Industrial Action in the Construction of the Gautrain and the 2010 Soccer Stadiums

Anton Roskam

2009/05/18 1

INDUSTRIAL ACTION IN THE

CONSTRUCTION OF THE GAUTRAIN AND THE 2010 SOCCER STADIUMS

Anton Roskam1

1 BA, LLB (Wits), Higher Diploma in Labour Law (RAU), MBA (cum laude) (Wits), Attorney of the High Court of South Africa. I wish to express my gratitude to Crispen Chinguno, a masters student in the Department of Sociology at the University of the Witwatersrand, who assisted me with this research.

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ABSTRACT

This paper considers the reasons why industrial action took place in the construction of the 2010 soccer stadiums and the Gautrain project, which has deadlines associated with the 2010 Soccer World Cup. A popular view was that the industrial action represented opportunism on the part of the unions and workers. Although the 2010 World Cup presented opportunities to labour, as it had serious deadlines and substantial attention from the general media, it is evident that the industrial relations environment in most construction sites was complex, irrational and in most cases poorly managed. This stemmed from the way in which the projects were procured and classified – building as opposed to civil engineering projects – to the role played by government, the failure to involve unions in the 2010 projects as a whole, the failure to implement Project Labour Agreements, the lack of unionization, the recruitment of labour, labour brokers and collective bargaining. The paper makes recommendations for the large construction projects that have already begun or are in the pipeline.

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TABLE OF CONTENTS

Introduction ................................................................................................................................... 6

Background ................................................................................................................................... 7

Methodology .................................................................................................................................. 9

Why does a worker engage in collective action? ...................................................................... 11

Weighing up the costs and benefits ......................................................................................... 12

Mobilisation Theory ................................................................................................................. 12

Interests ................................................................................................................................. 12

Mobilisation ........................................................................................................................... 14

Organisation .......................................................................................................................... 15

Opportunity ........................................................................................................................... 15

Forms of action ...................................................................................................................... 16

Conclusion ................................................................................................................................ 16

International Experience ............................................................................................................ 16

The Australian Olympic Games .............................................................................................. 16

The 2012 London Olympic Games .......................................................................................... 19

British report on large industrial construction sites ............................................................... 20

The Regulation of the Construction Industry .......................................................................... 22

Construction Industry Development Board ............................................................................ 22

The Civil Engineering Industry ............................................................................................... 27

The Civil Engineering Industry Interim Procedural Agreement ........................................... 27

The Substantive Agreement .................................................................................................. 28

The Sectoral Determination ................................................................................................... 28

SAFCEC’s Characterisation of the Civil Engineering Industry ............................................ 30

The Building Sector ................................................................................................................. 30

Project Labour Agreements ..................................................................................................... 31

The Metal and Engineering Industry ...................................................................................... 32

ILO: The Labour Clauses (Public Contracts) Convention, 1949 (No. 94) and Recommendation (No.84) ........................................................................................................ 32

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Objectives of the Convention ................................................................................................ 33

Application of the Convention .............................................................................................. 33

Content of the Convention..................................................................................................... 34

The Industrial Action ................................................................................................................. 35

The Strikes at Cape Town’s Greenpoint Stadium .................................................................. 39

The First Strike at the Durban Stadium ................................................................................. 39

Industrial action on the Gautrian Project ............................................................................... 40

The Project Bonus Strike at the Durban Stadium .................................................................. 41

The First Project Bonus Strike at the Nelspruit Stadium....................................................... 42

The First strike at Polokwane .................................................................................................. 42

The Civil Engineering Rates Strikes at the Nelspruit Stadium .............................................. 42

The Project Bonus Strikes at Polokwane ................................................................................ 43

The Second Project Bonus Strike at Nelspruit ....................................................................... 43

Soccer City in Johannesburg ................................................................................................... 43

Port Elizabeth’s Nelson Mandela Stadium ............................................................................. 44

The Summit .............................................................................................................................. 44

The Causes and Contributory Factors ...................................................................................... 46

Current Economic Challenges and Employee Expectations.................................................. 46

The complexity of the labour relations regimes ...................................................................... 47

Building or Civil Engineering work ........................................................................................ 48

Different rates of pay for similar work on one site ................................................................. 49

The Recruitment Policies and the Use of LDCs ..................................................................... 49

Weak Trade Union Organisation ............................................................................................ 51

Union Rivalry ........................................................................................................................... 52

Labour Brokers ........................................................................................................................ 52

The Failure of the Stakeholders to Engage in Dialogue Beforehand ................................... 53

Conclusion and Recommendations ........................................................................................... 54

The Objectives and Role of the Public Authority Client......................................................... 55

Ratification of the ILO’s Labour Clauses Convention, 1949................................................. 56

The Negotiation of PLAs for Large Projects .......................................................................... 56

Classifications between Civil Engineering and Building ....................................................... 57

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The Requirement that 70% of the Labour be Recruited Locally ........................................... 57

Collective Bargaining .............................................................................................................. 57

Labour Brokers ........................................................................................................................ 58

References .................................................................................................................................... 59

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INTRODUCTION

The 2010 Soccer World Cup is an opportunity for South Africa to showcase the country to the world. Accordingly, the construction projects associated with this event, including the building of the 10 soccer stadiums, need to be completed properly and on time. These projects are, in short, in the national interest.

There was a wave of industrial action in the stadium construction sites associated with the 2010 Soccer World Cup. These included strikes at the stadium construction sites in Cape Town, Durban, Nelspruit, Polokwane, Bloemfontein and Port Elizabeth. There was also a strike at the Gautrain rapid rail project, which, although it is not a 2010 project per se, has deadlines associated with the 2010 Soccer World Cup. After the strikes began, initiatives were undertaken to promote discussions between the main contractors and the unions under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA). The media expressed concerns that these strikes may jeopardise South Africa’s preparations for the 2010 World Cup.

It was, therefore, considered imperative to reflect on the causes of these strikes and whether there are ways in which these disputes could have been resolved to the satisfaction of all concerned without disruptions to the projects.

This report will be produced near the end of the construction of the stadiums, and will, therefore, probably not affect the industrial relations regimes and processes operative at these sites. However, the research is important because other large construction projects have already begun and are in the pipeline in South Africa. They relate to infrastructural development, such as the building of power stations. Therefore, this report may well impact upon the way in which these projects are organised so that labour disputes can be prevented in the future and, where they do occur, speedily resolved. The report may also impact upon the way in which labour relations is regulated in the construction industry in the future. Moreover, it may well be helpful in improving industrial relations in other industries in relation to issues like the role of labour brokers and subcontractors.

But before we proceed, three points are worth noting upfront. The first is that strike action associated with projects of this nature is not uncommon. As many people pointed out during the course of this investigation, France had strikes right throughout their World Cup. The Athens Olympic Games was also threatened by strike action, as the unions demanded an 8% increase in the wake of the conservative government coming to power in Greece (Howden, 2004). These strikes disrupted flights at Athens’ airport, halted public transport and even halted work on the Olympic projects on the day that the Olympic flame arrived in Athens. Even the London Olympic Games of 2012 has already been subjected to threats of industrial action (Berry, 2007).

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The second point is that there are many other projects associated, directly or indirectly, with the 2010 Soccer World Cup such as the extension of airports, the building of hotels, etc, which have not been subjected to strikes like those experienced in the construction of the 2010 stadiums. For this reason, and also because their inclusion in the brief would have made this research overly burdensome, they fall outside the ambit of this report.

The third point relates to the issue of “causation”. In the light of the objectives and methodology of this research, the term is used loosely and includes the perceived contributory and underlying factors giving rise to the industrial action.

The report is structured as follows: Following a brief background of the construction industry and a description of the methodology employed in this research, the report reviews the literature on why workers engage in industrial action. It then considers the Australian experience relating to the Sydney Olympic Games and a brief look at how matters are being managed from an industrial relations point of view for the London Olympic Games. The report then reviews aspects of the Report of the British National Development’s 1970 report on large construction sites, which describes many of the problems being experienced in South Africa today. It then considers how industrial relations in the construction industry is regulated both from a collective bargaining and legislative point of view. This also includes consideration of the ILO Labour Clauses (Public Contracts) Convention No.94, 1949, which is instructive, albeit not binding on South Africa. The report then considers the industrial action that took place at the stadiums and the Gautrain, before recording some of the views about the causes and contributory factors relating to the industrial action. It concludes with recommendations that government and the industry should consider for the future.

BACKGROUND

By 2003 the construction industry had been in a sustained period of decline, as result of the post-1997 economic slowdown, the high interest rates after 1996 and a substantial and real decline in government’s budgets for infrastructure after 1997 (McCutcheon, 2003). This meant that the industry was lean, relying heavily on short, fixed term contracts, known in the industry as limited duration contracts (LDCs). But after 2004, with increased government spending on infrastructure as a result of changes to government’s macro-economic policies which emphasised the construction industry as a key driver of growth, the construction industry began to grow substantially (South Africa Infrastructure Report Q4, 2004). This included the construction projects associated with the 2010 World Cup, which included the stadiums and upgrading of the national roads, and projects like the Gautrain. It now also includes the building of power stations. Some of the main contractors predict sustained growth in the sector “well into the next decade (Basil Read, 2007)” and the foreseeable future (Wiley, 2007).

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Within the Southern African region there have also been large construction projects, particularly in places like Angola and Mozambique, where constructions companies in South Africa have competed, often unsuccessfully, with companies from China who reportedly import their own labour and pay pitiful wages. But these international companies have not, as yet, ventured significantly into South Africa itself.

