WHY A R17M WIN COULD BE A PYRRHIC VICTORY (25.07.2008)

This week’s R17 million award against a KwaZulu-Natal textile company for not paying wage rates agreed by the bargaining council highlights yet again a fundamental, obvious and yet frequently unrecognised reality: the conflict between societal demands, government policies and business principle.
It has been said often enough, in this column and elsewhere, that the only principle for business is the maintenance and growth of the bottom line. That is a simple fact of life in our profit-driven global economic system.
It is one that trade unions, as the major societal bulwark against gross exploitation, have constantly to battle against. And the conditions under which this struggle is waged are largely determined by government policies.
But, in this brutally competitive, dog-eat-dog environment where labour confronts capital, hostility can also erupt between different sectors of capital. So it is that domestic garment manufacturers find themselves sharing the concern of the SA Clothing and Textile Workers’ Union (Sactwu) regarding the continuing flood of cheap imports.
However, as surveys presented to the National Economic and Labour Council (Nedlac) have shown, there has also been a marked reluctance by local manufacturers to invest domestically. This dearth of capital investment has made it even more difficult for South African workers to compete in a liberal trade environment supported and, in part created, by the government. It is this environment that enables and encourages the flood of cheap imports.
And it remains a flood, despite the two-year “voluntary restraint” quota deal done with China on a range of items. In fact, there is strong evidence that Chinese goods, at a marginally higher cost than previously, and labeled “Made in Malaysia”, may still be a prime undercutting culprits. If this is not the case, it is difficult to account for last year’s 1 094 per cent surge in the value of Malaysian imports in this sector.
There is also evidence that importers, faced in September 2006 with the prospect of quotas on Chinese goods, placed forward orders. According to a report produced in March by Clothing Trade Council executive director Jack Kipling, it is estimated that as many as 51.7 million additional items of clothing were ordered in 2006 for delivery last year.
But the voluntary restraint agreement with China, which ends this year, has resulted in a quite sharp decline in imports sourced directly from China. However, a range of other countries has benefited greatly from this quota deal as importers switched their orders to countries such as Vietnam, Bangladesh, Sri Lanka and even Zimbabwe.
Most galling for the labour movement is the fact that the value of imports from Burma (Myanmar) a brutal military dictatorship, have soared by 450 per cent from R17.5 million in 2006 to R78.7 million last year. However, the biggest gainer in monetary terms is Indonesia which saw the value of its imports grow by 232 per cent to R160.1 million.
What this means is ongoing pressure on local manufacturers — and a continuing loss of jobs. Since 2003 when the flood of cheaper imported textiles, garments and footwear got fully underway, more than 20 000 jobs have been shed by major manufacturers in the clothing sector alone. Proportionately hardest hit has been the footwear sector where Sactwu estimates that two-thirds of some 30 000 jobs have now been lost.
With the system firmly in place, domestic policy unchanged and the end of the voluntary restraint agreement looming, more jobs are threatened. In such an environment, the R17 million award to 393 underpaid workers in KZN may be a pyrrhic victory. Unless the unions and wider society can persuade government to alter the rules.