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
  • Thanks so much for that perspective Mike. ‘Balance’ seems to be the buzzword when it comes to how unions are viewed – the perception that they are heavy-handed in their engagements with the employer is a worry and needs to be addressed. What is also disturbing is the xenophobic unrest and resultant negative perception in SA as an investment destination by potential investors from across the continent.
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  • We certainly cannot go on the way we are – as you said earlier something’s got to give. And although China cannot be cited as a model of human rights as you said we have to figure out a way to move from the current position to one that encourages growth and jobs.
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  • The Big problem is that Unions in SA have more power than the employer. When they strike companies have to choice and they always win which in turn makes the products the company is making to increase the prices to absorb the labor costs which again in turn makes the employee not able to afford products again. The balance is really needed and its needed fast We need policies that are strong to protect both parties plus engagement when making these policies is important Right now our funders are holding on to money cause of Xenophobia when the country is out there preaching Invest in SA investors and even tourists want a peaceful country where they feel safe My family calls me everyday to check on Xenophobia and its sad that government is quite and when people are arrested they are released in a few days with no charge. This would never happen in any other country what type of freedom lets people get away with looting and even killing
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  • 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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  • Mike thanks for the input it's good hearing it from the horses mouth as to what is actually happening regarding foriegners in business here. I agree that on a governmental level things need to change and quickly regarding the policies surrounding this issue. Would you have any advice for small foreign business owners in SA on how to navigate these waters and run profitable businesses here? Is there an organisation in SA that assists in this?
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  • 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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  • @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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  • @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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  • Mike thank you so much for being candid we need to hear more from investors like you who are directly affected by the buffet of issues we have right now.
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  • 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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  • 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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  • 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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  • 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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  • 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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  • 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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  • 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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  • 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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  • Monique Chinnah
    Don't lose hope lfriky. Businesses need all the entrepreneurship mentorship available. We all view the world witha bias but different perspectives allowgrow us out of old reasoning and better ourselves.
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