Within South Africa, there are a handful of big contractors. They include: Wilson Bailey Homes (WBHO), Murray and Roberts, Group 5, Grinaker-LTA and Basil Read, which are involved with the 2010 stadiums and the Gautrain. In the civil engineering industry they all belong to the South African Federation of Civil Engineering Contractors (SAFCEC). There is no bargaining council in the civil engineering industry, but there are several building bargaining councils operating in various regions of the country.

Union density within the construction sector is low. There are numerous unions in the industry, but there are only two with any significant membership. They are the National Union of Mineworkers (NUM), into which the old Construction Allied Workers Union (CAWU) integrated, and the Building Construction and Allied Workers Union (BCAWU). NUM, an affiliate of the Congress of South African Trade Unions (COSATU), is the dominant union in the industry. BCAWU is perceived by management as less likely to engage in strike activities.

There are 10 stadiums that are being constructed or renovated. The following table sets out the stadiums, their capacity, estimated costs and the main contractors.

Name Location Estimated cost Capacity Main contractors

Soccer City Johannesburg R1,6bn 97,000 Grinaker-Lta, Interbeton

Coca-Cola Park (formerly Ellis

Park) Johannesburg R40m 60,000 Rainbow

Construction

Loftus Versfeld Pretoria/Tshwane R40m 50,000 Homeless Building

Construction

Peter Mokaba Polokwane R1,3bn 46,000 WBHO

Royal Bafokeng Stadium Rustenberg R330m 45,000 ?

Vodacom Park Bloemfontein/Manguang R80m 48,000 Joint Venture of local building

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Name Location Estimated cost Capacity Main contractors

contractors

Mbombela Stadium Nelspruit R650m 45,000 Basil Read,

Bouygues

Green Point Stadium Cape Town R3,85bn 70,000 WBHO, Murray

and Roberts

Nelson Mandela Bay Stadium Port Elizabeth R1,1bn 48,000 Grinaker-Lta,

Interbeton

Moses Mabhiba Stadium Durban R1,8bn 70,000 Group 5, WBHO

Source: Financial Mail, 8 August 2008; Labour Research Service (LRS), October 2007

METHODOLOGY

The research was conducted primarily through the holding of semi-structured interviews with stakeholders in the construction of the 2010 stadiums and the Gautrain. The persons interviewed included employees or officials of most of the main contractors and their employer organisation, the dominant unions in the construction industry, government, the CCMA and an experienced industrial relations consultant in this industry. A full list of the persons interviewed is set out in Annex A. The research also involved reading and analysing various documents such as academic articles and books, collective agreements, arbitration awards and newspaper and magazine reports.

Interviews were also sought from Cindyanne Estment, HR Director, Group Five Kwazulu-Natal (Pty) Ltd, Narius Moloto, General Secretary of BCAWU, Nick Gray, the HR Director of SAFCEC and representatives of the Johannesburg Metropolitan City Council (JMCC) dealing with the 2010 campaign. Ms Estment was, on the instructions of her company, not willing to be interviewed, but was willing to draft responses in writing to our questions. These answers were, however, not received by the time this report had to be submitted. Messrs Moloto and Gray and representatives of the JMCCC proved difficult to pin down for an interview, and after several attempts via telephone and email, the requests for these interviews were abandoned.

While the fact that these interviews did not take place is regretted, it did not materially impact upon the research, as interviews did take place with Mr Kgonyane, the 2010 campaigns co-ordinator of BCAWU and Mr Muller Uys, the immediate past HR Director of SAFCEC.

The research design involved a process of “snowball sampling” such that interviewees were asked at the interviews who else should be interviewed. Snowball sampling is a technique that is

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useful when confidential information is sought or when the researcher wishes to secure “hard to find or reach populations” (Fredericks, 2005: 330). Moreover, as the research revealed factors with regard to the industrial action in the stadiums and Gautrain that were unknown to the researcher before he began with his research process, a flexible and emergent design during the research process was required (Leedy and Ormrod, 2001).

The interviews were semi-structured. The interviewee was requested to explain what in his view the factors that caused the industrial action were. The interviewees were encouraged to go beyond the actual articulated demands and grievances by being requested to speak about all the factors that they believed may have promoted industrial strife. The interviewees were also requested to comment on whether any or all of the following could have contributed to the industrial action:

• The nature of the collective bargaining arrangements; • The possibility of different wage regimes on these construction sites; • Procurement policies such as the requirement that 60-70% of the workforce be drawn

from the local area; • The role of sub-contractors; • The role of labour brokers; • The role of BEE contractors; • The nature of the unions and the extent of unionisation; • The role of government; and • The dispute resolution procedures and agencies, including the CCMA.

Most of interviews were electronically recorded except where the interviewee objected or a recorder was not available, in which case notes were taken. All the interviews were conducted on a confidential basis. None of the interviewees will be quoted and the views expressed will not be ascribed to a particular person. The reasons for this are that most of the interviewees are involved in some way in collective bargaining within the construction industry, or will, in the case of government representatives, act in ways that will materially impact upon the process of collective bargaining. The confidentiality of the interview process ensured that the interviewees could speak more freely, as they would not compromise their future positions in collective bargaining. The confidentiality of these interviews, therefore, also served to protect the collective bargaining process in the broader construction industry, which, as will be seen from the report itself, is in a sensitive period of its development.

The interviewers tried to mitigate subjectivity by, amongst other things, by not leading the interviewees and regularly confirming what was meant by specific statements, for the purpose of ensuring validity and reliability. However, in later interviews, after a picture of the issues had begun to emerge, the interview focussed on more direct questions, including questions that were designed to corroborate or refute information and views expressed by other interviewees.

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Triangulation was employed, in line with the recommendations of Perry (2001), by revisiting the issues with other interviewees and by examining documentation to support or refute the interviewees’ perceptions and recollections.

In line with the recommendations of Yin (1994) and Perry (2001), a number of measures were followed to augment construct validity, which refers to “the formation of suitable operational measures for concepts being investigated (Perry, 2001: 318).” A wide-ranging literature review was conducted prior to embarking upon the process of data collection. In addition, a flexible approach was adopted. This included the adoption of broad and open-ended research questions rather than narrow and precise hypotheses or propositions. Moreover, the interviews were conducted in such a way that interviewees were invited to tell their stories and views. The questions put to them were generally open-ended. They were only prompted where necessary. Through triangulation the interviewees’ responses were checked and crosschecked with each other and the documentation provided.

As regards external validity, which refers to the capacity of the research to make general findings beyond the immediate case studies (Yin, 1994), no generalisations can be made in this research, as the purpose of the research is to add to theory rather than to test the applicability of a theory to a population (Perry, 2001). Nevertheless, care in the selection of interviewees is usually sufficient to attain adequate external validity for the theory-building purpose (Perry, 2001). In this regard it should be noted that most of the interviewees were experienced practitioners in the industrial relations field.

As regards reliability, which refers to how consistently a technique used to measure a concept would yield similar results if other researchers were to replicate it (Perry, 2001), it should be noted that this research was conducted in the interpretive paradigm, and the role and interpretations of the researcher played a significant part in the analysis and interpretations. Therefore, similar research by another researcher might not lead to exactly the same results. This should be seen as adding to the richness of the theory building exercise. However, the procedures outlined above regarding data collection (including the semi-structured interview guide), data analysis and the manner in which data was kept (namely: interview transcripts, recordings, notes and analytical notes such as mind maps), have ensured reliability where this is possible.

It should be noted that the only assumption that could materially affect the outcome of this research is the assumption that the interviewees answered the questions posed to them in the interviews honestly.

WHY DOES A WORKER ENGAGE IN COLLECTIVE ACTION?

This is one of the vexed questions that is at the core of the academic discipline now commonly referred to as industrial relations. In considering the factors that caused workers at the 2010

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stadiums to go on strike, it is therefore useful to consider some of the theory developed on this issue.

WEIGHING UP THE COSTS AND BENEFITS

Olsian theory states that individuals try to maximize their personal interests by choosing a particular course of action that maximizes their benefits and minimizes their costs (Kelly, 1998). Individuals will, therefore, rationally weigh up the costs and benefits of a course of action and act if the benefits outweigh the costs. An individual will not act in concert with others if his or her interests do not coincide with the interests of others in the group unless there is coercion or some other special device to make them act collectively. According to Kelly (1998) this theory is based upon four assumptions:

• The theory deals with individuals are the proper unit of analysis. • People are assumed to be self-interested agents, which implies that they do not act in the

interests of other people, unless their interests coincide. • Behaviour is future-orientated and not determined by past actions and events. • People use rational and logical means to pursue their goals. Their choices are also the

most appropriate in the sense that they maximise their benefits and minimise their costs.

For anyone who has some experience of the world of industrial relations it would be evident that these assumptions bear little resemblance to the world of industrial relations. From a theoretical point of view the theory is also deficient because workers are not simply motivated by simple calculations of individual self interest (McAdam, 1988), as they may be mobilized by the need to comply with social norms or involvement with a network of friends (Klandermans, 1989) or by group interests and group gains and interests (Fireman and Gamson, 1979; Gamson, 1992; Turner et al, 1987). As a result of its deficiencies the theory is forced to fall back on coercion as an explanation for collective action, which is not supported by empirical studies (Kelly, 1998).

Based upon these and other deficiencies, it is useful to consider the elements of mobilisation theory, which provides a more helpful guide when considering the factors that promoted industrial action in the 2010 stadium construction sites and the Gautrain.

MOBILISATION THEORY

According Tilly (1978, as cited by Kelly, 1998) a useful theory of collective action must address five components: interests, organization, mobilization, opportunity and forms of action. Each of these elements will be considered in turn.

