter what. I keep growing and I actually think this is a blessing in disguise because I end up with a thicker skin. As an entrepreneur you welcome a thick skin wherever it comes from.
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  • Marang Setshwaelo
    It is so bizarre to me that an investor who's creating jobs in an age where unemployment is such a problem isrejected simply because they're not a citizen. it makes no sense at all and impedes so many opportunities. we need to do better be better.
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  • Marang Setshwaelo
    Correctly utilised I do believe that unions can be a benefit both to employees AND employees. Unfortunately our country has a legacy of extreme labour exploitation and historically unions have played an important role in addressing that…where we are now I feel like unions can play a key mediation role in dealing with the lingering effects of this painful legacy – and it works well when the unions have a realistic view of the business challenges in today’s environment and do not approach the employer as a avaricious exploiter but as a businessperson trying to balance a very tricky situation….it’s a major responsibility!
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  • Marang Setshwaelo
    Inasmuch as unions can be regarded as a menacing and daunting force to deal with it’s crucial in a country such as ours that workers rights are protected. All too often we hear of tales of exploitation of vulnerable peoples in the workplace – it’s really important to strike a balance and ensure that both sides – employer and employee are fairly represented. At the end of the day businesses need to turn profits to survive – we have to strive to ensure that takes place in concert with workers rights.
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  • Marang Setshwaelo
    Hmmmmmm... i'm not necessarily convinced that internal resources are the solution. Often these situations require the services of an outside mediator or negotiator because the parties concerned are too close to or invested inthe situation. Also I've heard too many stories where HR are seen as management's henchmen and not necessarily the impartial representative representing best HR & labour practice - i do believe there is still a place for responsible unions in SA.
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  • Sarah Murray
    Agreed totally senseless and so short sighted! What makes me wonder is how long will our neigbouring nations put up with this Xenephobia? When are they going to say enough is enough and impose sanctions or block South African trade in their countries to try and force the SA govenment to stop this! Does this administration really need to repeat the mistakes the Nats made during apartheid? It seems this may be a possiblility if nothing is done which deeply saddens me considering all we have been though and fought for as a country.
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  • Sarah Murray
    Ifriky it breaks my heart to hear how successful smart and willing people such as yourself are made to feel this way in our country! My first 2 employees a while back were 2 wonderful hard working Zimbabwean ladies who werehungry for successand treated my bakery as there own. Unfortunately as in many situations they had fled Zim to try and provide for their families back home and as such were here illegally. I made every effort possible to legalise them through the proper channels however it was denied for no apparent reason andbecause they were now on illegal immigrantradar were sent back home! I have never been more dissolutioned and angry withour government punishing them and inadvertantly me as a business owner for trying to abide by the laws! What ends up happening is that entreprenuersend up circumventing the laws in order to keep our foreign employees! But in the long term this means that they will never benefit from the workers rights of SA and leaves them exposed to exploitation.
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  • Sarah Murray
    Marang yes when you put it like that and considering our country's history it must be a huge responsibilty and a precariousbalancing act! And you are right I think employers tend to be wary of unions and feel as if they will be made out to be sword wieildingmonsters. I think sensationalised media has a lot to do with this what is your take and how do we bridge the gap between the perception and the reality?
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