South Africa: Wage Agreement Is 'Killing Jobs' in Cape Construction Sector

analysis

An agreement that pays above industry average wages is being strongly contested by small building companies and sub-contractors who argue that it is unaffordable and will put them out of business. Big players and trade unions want everyone to pay the same wages to ensure a 'level playing field'.

The minister of labour recently extended a collective bargaining agreement signed between employers and trade unions in the Western Cape's construction sector to all sub-contractors and other parties that were not signatories to the original agreement.

This binds these parties to the wage agreement that kicked in on November 1, 2019.

Small contractors and sub-contractors believe that the agreement discriminates against them, the non-parties, and if enforced, will accelerate the decline of the industry witnessed over the last 18 months.

At the very lowest pay grade, employers must pay R299.79 a day for a labourer. Of this, R240 is paid directly to the employee, while the employer pays the balance to the Building Industry Bargaining Council. The balance, R59.31 per day, covers pension contributions, sick pay, holiday pay, bonus pay, and the Building Industry Bargaining Council (BIBC) levy.

The employee is also expected to contribute R23.94 per day, which includes a...

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