INTERESTS

According to Kelly (1998) the fulcrum of this model is interests – the ways in which people define their interests and believe that they are similar or different or opposed to the ruling group.

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He argues that when considering the element of interests argues that two issues must be considered. The first is “how and why people acquire a sense of injustice or grievance” and the second is how it develops into a collective grievance (Kelly, 1998: 27).

For Kelly (1998: 27) a sense of injustice, or put another way, “the conviction that an event, action or situation is ‘wrong’ or ‘illegitimate’” is a necessary condition for collective action to take place. Individual complaints develop into general grievances where there is a perceived sense of injustice (McAdam, 1988). This means that workers are more likely to identify with the collective interests of a group if they perceive a sense of injustice (Kelly, 1998).

This is borne out by numerous studies such as the one conducted by Buttigieg et al (2008), which found, amongst other things, that in the context of a financial services union and a large multinational banking organisation in Australia, workers were more willing to engage in industrial action when they experienced a sense of injustice or unfairness in the employment relationship and when they held a collectivist orientation to work. Other studies indicate that perceived injustices with respect to relative pay or notions of underpayment – perceptions of distribution injustice – are associated with higher levels of attitudinal militancy and pro-union attitudes (Cappelli and Sherer, 1990; Farber and Saks, 1980).

But perceptions of injustice are not limited to grievances associated with distributive justice. For example, workers attitudes may also be affected by procedural justice. Lind and Tyler (1988) found that if employees are provided with a meaningful voice to express their concerns and air their grievances, then conflict is less likely. Folger and Cropanzano (1998) found that if the processes of decision-making are perceived to be one-sided, unfair and unduly dominated by the employer’s interests, workers might respond negatively and with hostility.

It is possible that worker attitudes may also be affected by questions of interpersonal justice and informational justice, which focuses on the behaviours of the decision-maker. Interpersonal justice focuses on the sensitivity, politeness and respect people are shown by persons in authority while informational justice focuses on the explanations or information provided by decision makers as to why certain procedures were used or why outcomes were distributed in a particular way; for example, was the information or explanation thorough, reasonable, truthful, candid, and timely (Nowakowski and Conlon, 2006).

There are a wide degree of behavioural consequences that result from a perceived sense of unfairness. These may which may include withdrawal from the organisation, lower effort, poorer performance (Folger and Cropanzano, 1998) and even strikes as a means of addressing the perceived unfairness (Hyman, 1989).

But while a sense of injustice is a necessary condition for collective action to take place, it is not sufficient because the grievants must also feel that their situation can be changed by “collective agency” (Gamson, 1992; Kelly, 1998; Klandermans, 1997: 41-43; Melucci, 1988).

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As regards the second issue – the transition of the grievance from the individual to the collective – Kelly, drawing on social movement theorists, posits that there are three essential processes; namely: attribution, social identification and leadership. An attribution is an explanation for an action or event i.e. its reasons or causes. Different kinds of attributions would lead to different kinds of behaviour. For example, if a union signs a poor collective agreement, explanations for this may range from having poor negotiators, experiencing adverse economic conditions and having a lack of worker militancy. Each of these explanations would lead to different kinds of actions.

Social identification is the process whereby people develop a sense of themselves as a group – “we” – which is defined in opposition to an out-group – “them”- which has different interests and values (Kelly, 1998). If workers experiencing a sense of unfairness grievance identify their interests as different from the employer, then the workers will categorise themselves into a group that is discernable from that of the employer (Turner, 1982). The workers or union (the ‘in-group’), will promote a positive sense of their group and a negative attitude about the employer (the ‘out group’). In this way, the sense of injustice more readily translates into collective action (Edwards, 1986).

Both a sense of injustice and social identification are socially constructed by leaders and activists (Fantasia, 1988; Gamson, 1995; Klandermans, 1997). For example, leaders or activists can promote a sense of injustice about an event or action and they are able to use many tools, including language, to shape the definition of interests (Kelly, 1998).

The perception of a sense of injustice is critical for collective action because it serves to separate the workers from the employer in terms of shared interests, especially if blame is attributed to the employer (Buttigieg et al, 2008). Moreover, employers are often easily attributed with blame in the workplace because workers perceive the issues to be within management’s control (Johnson and Jarely, 2004), which they frequently are. The perception of injustice and the attribution of blame to the employer are associated with more successful organising campaigns and bargaining outcomes for workers (Badigannavar and Kelly, 2005).

MOBILISATION

Mobilisation is the process by which people in a group obtain collective control over the resources needed for collective action (Kelly, 1998). Klandermans (1984a; 1984b) argued that individuals who are committed to a particular objective or demand would assess whether to engage in collective action by evaluating their goal, social and reward motives. The goal motives encompass beliefs about the number of people that are expected to participate, which is based upon the assumption that the greater the number that participate, the greater the chance for success. This means that collective responses to grievances are more likely if workers believe that they act as an effective means of challenging the injustice (Barling et al, 1992; Buttigieg et al, 2008).

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Social motives refer to the perceived reaction from others and the value placed on those reactions; for example, the reactions of family, friends and colleagues.

Reward motives refer to the personal consequences of being involved, which include, for example, loss of pay. As noted above with regard to the cost-benefit model, reward motives are not determinative of collective action, but there is evidence that decisions to engage in action are affected by assessments of the likely benefits of the action (McClendon and Klaas, 1993).

Leadership may promote a sense of group cohesion and identity by encouraging people to think of their collective interests and facilitating negative stereotyping of management, urging collective action and defending the action in the face of counter mobilization (Darlington, 2002; Kelly, 1998). Workers are more likely to engage in collective action where their leaders are seen to be accessible or responsive to their concerns about the perceived injustice (Buttigieg et al, 2008; Levesque et al, 2005; Metochi, 2002; Thatcher et al, 1990) and where these leaders emphasised that the sense of injustice or grievance could be resolved through industrial action (Batsone et al, 1978).

However, leaders could also moderate responses between the perception of injustice and the inclination for collective action (Buttigieg et al, 2008). In the light of the fact that leaders who are accessible or responsive to the workers needs are more effective in promoting collective action, we would expect that these leaders would also be more effective in moderating workers’ responses.

ORGANISATION

This refers to a structure of a group and those aspects that affect its capacity for collective action (Kelly, 1998). Traditionally, this has referred to things like union density, the number of shop stewards and their ratio to the number of workers and union decision-making procedures (i.e. whether it is centralised or decentralised). Tilly (1978, as cited by Kelly, 1988) argues that one has to also consider, amongst other things, the extent to which members identify with the organisation and the degree of interaction between members of the organisation.

The theory expects to find that there is a greater willingness among union members to take part in industrial action where the workplace is well organised and represented by shop stewards (Barling et al, 1992; Buttigieg et al, 2008).

OPPORTUNITY

The issue of opportunity is divided into three components: the balance of power between the parties, the costs of repression by the ruling group and the prospects available for subordinate groups to pursue their claims (Kelly, 1998).

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FORMS OF ACTION

Collective action will take on different forms, which are usually determined by the balance between interests, organisation, mobilisation and opportunity (Kelly, 1998).

CONCLUSION

The elements of mobilisation theory provide a useful roadmap for identifying the factors that cause industrial action. Key to this theory is the proposition that a sense of injustice is a critical element of worker interest identification. This sense of injustice assists workers to differentiate themselves from management. Through attribution of blame to the employer for their situation or grievances and through social identification with other workers, and possibly the union, the workers perceived injustices are capable of being translated into collective interests, which increases the likelihood of collective action, if the workers feel that their situation can be changed by collective agency. Workers will weigh up the goal motives as well as their social and reward motives. Their propensity to engage in collective action will also be affected by the responsiveness of their leaders. The opportunity for collective action is affected by the balance of power between the parties, the costs of repression by the ruling group and the prospects available for subordinate groups to pursue their claims. The form of collective action will be affected by the balance between interests, organisation, mobilisation and opportunity.

INTERNATIONAL EXPERIENCE

This section of the report will primarily consider the approach to industrial relations adopted for the Sydney Olympic Games, which was perceived as a great success. It will also briefly consider the approach being adopted for the 2012 London Olympic Games. This section ends with a review of the industrial relations section of the 1970 British National Economic Development Office (NEDO) report on large construction sites, which seems pertinent to South Africa today.

THE AUSTRALIAN OLYMPIC GAMES

Tony Webb (2001) asserts that one of the reasons for the success of the Australian Olympic Games was the organiser’s collaborative approach in, amongst others, the area of industrial relations. From an industrial relations point of view, he argues that these games were a success because it involved completing a $3.2 billion dollar construction project on time and within budget and in the process cleaning up the toxic waste site at Homebush Bay with only one day on one site being lost as a result of a minor industrial dispute. Moreover, Webb claims that training provided during the process significantly improved the skills and safety culture in the Australian construction industry workforce and as result of the success of the Games’ construction projects, the industry has attracted continuing investment in the industry.

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Webb (2001) points out that in the early 1990s the Australian construction industry was in recession. Webb (2001: 14) also notes that the culture of the building industry and the way in which construction projects are put together often resulted in competition between contractors on price and that this led to adversarial relations between:

• contractor and client (and sometimes lawyers for each side)

• contractor and design consultants who draw up the plans

• contractor and subcontractor (and people they subcontract to)

• contractor and client’s representatives used to ensure that time, cost and quality standards are met

• and not least between workers and the various contractors and subcontractors as everyone tries to squeeze the ‘weakest link’ down the line, cost cutting sometimes by cutting corners (including safety).

