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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