Clothing factories based in Newcastle, KwaZulu-Natal, who face pressure from the government to comply with minimum wage legislation, had begun retrenching workers to make room for the pay stipulations, Newcastle Chinese Chamber of Commerce chairman Alex Liu said yesterday.
The latest step is an escalation of the wrangle over compliance with the minimum wage, which began about eight months ago.
Liu was unable to give any numbers, saying he had not conducted a survey but knew of factories that had begun layoffs.
Liu confirmed that his company, Simunye, was about to close down with the intention of re-opening and hiring a reduced number of employees.
He estimated that between 100 and 120 of the current 160-strong workforce could be re-employed.
“We are restructuring and everybody will be retrenched. We will recruit only skilled labour and it will be a majority of the people who were working in the old company,” Liu said.
Clothing firms in Newcastle employ about 8 000 people. The minimum wage increased to R336 a week at the end of last month and is set to rise to R465 by the end of the year and reach R516 by April next year.
Liu said most factories could not comply as the prices they received from the retailers had not changed. “If retailers will not increase their prices, it is almost impossible for factories to increase wages,” he said.
Wayne van der Rheede, the deputy general secretary of the Southern African Clothing and Textile Workers’ Union (Sactwu), said no retrenchment notification had been received from any of the factories.
Last week, the bargaining council for the clothing manufacturing industry began assessing the payrolls of 416 non-compliant factories to verify the scheduled 70 percent compliance level set for the beginning of this month.
Leon Deetlefs, the national compliance manager for the bargaining council, said yesterday that inspectors visited 47 factories and found that 61 percent were still not compliant.
“We have handed them over for the execution of writs. Closure of these factories should take about a week,” he said.
The Apparel Manufacturers of SA (Amsa) has proposed a new entry wage model, which it said would level the playing fields between complying and non-complying employers and create more jobs.
Amsa’s 250 members employ 70 percent of the nearly 57 000 workers in the industry.
The proposal was rejected by Sactwu, which said it would take wages back to 1986 levels. Amsa had suggested that a general worker be paid R220 a week in rural areas and R300 a week in urban areas.
A rural-based unqualified machinist would pocket R250 a week while one living in a metro would earn R350. A qualified machinist from a non-metro area would earn R280 a week, while the metro-based counterpart would get R450.
Johann Baard, Amsa’s executive director, said its failure to persuade unions to accept this proposal meant non-complying companies would continue to have an advantage.
The latest stand-off comes as Trade and Industry Minister Rob Davies said yesterday that his department’s programmes had had a positive impact on the clothing industry.
“Over 200 companies have utilised the Clothing and Textile Competitive Programme and Production Incentive, resulting in the retention of 40 000 jobs and the creation of 1 100 new jobs,” he said. - Business Report