According to Webb (2001), the industrial relations architecture of the Games unfolded as follows. Multiplex, who was awarded the construction contract, argued that industrial relations should be “managed by individual contract sites rather than a common ‘whole of site’ agreement” (Webb, 2001: 19). This led to Project Agreements that were negotiated at each specific site in line with an enterprise bargaining level approach, although the agreements were based on a pattern developed by the Labour Council with the major contractors.

These Project Agreements contained two types of productivity payments. The first involved increases to all workers hourly rates on a site upon completion of elements of the project in accordance with an agreed schedule. If the schedule was not met the increases were forfeited. The second productivity payment involved additional hourly payments when agreed milestones for project productivity were met. These productivity payments incentivised early completion of each stage of the project.

The Project Agreements also set standards for safety, security and dispute resolution. The unions had access to the sites and through the swipe card access system implemented for security reasons, the unions were able to know who exactly was on site in order to discuss union membership with them and resolve any grievances.

The Project Agreements were registered in terms of the New South Wales (NSW) labour legislation and made applicable to all employees on the site.

In addition, in late 1997 a Memorandum of Understanding for the Olympic Construction Program was signed. The parties were the NSW government, the Labour Council of the NSW and the main unions in the construction industry. The key elements of the Memorandum of Understanding were the following:

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• It covered all 18 Olympic construction sites that were planned or in progress. • It provided a framework for company or site specific project agreements. • It committed the parties, including the unions, to ensuring “delivery of all 2000 Olympic

and related projects in time and within budget in an industrial environment based on co-operation and stability”.

• It set out the parties’ common understanding on issues such as project agreements, dispute resolution, occupational health and safety, project productivity allowances, redundancies and superannuation, accident insurance and training.

The Memorandum of Understanding also led to the negotiation of a $1.85 per hour bonus for workers in the Olympic Construction Program. In effect it was a “site allowance”, but it could not be framed in this way. The employer, although concerned about the “all of site” nature of the agreement, recognised that it did not fundamentally change the Project Agreements in place and praised the process of concluding this Memorandum as a “model of government and everybody working together (Webb, 2001: 21).”

Webb notes that while the unions settled for $1.85 per hour, in 1996-7 the industry was coming out of recession and it was widely acknowledged that a rate of $2.50 an hour or higher was realistic, especially later as the economy improved. The $1.85 bonus was never renegotiated and operated throughout the Sydney region because the unions were determined to ensure that higher rates elsewhere would not draw workers away from the Olympic sites.

Webb reports that many of the unions’ leadership were criticised for the cooperative stance and for failing to maximise their bargaining positions. In reaction the union leadership, while acknowledging that a better deal might have been struck, argued that co-operation meant that all sites recognised union representatives and a high level of union membership. For example, the major sites each employed one or more of the union’s senior trade union representatives who had the respect of both the workers and the management. They had a direct link with the workforce, acted as a channel for resolving workers’ grievances and played a special role in the areas of safety and training. The union leadership, therefore, argued that it changed the culture of the construction industry in that it showed that a unionised building programme could be successful – delivering on time and within budget. They also point to significant gains in respect of training and safety.

Therefore, according to Webb (2001: 21-22), the industrial relations framework was:

An overarching understanding at the highest level that

a culture of collaboration was needed for the whole Olympic construction project

it was worth paying a common Olympic site bonus to all workers involved in the construction program on Olympic sites to ensure on-time and within-budget completion

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this ‘site allowance’ would be capped for the duration of the Games program (and though not explicit would also apply to all other sites in the Sydney area for the same period).

Enterprise Agreements made with individual companies and registered as Consent Awards [i.e. making them applicable to all workers on the site] – based upon a pattern that

Set milestones for achieving specific stages of the projects

tied productivity payments to achievement of these milestones

provided incentives to reach these milestones early

locked all subcontractors into the common rules.

A basic award framework that was untouched by the above. This included pre-existing trade-specific awards, over award payments, and additional company specific allowances that set rates of pay and conditions for different trades or sections of the industry.

Interestingly, and entirely pertinent to the construction sector, Walker et al (1999:6) describe how the NSW Industrial Relations Commission issued, after extensive negotiations, a labour award regulating terms and conditions of work that tried to ensure a “consistent and complementary set of wage structures and conditions”, but also provided for the flexibility required of the Olympic Games. The award also regulated such things as union access and recruitment of staff. The award was only published after extensive research into the problems that arose at the Atlanta Games. It points to the possibility for a labour regime to be promulgated for specific events, like the Olympic Games, whose very nature calls for a special type of dispensation.

THE 2012 LONDON OLYMPIC GAMES

The London Olympic Games have also attempted to approach the construction of the Olympic facilities in a collaborative manner. As early as 8 June 2007 London’s Olympic Delivery Authority entered in a Memorandum of Agreement with the Transport and General Workers Union, Amicus, General Municipal Boiler Makers and the Union of Construction, Allied Trades and Technicians. The agreement is, in essence, a framework agreement, guiding the relationships between the parties.

The agreement recognises that good industrial relations are “... key to realising the ultimate goal of a successful project, completed on time and within budget.” The agreement provides for regular meetings between the parties and the principles that will guide their relationship. The

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principles include encouraging employees to be members of the unions, organisational rights for the trade unions, particulars of employment, disciplinary rules, etc.

BRITISH REPORT ON LARGE INDUSTRIAL CONSTRUCTION SITES

In 1970 Britain’s National Economic Development Office (NEDO) published a report on the mechanical and electrical construction industry. It is submitted that its insights and recommendations are in part still pertinent today and hold important lessons for the broader construction industry in South Africa.

In Chapter 4 the report sets out some of the generic characteristics of large industrial constructions sites. The first characteristic is about the impact of something happening on one site upon another.

...[B]ecause such large sites have an obvious national and commercial importance there is a sense of urgency about their early completion. Accordingly, large sites are particularly prone to heavy and unremitting pressure from labour, whilst management is predisposed to deal with demands without regard to the impact of its decisions on the wider environment or upon the future. Each site is seen as a unique and once-for-all job and the overwhelming need is for its early completion. In reality, what happens on that particular site has an impact on the others (NEDO Report, 1970:39).

The report describes the nature of these sites thus:

Large sites bring together a variety of workers of diverse skills from different and competing unions. They are both permanent and casual workers, ‘travelling’ men and locally recruited men. All are employed by many independent contractors who, unless controlled, act on labour matters in an unconcerted and sometimes competing way. Some sites are located in remote, often uncongenial, areas. Hostels and amenities are sometimes poor. Something like two-thirds of the work is on a casual basis, with all the disadvantages of casual labour – constant pressure for the highest possible earnings, a high turnover during the start up of a job and often low morale and disintegration of the workforce frequently at its most extreme as the job nears completion (NEDO Report, 1970:39).

As one reads the paragraph above, and although it was written in 1970 about British construction sites, there is a strange sense of déjà vu when one thinks of the 2010 Soccer stadiums and the Gautrain. But this is not all!

The NEDO Report (1970:39) goes on to describe how “two distinct systems of pay and conditions exist arising from two different negotiating systems each with its own philosophy”. It describes how the rates of pay agreed in national negotiations are not decisive in determining wages and there is a further tangled structure of additional payments as a result of site level

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bargaining, particularly over incentive bonus schemes. It points out that the anomalies that result are often “grossly inequitable and an inevitable cause of friction (NEDO Report, 1970:39).” The NEDO Report (1970:41) concludes as follows:

In an irrational environment of this kind, labour trouble is inevitable and the industry has in fact a strike record which gives cause for concern ... .

In order to remedy this situation the NEDO Report makes a number of recommendations. These include the following:

• As regards incentive schemes, some of the working party that compiled the report believed that it was necessary to link earnings and outputs, but that uniform and consistent bonus schemes needed to be applied on a site basis.

• There should be national agreements to provide uniformity in a number of matters. • Site negotiation agreements should be concluded before work on the site starts. This

includes any concerns about demarcation and productivity matters. • Certain matters should be reserved for national negotiations and agreement in order to

ensure coherence and others should be reserved for site level bargaining and agreement in order to provide the flexibility for varying conditions. The report’s suggestions are set out in the table below:

At a national level At site level • Basic rates and differential pattern for

skills • Hours of work • Premiums for overtime and shiftwork • Holidays and holiday pay • Travelling and subsistence • Recognition and facilities for stewards • Settlement of grievances affecting

‘national’ policies • Code of amenities • Code of dismissals, safety, etc

• Bonus schemes • Productivity payments • The removal of demarcation practices • Redundancy • Special payments of allowances for unique

site conditions • Detailed steward or union facilities • Domestic grievance procedure • Control of overtime and the use of shift

work

Source: NEDO Report (1970:46)

The NEDO Report (1970: 49-50) also has some pertinent comments to make about the role of the client. It notes that the client is not purchasing a ready-made article, but committing large sums of money over a long period of time. The efficiency of the ongoing work is influenced by the quality of industrial relations and, therefore, the client should “face up to this threat to their interests” and be concerned about the nature of the industrial relations practised by the contractors and its subcontractors. The report therefore suggests the client should concern itself with:

• Compliance with the national agreements;

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• Initiation within the terms of the national agreement of site-level bargaining and the subsequent monitoring of the terms agreed;

• If incentive schemes are in operation, their nature and control; • The provision of amenities • When choosing a contractor, the competence of that contractor in industrial relations and

safety; • The support of employers’ organisations and of trade unions; and • Monitoring the safety discipline and precautions of the contractors.

