PRESENTATION TO THE 2013 IRMSA CONFERENCE26 – 27 NOVEMBER 2013, GALLAGHER ESTATE

MANAGING INDUSTRIAL RELATIONSAS A STRATEGIC RISK

PRESENTATION OUTLINE

RISKS ASSOCIATED WITH COLLECTIVE BARGAINING

KEY UNDERLYING CAUSES

RECOMMENDATIONS ON MANAGEMENT

RISKS ASSOCIATED WITH COLLECTIVE BARGAINING

INDUSTRIAL ACTION

BUSINESS CONTINUITY

CHALLENGES TO COLLECTIVE AGREEMENTS

REPUTATIONAL DAMAGE

INDUSTRIAL ACTION IN 2013

Increased incidence compared to 2012 - Gold, Motor Industries, Civil Engineering, Food & Beverage, Road Passenger, Private Health, Aviation -

Almost all strikes in 2012 were protected – Exceptions in Medupi & Eskom

Reduced violence & intimidation compared to previous years . . . but still a characteristic

Worst yet to come? – Platinum Belt negotiations

Consensus amongst economists that 2013 economic growth was negatively impacted

1st half GDP growth was 2% - between 0.5% to 1.2% lower GDP growth attributable to extent and duration of industrial action

Decline in productivity

BMW SA – SA removed from consideration as a site for production of a new model – implications at micro & macro level

INDUSTRIAL ACTION: ECONOMIC IMPACT

020

4060

80

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Year

Brazil Russia

India China (no data)

South Africa Nigeria

Turkey United States

BRICS, Nigeria, Turkey and U.S. ; 1999-2008

Percentage of working days lost/total working days per year

Source: LABORSTA Labour Statistics Database

INDUSTRIAL ACTION COMPARATIVELY

Macro level – Free Market Foundation challenging the constitutionality of the powers of the Minister of Labour to extend collective agreements to non-parties

Micro level – Worker committees in the Platinum sector e.g. Lonmin Marikana

CHALLENGES TO COLLECTIVE AGREEMENTS

KEY UNDERLYING CAUSES

Inequality, poverty & unemployment – socio-economic frustration

Inadequate awareness of internal & external labour market dynamics

Ineffective management of industrial relations

Absence of meaningful engagement with employees & trade unions

Adherence to inefficient bargaining processes

Majoritarianism vs Inclusivity in bargaining

Trade unions jockeying for position

RECOMMENDATIONS AT STRATEGIC LEVEL

Entrench an industrial relations risk conscious culture

Representation by industrial relations function in the highest executive structure to ensure meaningful consideration of industrial relations risks in executive decision making

Optimally capacitated & resourced industrial relations function

Prominence in the register of strategic risks

Engagement on industrial relations risks & mitigation measures at every level of management

RECOMMENDATIONS AT OPERATIONAL LEVEL

Structured environmental scanning & intelligence gathering

Effective communication & engagement with employees and trade unions

Regular meaningful review of policy & procedures

Promoting inclusive bargaining

Adopting a progressive bargaining paradigm

Monitoring collective agreement implementation and proactively addressing any compliance issues arising

IN CONCLUSION

Risks associated with industrial relations present the potential for adverse consequences at the macro & micro level

Consequences can be mitigated (not eliminated) through various interventions

Management of industrial relations risks must be elevated to the strategic level