Dear Steel Industry employer
A public media debate has recently emerged as to the accuracy of statements by NEASA’s Chief Executive, Gerhard Papenfus, regarding the entry-level wage of R99 per hour, cost-to-company, for unskilled, inexperienced employees in the Metal and Engineering Sector.
In response, SEIFSA alleges that the information is being misrepresented since R99 per hour, according to their argument, the cost-to-company is not the negotiated wage.
The allegations regarding misrepresentations go something like this:
- The negotiated wage as of 1 July 2026 is R70,95 per hour, not R99 per hour.
- The additional on-cost of 40% includes cost items which are applicable to all sectors, such as UIF, SDL, COIDA, etc.
- Consequently, it is not correct to state that a wage of R99 per hour, cost-to-company has been negotiated.
Here is the problem with these averments:
- The “negotiated” wage of almost R71 per hour is exactly the problem. This admitted excessive wage forms the basis of any cost-to-company calculation.
In negotiations, employers do not simply look at a percentage increase on the current wage; what is considered is the impact that any across-the-board wage increase will have on all other cost items, not only the wages. These items include UIF, SDL, COIDA, bonuses, etc.
The effective negotiated wage, all costs considered, is indeed R99 per hour, cost-to-company, and stating that fact is not a misrepresentation by any stretch of the imagination. |
- It is agreed that many cost items are inherent in the cost of employment regardless of sector; however, a number of MEIBC cost items are not common to all sectors, e.g., Leave Enhancement Pay, Provident Fund contributions, additional paid leave, etc.
However, for the sake of the argument, should one apply the total 40% on-cost to the national minimum wage, the cost-to-company would be a mere R42,32, 43% of the minimum cost-to-company of R99 per hour for the lowest grade employee under the scope of the MEIBC.
There seems to be agreement among all employer parties in the MEIBC that the minimum wage of R70, 95 per hour is simply too high to sustain the industry or employment, and it is most certainly too high to attract any investment into the sector. It serves no purpose to bicker as to whether R71 or R99 is the negotiated wage; both are equally disturbing.
If all employers, including SEIFSA, agree that the wage is too high, should that not then be the focus?
SEIFSA is obviously very sensitive to this issue, as it portrays them to be the worst collective bargaining negotiators that this country has ever seen. This industry has the highest wages of all industries covered by bargaining council agreements.The trade union, NUMSA, is involved in both the Motor Industry and the Steel Industry. In the Motor Industry, the entry-level minimum wage of an employee is 48% of that of the Steel Industry.Why the difference?The difference is the negotiators. It is SEIFSA that, over many years, has negotiated this industry into the position it currently finds itself in, and SEIFSA admits that the industry is in a state of continuous decline. |
A dramatic reset of the wage structure in the sector is desperately needed to have any chance of arresting this decline.
It is acknowledged that the sector faces many headwinds and that wage costs are not the only obstacle; however, it is a component that employers can control.
It may not be easy; in fact, it may be painful, but it may well be a lot less painful than the long-term consequences should this status quo remain.
For more information
NEASA Media Department
media@neasa.co.za