The NEDO report also recognises that contractors need to supplement their workforce by recruiting casual or temporary employees. But in order to foster skills development and provide some prospect of future employment, it suggests that a voluntary industry register of employment be kept, particularly by the larger contractors. It then suggests that the industry could then offer these people, amongst other things, opportunities for additional training and promotion and retirement entitlements.

THE REGULATION OF THE CONSTRUCTION INDUSTRY

The regulations governing the construction industry are complex. This report highlights those aspects of the construction sector’s regulatory environment that impact upon industrial relations, which include the Construction Industry Development Board Act No 38 of 2000 (“CIDB Act”) and its Regulations2, the various collective agreements concluded in and the sectoral determination made for the civil engineering industry, the regional building bargaining councils and metal and engineering sectoral bargaining council. This section also considers Project Labour Agreements (PLAs), which are usually site specific collective agreements that regulate industrial relations practices and terms and conditions of employment. Lastly, this section considers the contents of the ILO’s Labour Clauses (Public Contracts) Convention, 1949 (No. 94) and Recommendation No.84, which are, to date, not binding on South Africa.

CONSTRUCTION INDUSTRY DEVELOPMENT BOARD

The CIDB Act established a Construction Industry Development Board (“the Board”). The purpose of this Act is to implement an integrated strategy for the reconstruction, growth and development of the construction industry. It defines the construction industry as “the broad conglomeration of industries and sectors which add value in the creation and maintenance of fixed assets within the built environment.”3

2 Government Notice 692 of GG No. 26427, 9 June 2004 3 Section (1)(h) of the CIDB Act

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One of the main functions of the Board is to establish and maintain a national register of contractors. The register provides for categories of contractors and must be maintained in such a way that it facilitates public sector procurement and integrates other statutory contractor registers.

One of the objects of the Board is to promote, establish and endorse uniform and ethical standards that regulate the actions, practices and procedures of parties engaged in construction contracts.4

In order to advance the uniform application of policy with regard to the construction industry’s development, the Board is required, amongst other things, to:

• Promote the standardisation of the construction industry’s procurement process within the framework of the government’s procurement policy.5

• Initiate, promote and implement national programmes and projects aimed at the standardisation of procurement documentation, practices and procedures.6

In pursuance of these objectives, and in terms of sections 4(f), 5(3)(c) and 5(4)(b) of the CIDB Act and regulation 24 of the Construction Industry Development Regulations, the Board published notices in the Government Gazette containing Standards for Uniformity in Construction Procurement7.

The Standard refers, amongst others, to the following referenced documents as being indispensible for the application of this standard: The General Conditions of Contract for Construction Works as published by the South African Institution of Civil Engineering and the JBCC Series 2000 Principle Building Agreement as published by the Joint Building Contracts Committee (JBCC).

In March 2006 the Board published a Manual to Guide Infrastructure Development for the Soccer World Cup8. This Manual guides government institutions that are involved in infrastructure procurement associated with the 2010 Soccer World Cup. It aligns itself to the relevant legislation, including the Regulations promulgated under the CIDB Act. The Manual is detailed and outlines a complex process for procurement, and accordingly, only those processes that are germane to this report are selected.

The Manual illustrates how the appropriate form of contract should be chosen in the figure below. It warns that this is a strategic decision that is necessary in order to improve project delivery. 4 Section 4(f) of the CIDB Act 5 Section 5(3)(c) of the CIDB Act 6 Section 5(4)(b) of the CIDB Act 7 Notice 68 of 2005 published in GG No. 27831 of 22 July 2005; Notice 99 of 2005 published in GG No. 28172 of 14 October 2005; Notice 9 of 2008 published in GG No. 30692 of 1 February 2008 8 Downloaded from the www.cidb.org.za on 20 September 2008

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Start

Does the works satisfy all of the following:

straightforward or repetitive work, for short duration;

almost no requirement for sophisticated management techniques;

Imposes only low risks on both the procurer and the contractor; and the

Design of the works is almost complete when the construction starts

What is the contracting strategy?

design by employer

design and build / develop and construct

management contract

construction management

Does the work predominantly involve building

works?

Does the work predominantly involve building

works?

JBCC Minor Works Agreement

FIDIC Short Form of Contract General Conditions (Short Form)

orNEC3 Engineering and

Construction Short Contract

Yes

Yes

Yes

No

No JBCC Principle Building Agreement

FIDIC Red Book

FIDIC Yellow Book

FIDIC Silver Book

NEC3 Engineering and Construction Contract

No GCC 2004

As can be seen from this diagram, one of the key questions asked in determining the form of contract is “Does the work predominantly involve building works?” The split between engineering and construction, on the one hand, and building, on the other, is determined by the answer to this question. This accords with the general practice in the industry over the years. As Hauptfleisch and Siglé (2000) note, it is sometimes difficult to determine precisely the dividing line between civil and structural engineering because there are many combined projects that can be classified as either, but the determination is made by establishing which of civil engineering or building dominates. The answer to this question has profound implications for the terms and conditions of employment of employees working on the construction site.

This split between civil engineering and general building is contained in the Regulations promulgated under the CIDB Act and replicated in the Manual. The Regulations provide for, amongst other things, the registration of contractors in terms of specific categories of registration. The Regulations also prescribe the manner in which public sector construction contracts may be invited, awarded and managed within the framework of the register and the

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framework on the policy on procurement.9 Regulation 25(9), reflecting the meaning and import of section 18 of the CIDB Act, requires a person who enters into a contract for the provision of construction works to satisfy him or herself, amongst other things, that the contractor concerned is registered in terms of the Regulations and has demonstrated that he or she has the resource capability and capability specific to the contract concerned.

The national register of contractors categorises the contractors so that each one has an alpha-numerical “grading designation”. The designation has a numerical number. This represents the tender value that a registered contractor may contract for within a particular class of construction work. The tender ranges are set out in the table below. Therefore, a “5” designates that the registered contractor is capable of undertaking work within the R3 to R5 million range. The regulations set out how this numerical designation is calculated.

Table 1: Tender Value Range Designations

Tender Value Range Designation Range of Tender Values

Greater than Less than or equal to

1 R0 R200,000

2 R200,000 R500,000

3 R500,000 R1,5 million

4 R1,5 million R3 million

5 R3 million R5 million

6 R5 million R10 million

7 R10 million R30 million

8 R30 million R100 million

9 R100 million No limit

Source: Manual to Guide Infrastructure Development for the Soccer World Cup (March, 2006)

Clearly most of the contractors for the 2010 stadiums and the Gautrian would have had to have a numerical designation of “9” in the light of large value of these construction projects.

Together with the numerical designation is a two-letter alphabetical designation. There are twenty potential alphabetical designations. The two important ones for the purposes of this

9 See a16(3) of the CIDB Act

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report are “CE” and “GB”. “CE” is defined in schedule 3 to the Regulations and denotes “civil engineering works”. It refers to:

Construction works that are primarily concerned with the materials such as steel, concrete, earth and rock and their application in the construction, operation, maintenance and management of hydraulic, structural, environmental and systems aspects of infrastructure works and services.

The schedule sets out a number of examples of civil engineering works. They are listed below:

Airports and runways Bridges, culverts and canals Concrete dams Cooling towers Earth and rock fill dams Earthworks, roads and storm water drainage Elevated reinforced concrete towers Freeways Fuel installations Grand stands Headgears Irrigation Marine works including dredging works Pump stations and pipelines

Railways and sidings Security fences Sewerage reticulation and pump stations Silos Solid waste disposal sites Sporting facilities Swimming pools Township services (water sewer, roads and storm water) Tunnels and underground works Wastewater and sewerage treatment Water retaining structures Water reticulation and treatment (Emphasis added)

“GB” denotes “general building works” and is defined in schedule 3 to the Regulations as:

Construction works that:

a) are primarily concerned with the provision of permanent shelter for its occupants or contents; or

b) cannot be categorised in terms of the definitions provided for civil engineering works, electrical engineering works, mechanical engineering works, or specialist works.

The schedule sets out a number of examples of general building works. They are listed below:

Airport control towers Aquariums Auditoriums, opera houses, concert halls Civic centres, city and town halls and theatres Communication, radio and television, computer buildings Conferences centres

Hospitals / Clinics Justice buildings Industrial buildings, aircraft hangers, barracks, sheds, warehouses Laboratories Low rise buildings Mortuaries Museums, monuments and memorials Police Stations

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Conservatories Defence facilities Domestic facilities / dwelling units Educational facilities Fencing High rise buildings

Prison complexes Recreational and leisure facilities Refurbish / renovate buildings

Thus a grading designation of “9CE” indicates that the registered contractor may undertake civil engineering work over R100 million and a grading designation of “9GB” indicates that the registered contractor may undertake general building works over R100 million.

More importantly, it would appear that the stadiums and Gautrain are, in the main, civil engineering works, based on the definitions and examples set in Schedule 3 of the Regulations.

In this regard it is important to note that “the character of an industry is determined, not by the kind of occupation in which the employees are engaged, but by the nature of the enterprise in which both employer and employee are associated for a common purpose (Rex v Sidersky 1928 TPD 109 at 112-3).” This means that once the character of the industry is determined, all the employees are engaged in that industry irrespective of the actual work that they do. So, if an employer carries out chemical manufacturing work, but employs one or two bricklayers, then the employer is not also in the building industry. Likewise, if the character of the industry is determined to be civil engineering work, the fact that the employer engages bricklayers as well, does not mean that the employer also falls within the building industry.

THE CIVIL ENGINEERING INDUSTRY

THE CIVIL ENGINEERING INDUSTRY INTERIM PROCEDURAL AGREEMENT

In May 2004 SAFCEC, NUM and BCAWU entered into an interim procedural agreement pending the establishment of a bargaining council for the civil engineering industry.

