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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  • 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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  • 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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  • 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
    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
    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
    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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  • Sarah Murray
    Antoprophy I do agree that a certain evolution is neccessary as business changes. I would love to hear some of your war stories and lessons learnt my business is still fairly young and I have only ever had 2 employees so I'm sure I could learn alot from your experience. Does any particular story stand out as a big smack in the face lesson?
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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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  • Antoinette Prophy
    Absolutely agree that we must ensure workers' rights are protected most certainly but are our existing union structures and essence based on the 'baas' framework?Most entrepreneurs especially millennials are driven by the people over profits so to be painted with the Thatcher era brush is dated.
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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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  • 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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  • Antoinette Prophy
    I made the mistake to ramp up too quickly without the correct processes and systems in place and this lead to unnecessary chaos and confusion. Pace yourself pace your growth and if scaling up becomes a business imperative make sure you have the right systems in place from recruitmnet to onboarding to induction. Every step of the HR value chain plays a role in how employees immerse themseves in your brand.
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  • Antoinette Prophy
    http://www.statssa.gov.za/publications/P0211/P02111stQuarter2016.pdf We need to fix these stats and being able to create employment easily and effortlessly must become part of the entrepreneurship conversation. We cannot encourage businesses to scale-up just to become stagnant at a certain level.
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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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  • Marang Setshwaelo
    Whoa! So true Anto! Especially with the world economy in the state it's currently in we really have to be competitive. It's becoming easier for companies to move production elsewhere if costs of operation are too high in SA.
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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
    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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  • Antoinette Prophy
    Something's Gotta Give always.
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  • Marang Setshwaelo
    @TheTastyChef - confrontations between companies and unions are often depicted in the media as David vs Goliath battles which really isn't helpful when the situation is in reality much more nuanced than that. An existing culture of openness and transparency between management and workers can help alleviate potential on-the-ground tensions during such situations when the workforce knows that essentially the leadership want to do right by them because that's their experience of the workplace.
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  • Sarah Murray
    I agree Antoprophy as a millenial in business I have no or very little experience of that time and as a result have no hangups that I'm sure older entreprenuers have. I do business based on people if we click I like their story I believe in them. The same goes for employees so it wold be great to see a shift in the unions make them less daunting and more approachable to business owners as a real solution to ensuring the status quo of the employer employee relationship.
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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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  • 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
    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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  • Antoinette Prophy
    I'm sure there isa dev house out there working away on an app or chatbot called Thabo who will act as a clinical mediator making union reps redundant. We need an Uber type shake up on a space that is lagging and archiac. I agree that external mediation is much needed and yes the recent Masmart pay dispute is evidence of this but boy-oh-boy does it need a Tesla type make-over.
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  • Sarah Murray
    I hear you that an internal person may not win the trust of workers and actually putting myself in an employees shoes i do agree.
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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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  • Marang Setshwaelo
    @NB82- i agree wholeheartedly.... inasmuch as we have sound labour laws we see plenty of cases where companies ride roughshod over workers rights.I really do feel like there is still a place for ethical responsible labour unions in SA.
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  • Antoinette Prophy
    Hey Nicole nice bumping into you.
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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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  • 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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