Job Destruction in the South African Clothing Industry: How an Unholy Alliance of Organised Labour, the State and Some Firms is Undermining Labour-Intensive Growth

Abstract

For ten years, the National Bargaining Council for the Clothing Manufacturing Industry (NBC) has been used by the South African Clothing and Textile Workers Union (Sactwu) and by largely Cape Town-based employers to impose higher labour costs on 'Chinese' employers in Newcastle, in northern KwaZulu-Natal. Many Newcastle employers have failed to comply with the rising minimum wages and levies imposed by the Council. The struggle intensified in 2010/11 when the NBC used the labour courts to put pressure on, and close down, targeted non-compliant firms, in response to which some employers initiated legal action against the Minister of Labour and the NBC. The struggle between the NBC and non-compliant firms is of broader importance because the non-compliant firms comprise the labour-intensive rump of the last remaining labour-intensive manufacturing sector in South Africa. Their fate draws our attention to the role of labour market policies and institutions (especially the process of minimum wage-setting through bargaining councils), trade liberalisation and industrial policy in determining the viability of labour-intensive manufacturing. The Newcastle case shows how, under the guise of promoting 'decent work' and the supposed levelling of the playing field for producers, an unholy coalition of a trade union, a group of employers and the state can initiate and drive a process of structural adjustment which undermines labour-intensive employment and exports South African jobs to lower-wage countries such as Lesotho and China.

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