The agreement provides a procedure for national negotiations for a defined bargaining unit at a national collective bargaining forum. These negotiations relate to, amongst other things, terms and conditions of employment. It also provides that issues that are tabled and negotiated at the national collective bargaining forum may not, during the currency of any agreement, be the subject of collective bargaining at a company level.

The interim agreement also provides for certain trade union organisational rights, including stop order facilities, reasonable trade union access to and facilities at the workplace and paid leave to attend national negotiations.

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THE SUBSTANTIVE AGREEMENT

SAFCEC, NUM and BCAWU have negotiated an agreement on matters pertaining to wages and terms and conditions of employment. The present three-year agreement, called the Substantive Agreement, is due to terminate on 31 August 2009. The agreement applies to employees in grades 1 to 9, which are defined.

The Substantive Agreement provides for an 8% increase on the employee’s current wage in September 2006, 2007 and 2008. Obviously at the time that it was concluded, the parties, in particular the trade unions, did not anticipate that inflation would be higher than 8%. It also provides for minimum hourly rates of pay per grade of employee and for actual (as opposed to minimum) annual bonuses equivalent to 14, 15 and 16 days pay in 2006, 2007 and 2008 respectively.

In terms of section 23 of the Labour Relations Act No. 66 of 1995 (‘the Labour Relations Act”), the Substantive Agreement is binding on the trade union parties and their members, and SAFCEC and its members, which comprises all the main civil engineering contractors in this country. The Substantive Agreement does not, however, bind employees who are not members of either NUM or BCAWU, or, employers that are not members of SAFCEC, which includes many subcontractors.

THE SECTORAL DETERMINATION

In terms of section 56 of the Basic Conditions of Employment Act No 75 of 1997 (BCEA), the Minister promulgated Sectoral Determination 2: Civil Engineering Sector10, and amended it on 16 February 200711. The Sectoral Determination reflects the wages and terms and conditions of employment of the Substantive Agreement, which includes the annual bonuses. However, in terms of s 55(4) of the BCEA, a sectoral determination may only prescribe minimum terms and conditions of employment, including minimum rates of remuneration. Therefore, the annual bonuses in the determination would be the minimum required payment. However, if the employee is a NUM or BCAWU member he or she would be bound by the Substantive Agreement, which sets out that the annual bonus payment is not a minimum required payment, but an actual payment.

Clause 2(1) of the Sectoral Determination defines the civil engineering sector as follows:

(1) The Civil Engineering Sector means the sector in which employers (other than local authorities) and employees are associated for the purpose of carrying out work of a civil engineering character and includes such work in connection with one or more of the following activities:

10 GG R.204 of 2 March 2001 and R.201 of 18 February 2004 11 GG R.133 of 16 February 2007

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(a) The construction of aerodrome runways or aprons; aqueducts; bins or bunkers; bridges; cable ducts; caissons; rafts or other marine structures; canals; cooling, water or other towers; dams; docks; harbours; quays or wharves; earthworks; encasements; housings or supports for plant, machinery or equipment; factory or works chimneys; filter beds; land or sea defence works; mine headgear; pipelines; piers; railways; reservoirs; river works; roads or streets; sewerage works; sewers; shafts or tunnels; silos; sports fields or grounds; swimming baths; viaducts or water treatment plants;

(b) excavation work or the construction of foundations, lift shafts, piling, retaining walls, stairwells, underground parking garages or other underground structures;

(c) the asphalting, concreting, gravelling, levelling or paving of parking areas, pavements, roads, streets, aerodrome runways or aprons, premises or sites; and further includes:

(i) any work of a similar nature or work incidental to or consequent on any of the aforesaid activities; and

(ii) the making, repairing, checking or overhauling of tools, vehicles, plant, machinery or equipment in workshops which are conducted by employers engaged in any of the activities referred to in subclauses (2)(a), (2)(b) and (2)(c);

but excludes:

(aa) work in connection with any one or more of the activities specified in subclause (2)b where such work, when undertaken in connection with the erection of structures having the general character of buildings and irrespective of whether or not such work involves problems of a civil engineering character, is carried out by the employers erecting such structures;

(bb) work in connection with any one or more of the activities specified in subclause (2)(c) when undertaken as an incidental operation in connection with the erection of structures having the general character of buildings or when undertaken by the employers erecting such structures;

(cc) any work falling within the scope of the Iron, Steel, Engineering and Metallurgical Industries as defined in the Main Agreement of the Bargaining Council for that Industry. (Emphasis added.)

From this definition it would appear that the construction of the stadiums is in fact a civil engineering project and that the Sectoral Determination would apply.

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SAFCEC’S CHARACTERISATION OF THE CIVIL ENGINEERING INDUSTRY

During the 1990s SAFCEC and the Building Industries Federation of South Africa (BIFSA) formerly agreed upon a schedule setting out the demarcation between the civil engineering and building industries. It reflects many of the definitions already referred to. A copy of the letter and accompanying schedule are Appendix B.

THE BUILDING SECTOR

There are five bargaining councils operating in this sector. They are the Bargaining Councils for the Building Industry for:

• the Cape of Good Hope; • Bloemfontein; • East London; • Kimberly; • North and West Boland; and, • Southern and Eastern Cape.

While the bargaining council for the Southern and Eastern Cape continues to administer benefit funds, it does not negotiate wages and other terms and conditions of employment because the employers claim that the unions are not representative enough (Godfrey et al, 2007).

There used to be a bargaining council for the building industry in Gauteng, but it collapsed after the parties were no longer sufficiently representative. Baskin (1998) describes the rise of non-regulated employment in the building industry in Gauteng and how it led to a situation where increasingly more and more employers and employees fell outside the regulatory net of the bargaining council.

Nowadays a few of the larger building contractors within Gauteng bargain with NUM and BCAWU at a voluntary bargaining forum, but obviously any agreements reached at that forum are only binding upon the signatories. However, most of the building contractors do not belong to this forum. They include the infamous “bakkie contractors”, who pick up workers from the side of the street on a daily basis.

Similarly, the bargaining council for the building industry in Kwazulu-Natal also collapsed and there is a voluntary bargaining forum in that province which includes a limited number of employers.

With effect from 1 January 2008 and until 31 October 2010, the Minister of Labour extended the collective agreement concluded at the bargaining council in the Western Cape.12 This agreement

12 GG No. 30586 Notice R.1208 of 21 December 2007

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determines the wages and terms and conditions of employment of employees on the Greenpoint stadium, as this stadium was deemed, rightly or wrongly, to be a building contract.

In most of the collective agreements and constitutions of these councils the building industry is defined in much the same way.

PROJECT LABOUR AGREEMENTS

Some large and complex construction sites have what are referred to as a Project Labour Agreement (PLA), which in essence is a collective agreement between the main contractor or its employer organisation or both and the relevant unions.

The Gautrain project has such an agreement. It was concluded between two employers’ organisations, SAFCEC and the Construction Engineering Association of South Africa (CEA (SA)), on the one hand, and various trade unions on the other, including NUM and BCAWU before the project began. This means that at the time that it was concluded, the unions did not have any members on the construction site.

Usually the agreement is endorsed by the client. This enables the contractors to recover additional expenses incurred in order to keep industrial peace on the site, which clients are usually only sensitive to when the problems occur.

The Gautrian PLA is a detailed agreement that regulates such matters as wages and other terms and conditions of employment, industrial relations procedures, practices and standards, occupational health and safety, trade union organisational rights, the rights and responsibilities of shop stewards, communication and co-ordination structures, negotiation and dispute resolution procedures, recruitment and discipline, etc.

The first important thing to note about the Gautrain PLA is that it applies to all contractors, employees and trade unions that are signatories to the agreement for the duration of the construction project. However, a subcontractor must also agree to abide by its terms and conditions through its contract with the contractor, unless the subcontractor seconds core employees to the project for less than one calendar month. Limited duration contract (LDC) employees employed for longer than a month are required to sign a contract in which they agree that they will abide by the PLA. This ensures that there is consistent application of wages and other terms and conditions of employment throughout the site.

The agreement also sets up a Contractors Consultative Forum, comprising representatives of most of the role players, which tries to ensure the effective application of the PLA and recommends any changes that may be necessary. In this way contractors and subcontractors are monitored to ensure effective compliance. The labour and management caucuses are formerly recognised, with the unions comprising the Site Labour Forum and management of contractors and subcontractors forming the Contractors’ In-house Communications Forum.

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The Gautrain PLA forbids negotiations on any matter provided for in industry agreements. The industry agreements are the Sectoral Determination 2: Civil Engineering Sector and the Main Agreement for the Metal and Engineering Industry Bargaining Council.

The PLA’s dispute procedures requires most disputes to be referred to mediation and then arbitration, which in effect means that employees have given up their right to embark upon strike action. The employees may have the right to strike in limited circumstances such as the demand for new terms and conditions of employment at industry level when the industry agreements expire.

THE METAL AND ENGINEERING INDUSTRY

The Metal and Engineering Industry Bargaining Council has a main agreement that regulates actual rates of pay. The Minister of Labour has extended it to non-parties in terms of section 32 of the Labour Relations Act. It has been extended to 2011.

Annexure H to this agreement, which was signed on 9 July 2008, provides for standard wages and other conditions of employment for employees who fall within the MEIBC’s scope, but who are working on multi-disciplinary sites where there is a PLA or equivalent agreement or a national committee representing the signatories to the annexure and the MEIBC have granted an exemption to apply the provisions of the annexure to a specific construction site. These standard wages are generally lower than the normal MEIBC rates, but are on a par with the other construction subsectors like civil engineering.

