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Economy
Friday, February 22, 2013 - 18:37
Waging war

In 2011 more than R1.03 billion was lost in employee income due to on-going strikes in various sectors. However, it is predicted that the figure for 2012 will be surpassed due to the rapid spread of strikes in many sectors of the SA economy.


According to Chris Jacobs, Conflict Resolution Expert at OIM International, many of the violent strikes are a direct result of failed wage negotiations between stakeholders. “If a dramatic change in the mind-sets of those involved in labour relations does not take place, we are in for a tough 2013,” he says.
“Strikes are a complete lose-lose situation for both employees and employers, as businesses lose income and often teeter on the edge of closure while staff face the possibility of retrenchments and lower wage increases than originally offered. Strikes, especially unprotected and unlawful ones, are simply a cost no party involved can afford.
“In the short term one party may feel like they have won the round, but in the long run these situations simply perpetuate the poverty cycle in our country as companies will have to recover income lost during the strike in one way or another – including retrenching more workers to manage costs,” Jacob continues.
“You will probably never reach a point where everyone is completely satisfied with the outcome, but you should have relative buy-in. The traditional notion of ‘winner-takes-it-all’ is no longer relevant and parties should rather seek innovative solutions that can address on-going fluctuations in our economy.”
Jacob explains that successful wage negation is a process that should result in both employer and employee benefitting and is a feat largely determined by the maturity of the relationship between the involved parties – management, employees and unions.
“Success relies on the maturity of all parties to engage in collective problem solving of the company’s competitiveness and other problems, while taking the economic climate, business realities and socio-economic factors into consideration to create a win-win situation for everyone involved.
“Besides a willingness to participate, the key to this mature relationship is stakeholders who are well-informed about company performance, familiar with key economic principles and understand the criteria that govern wage negotiations.”
To this end, Jacobs argues, constructive engagement is crucial as it prepares the company climate for wage negotiation long before it takes place.
“In essence, constructive engagement entails that management keeps unions and staff members in general informed of the company’s financial performance, as well as global and sector-specific developments, throughout the year. If this is done successfully and inclusively, everyone is conscious of the factors that could influence wage negotiation and it helps to ensure that no-one comes to the table with unrealistic expectations such as increases far beyond the inflation rate when the company is under financial pressure.
“Facilitation of this constructive engagement process is complex, requires skill and involves numerous aspects such as setting up team forums to regularly evaluate performance and getting everyone involved in goal setting, problem solving and enabling continuous improvement. The ultimate aim is performance and productivity improvement, and for every staff member to be an active participant in value creation. Then, once the company is succeeding, employees should share in the value,” he explains.
A second important factor is for management to invest in its people by empowering them with knowledge and business understanding in a regular and structured manner. “When people have context to interpret financial results, grasp certain key business and economic principles, and are up to date with company developments, it encourages a climate of realistic wage negotiations. Working with facts and informed participants help to take the emotion out of the process and promote a give-and-take approach to negotiation.”
Jacobs explains that the preparation phase is also a very important part of a constructive process. In the period leading up to the negotiations, all parties involved should openly and honestly share their expectations in view of the company’s performance already communicated.
The challenge is to find a win-win outcome when the company is under financial pressure, Jacob says. “These situations, in particular, require maturity when looking for solutions to ensure all parties still benefit. This may include exploring alternative options such as lower annual increases, but performance bonuses once the company can afford it. This kind of shared solution serves the interest of business by keeping doors open and the interest of employees through better job security in the long run.”
 

Copyright © Insurance Times and Investments® Vol:26.1 1st January, 2013
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