The purpose of this annexure, which is set out in paragraph 1.3, is to “ensure commonality of employment between the various industries working together on a construction site.”

The annexure refers to multi-disciplinary sites in paragraph 1.1 as “sites where metal, electrical contracting, piping, civil and building activities are being undertaken.” It also defines PLA or equivalent agreement in paragraph 1.5 as:

... an agreement entered into between the parties concerned with regulating specific conditions applicable to the specific construction site concerned, including the agreed wage structure.

ILO: THE LABOUR CLAUSES (PUBLIC CONTRACTS) CONVENTION, 1949 (NO. 94)

AND RECOMMENDATION (NO.84)

As its name suggests, this convention concerns labour clauses in public contracts. It came into effect in 1952 and to date has been ratified by 60 countries. South Africa has not ratified it, and therefore it is not binding on persons in South Africa. However, it is useful to consider whether South Africa should ratify it and whether the convention and its recommendation contain provisions that should be adopted in South Africa.

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OBJECTIVES OF THE CONVENTION

According to the ILO’s Report on Labour Clauses in Public Contracts (2008: xiii), there are two overriding objectives to the convention and the recommendation. They are to:

• [R]emove labour costs being used as an element of competition among bidders for public contracts, by requiring that all bidders respect as a minimum certain locally established standards.

• [E]nsure that public contracts do not exert a downward pressure on wages and working conditions, by placing a standard clause in the public contract to the effect that workers employed to execute the contract shall receive wages and shall enjoy working conditions that are not less favourable than those established for the same work in the area where the work is being done by collective agreement, arbitration award or national laws and regulations.

The convention deals with three main subjects: first, the types of public contracts that should contain labour clauses; second, the content of the labour clauses and the means for determining such content at a national level; and third, the methods for enforcing the terms of the labour clauses.

APPLICATION OF THE CONVENTION

Convention No. 94 applies to contracts that fulfil the four particular conditions laid down in paragraphs (a)–(d) of Article 1, paragraph 1. They are that:

• At least one of the parties to the contract must be a “public authority”. • The contract must be awarded by a “central authority of a member of the International

Labour Organisation for which the Convention is in force”. However, the competent authority must determine the extent to which and the manner in which the Convention applies to contracts awarded by authorities other than central authorities. This paragraph was introduced with, for example, “‘local authorities’ in mind (Report, 2008: 24)”.

• Execution of the contract must involve the expenditure of funds by a public authority and the employment of workers by the other party to the contract.

• The contract must be a contract for:

(i) the construction, alteration, repair or demolition of public works;

(ii) the manufacture, assembly, handling or shipment of materials, supplies or equipment; or

(iii) the performance or supply of services.

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Importantly, Article 1, paragraph 3, of the Convention requires that appropriate measures be taken by the competent authorities to ensure that labour clauses of the type required by the Convention apply to work carried out by subcontractors or assignees of contracts. This ensures that different wages and working conditions for similar work do not apply to workers of the contractor and the subcontractors.

The Convention provides in Article 1, paragraphs 4 and 5, for two possible exceptions from its scope of application. The first is that the competent authorities may, after consultation with the organisations of employers and workers concerned, exempt low value contracts that do not exceed a fixed amount. The second is that competent authorities may exclude persons occupying positions of management or of a technical, professional or scientific character, whose conditions of employment are not regulated by national laws or regulations, collective agreement or arbitration award and who do not ordinarily perform manual work.

As regards private employers who are granted subsidies or are licensed to operate a public utility, paragraph 1 of the Recommendation suggests that provisions substantially similar to those of the labour clauses in public contracts foreseen by the Convention should be applied.

CONTENT OF THE CONVENTION

Article 2, paragraph 1, of the Convention provides that public contracts must include clauses on wages, including allowances, hours of work and other conditions of labour which must be not less favourable than the conditions established by collective agreement, arbitration award, or by national laws or regulations for work of the same character in the trade or industry concerned in the district where the public work is carried out.

Article 2, paragraph 2, further defines means for protection of employment conditions in public contracts by providing that collective agreements, arbitration awards, or national laws or regulations applicable to the nearest district, or the general level observed in the same trade or industry, must be used where there are no applicable instruments referred to in the preceding paragraph of the Convention.

Recommendation No. 84 specifies in paragraph 2 the substantive content of labour clauses in public contracts. Labour clauses in public contracts should prescribe, either directly of by reference to relevant provisions of laws or regulations, collective agreements, arbitration awards or other agreements:

• the normal and overtime rate of wages (including allowances) to be paid to the various categories of workers concerned;

• the manner in which hours of work are to be regulated, including wherever appropriate: (i) the number of hours that may be worked in any day, week or other specified

period in respect of which normal rates of wages are to be paid;

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(ii) the average number of hours that may be worked by persons working in successive shifts on continuous processes; and

(iii) where hours of work are calculated as an average, the period of time over which this average may be calculated and the normal maximum number of hours that may be worked in any specified period;

• holiday and sick leave provisions.

Article 2, paragraph 3, of the Convention provides that the terms of labour clauses in public contracts must be determined by the competent authority after consultation with employers’ and workers’ organizations “in the manner considered most appropriate to the national conditions”.

There are also articles dealing with the tendering process. Article 2, paragraph 4, of the Convention provides that the competent authority must take appropriate measures, by advertising specifications or otherwise, to ensure that persons tendering for contracts are aware of the terms of the clauses.

As regards occupational health and safety, article 3 of the Convention requires adequate measures to ensure fair and reasonable conditions of health, safety and welfare for workers executing public contracts where appropriate provisions relating to the health, safety and welfare of workers engaged in the execution of contracts are not already applicable under national laws or regulations, collective agreements or arbitration awards.

The Convention also has articles dealing with enforcement measures, publicity and supervision, record keeping and inspection, sanctions and penalties for violation and the exemption of parts of the territory from application of this Convention.

THE INDUSTRIAL ACTION

There were numerous strikes at the stadiums and Gautrain. A table setting out the strike action that took place is set out below.

No. Date Cause Comments

Greenpoint- Cape Town

Main contractors: WBHO, M&R

Unions: NUM, BCAWU

1 27 Aug 2007 Transport arrangements and transport allowances

• Unprotected strike for 2 days involved about 800 to 1000 workers

• Workers returned to work after interventions by COSATU, NUM and BCAWU

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No. Date Cause Comments

2 18 Sept 2007 As above • Unprotected strike commenced on 18 September and workers returned to work on 25 September

• Alleged violence and damage to property.

• Striking workers were locked out of the site

• The employer obtained a court interdict ordering the workers to return to work

• Between 20 and 25% of workforce unionised, 70% of the workers work for subcontractors

Durban (Moses Mabhida)

Main contractors: Group 5, WBHO

Union: NUM

3 13 Sept 2007 Safety standards, absence of site ambulance, violation of minimum wage agreements by subcontractors;

• Work stoppage for part of the day

4 7 Nov 2007 Health and safety improvements; appointment of safety officers; project bonus; violation of minimum wages by subcontractors; (payment of civil engineering rates)

• Strike allegedly protected and involved about 1200 workers and ended on 19 November

• Clashes with police occurred

• Strike occurred after Department of Labour condemned safety standards on the site

• Employers obtained an interdict preventing strikers from entering the site while on strike and damaging property

• NUM threatened secondary strikes by workers at other stadia

5 3 Dec 2007 Project bonus and travel allowances

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No. Date Cause Comments

Nelspruit (Mbombela)

Main contractors: Basil Read, WBHO

Union: NUM

6 29 and 30 Nov 2007

Hourly wage rate, transport and travelling allowances, living allowance, alleged violation of BCEA, Project bonus

7 11 to 15 Feb 2008 Demand to be paid at civil engineering rates

8 2 to 7 April 2008 Wage disparity with other sites; payment on civil construction rates

CCMA mediated dispute. Contractors agreed to pay civil engineering rates.

9 11 April 2008 Land dispute with municipality

Work stoppage for about 3 hours

10 24 April 2008 Land dispute with municipality

Work stoppage for about 5 hours

11 6 May 2008 Subcontractor employees not paid

Sympathy strike for those employees

12 9 June 2008 Land dispute with municipality

Work stoppage for about 2 hours

13 July 2008 Payment of performance bonus

• Strike lasted 3 weeks

• Strike involved alleged violence and damage to property; four union members arrested for damage to

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No. Date Cause Comments

equipment;

• 500 workers dismissed, but later re-instated

Polokwane (Peter Mokaba Stadium)

Main contractors: WBHO

Union: BCAWU, NUM

14 23 to 25 January 2008

Labour broker failing to pay in accordance with minimum wage rates

Unprotected strike organised by BCAWU in solidarity with the labour broker’s employees

15 24 June to 2 July 2008 and 16 to 30 July 2008

Minimum wage rate and project bonus

The strike was unprotected and the workers returned to work after the employer obtained a court interdict. However, the unprotected strike resumed later in July. It was settled when the workers accepted R1,000 for the remaining bonus. NUM organised this strike.

Port Elizabeth (Nelson Mandela Stadium)

Main contractors: Grinaker-LTA

Union: NUM

16 . Transport Unprotected strike lasted for 1½ days

17 ... Project Bonus Protected strike

Bloemfontein (Vodacom Park)

Main contractor: JV of local building contractors

Union: NUM

18 11 Dec 2007 Project Bonus Strike lasted one day

19 7 March 2008 Problem with labour broker

Employer obtained interdict against strikers for alleged misconduct

Gautrain

Main contractors: M&R, Bouygues

Unions: NUM, BCAWU

20 25 Sept 2007 Minimum wages; project bonuses, incentive

• Unprotected strike action

• Workers returned to work on 28 September

• Involved 2000 to 3000 workers

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No. Date Cause Comments

bonuses, funeral cover and incentives

• Strike ended after employer issued several ultimatums and obtained interim court interdict

• Employer refused to negotiate arguing that issues in dispute regulated by national collective agreements

21 11 October 2007 As above • About 40 shop stewards and union officials staged a 24 sit-in in the Gautrain offices in Midrand and threatened strike action.

• Issues relating to this dispute were later referred to arbitration

THE STRIKES AT CAPE TOWN’S GREENPOINT STADIUM

The first strike took place at the Greenpoint stadium on 27 August 2007. It was an unprotected strike for 2 days. The dispute related to transport arrangements and allowances. This strike was led by the workers themselves, and was not organised by the unions. However, the workers returned to work after interventions were made by COSATU, NUM and BCAWU.

On 18 September 2007 the workers went out on strike again and only returned to work on 25 September after the employer obtained a court interdict ordering the workers to return to work. The disputes were resolved with, amongst other things, a payment of an extra R8 for travel. It should be noted that permanent employees at the stadium have usually been brought to the stadium and, therefore, are provided with accommodation and transport from their accommodation to the site. This is not the case for local employees, who are generally LDCs. They live in the communities and were not provided with transport.

The strikes were characterised by violence and clashes with members of the South African Police Services.

The main contractors at Greenpoint tendered on the basis that the construction of the stadium was a building contract where wages and terms and conditions of employment are set by the Building Industry Bargaining Council (Cape of Good Hope). There was confusion on whether the project was a civil engineering or a building project. The civil engineering sectoral determination has more job classifications, but the building bargaining council’s main agreement has less grades, but generally better pay conditions.

THE FIRST STRIKE AT THE DURBAN STADIUM

On 13 September 2007 workers at the Moses Mabhida stadium went out on strike for part of the day. Their grievances related to numerous matters, but centred mainly on the violation of minimum wages by subcontractors.

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INDUSTRIAL ACTION ON THE GAUTRIAN PROJECT

On 25 September 2007 workers at the Gautrain project embarked upon an unprotected strike in support of the demands for an R8 an hour increase and a 100% employer contribution to the employee’s funeral benefit. The workers returned to work on 28 September 2007 after the employer issued several ultimatums and it obtained an interim court interdict ordering workers to return to work. The joint venture refused to negotiate with the workers on the basis that the issues in dispute were regulated by collective agreements.

On 11 October 2007 about 40 shops stewards at the Gautrain and union officials staged a sit in at the Gautrain offices in Midrand and threatened strike action about the issues referred to above. A dispute was referred to arbitration in terms of the Gautrain’s PLA.13 The arbitrator, Mr Charles Nupen, was required to determine, amongst other things, whether:

• The PLA took away the right to strike, and if it does, whether this contravenes the constitution; and

• As of right, with reference to the applicable collective bargaining agreements and structures, the demands for an R8 an hour across the board increase and 100% employer contribution to the employee’s funeral benefit are illegitimate and in breach of these agreements.

The arbitrator noted that there is a complex web of regulatory machinery. These included:

• Sectoral Determination 2: Civil Engineering Sector. • the Main Agreement of the MEIBC. • Civil Engineering Industry Interim Procedural Agreement between SAFCEC, NUM and

BCAWU dated 4 May 2004. • The Substantive Agreements entered into between SAFCEC, NUM and BCAWU dated

31 August 2006, with an amendment dated 3 July 2007. • The PLA, which was negotiated before the commencement of the Gautrain project so that

the project might proceed with a clearly defined labour relations regime and so that costing, for the purposes of tendering could be calculated with greater accuracy.

The arbitrator held that the agreements prevented the employees from engaging in protected strike action. The arbitrator noted that in terms of section 65(3)(a)(i) of the Labour Relations Act, read with paragraphs 11 of the Civil Engineering Industry Interim Procedural Agreement and 37 of the MEIBC’s Main Agreement, employees may not strike during the currency of a substantive agreement when that agreement regulates the issue in dispute. He also held that the PLA itself requires disputes such as those relating to proposed changes to terms and conditions of employment to be referred to conciliation and then arbitration. The arbitrator held further that 13 NUM, BCAWU, SAEWA, UASA and Solidarity v SAFCEC and CEA Unreported arbitration dated 10 December 2007.

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the limitation on the right to strike was not unconstitutional, as section 36 of the Constitution of the Republic of South Africa Act 108 of 1996 allows for a limitation of fundamental rights and section 65(1)(b) of the Labour Relations Act prohibits participation in a strike if the person is bound by an agreement that requires the issue in dispute to be referred to arbitration.

In respect of the metal industry employees, the arbitrator’s ruling was that the unions covered by the Main Agreement of that industry’s bargaining council “… may not place a demand for a wage increase … insofar as [the employer] falls within the scope of the agreement.” The arbitrator noted that part 2 of the Main Agreement deals with actual wage increases in the industry and paragraph 37 of that agreement provides that the bargaining council is the sole forum for negotiating matters contained in the Main Agreement. Therefore, the arbitrator held that any strike in support of a demand in respect of a matter dealt with in the Main Agreement would be unprotected. The arbitrator also pointed out that paragraph 11.1 of the PLA reinforced this view by stating that no negotiations on any matter provided for in the Industry Agreements, which includes the Main Agreement, may take place at site level or in any of the structures established by the PLA.

In respect of the civil engineering industry, the situation is different. The PLA defines for its purposes the Sectoral Determination 2: Civil Engineering Sector South Africa as an industry agreement, even though it is per se a determination and not an agreement. The arbitrator noted that the unions correctly contended that the sectoral determination deals with wage minima and not “actuals”. The unions contended that as a result of this, they were not precluded from tabling a demand on “actuals” in appropriate circumstances to individual employers in the industry. But the arbitrator held that there is a current Substantive Agreement with an amendment between SAFCEC, NUM and BCAWU, dealing with the issues in dispute, namely actual wages and the employees’ funeral benefit, and since the employer was a member of SAFCEC, the unions were, therefore, precluded from embarking upon strike action in terms of section 65(3)(a)(i) of the LRA.

As a result, the unions were unable to pursue any strike action in support of their demands and their interest disputes were ultimately referred to interest arbitration in terms of the PLA’s dispute resolution procedures.

THE PROJECT BONUS STRIKE AT THE DURBAN STADIUM

On 7 November 2008 workers embarked upon strike action at the Durban stadium. The strike action was allegedly protected after the unions had referred the dispute to the CCMA and obtained a certificate of non-resolution. The issues in dispute related to health and safety issues, including the appointment of safety officers, the alleged violation of minimum wages by subcontractors, and most importantly, the demand for a project bonus.

The strike lasted about 13 days. Eventually NUM and the main contractors, Group 5 (which is the lead contractor) and WBHO, settled the dispute on the basis that a project bonus would be

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paid amounting to R6,000 provided certain project milestones were met and unauthorised absenteeism and unprotected strike action did not take place.

THE FIRST PROJECT BONUS STRIKE AT THE NELSPRUIT STADIUM

On 21 November workers at the Nelspruit stadium went out on strike. Their demand related to the payment of a project bonus. The employer at the Durban stadium had already agreed to the payment of a project bonus, which had set the standard in the industry.

The settlement of the dispute was facilitated by the CCMA and a written agreement was concluded between NUM and the contractors on 5 December 2007. The agreement provided for the payment of project bonus, which was conditional upon the employee not being absent without authorisation, not engaging in unprotected strike action and upon certain “milestone targets” being achieved.

THE FIRST STRIKE AT POLOKWANE

From 23 to 25 January 2008 there was a two day strike at the Peter Mokaba Stadium construction site in Polokwane. The strike was in solidarity with the workers working for a labour broking firm called Leboni, which was paying the workers less than the agreed rates of pay for the sector. The strike was organised by BCAWU. The workers returned to work after the labour broker gave in to the workers demands.

THE CIVIL ENGINEERING RATES STRIKES AT THE NELSPRUIT STADIUM

From 11 to 15 February 2008 the workers at the Mbombela stadium in Nelspruit downed tools in support of their demand that they be paid according to the civil engineering rates and not the building rates that had been determined by the employer. The strike resumed from 2 to 7 April 2008. Both strikes were unprotected. The dispute was settled on 15 April 2008 when the parties entered into a settlement agreement facilitated by the CCMA.

The contractors had successfully tendered on the basis that it was a building contract (i.e. a JBCC Series contract) and the employer had used the building wage rates agreed upon at the Gauteng Voluntary Bargaining Forum, as there was no bargaining forum or bargaining council covering the Nelspruit area. The unions argued that the construction was a civil engineering contract, and accordingly, the workers should be paid on civil engineering rates. The employer argued that it was a building contract, but before the dispute could be resolved through a demarcation dispute, the employer, upon the instruction of the local authority (i.e. the client), agreed to implement the civil engineering rates without conceding that it was a civil engineering contract. The civil engineering rates, in particular the minimum entry level rates, were much higher than the building rates used.

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THE PROJECT BONUS STRIKES AT POLOKWANE

From 24 June to 2 July 2008 NUM organised a strike at the Peter Mokaba Stadium construction site. NUM demanded a minimum wage of R8 per hour plus a R1,500 project bonus per month. In addition, it demanded payment of the remaining project bonus. This was an unprotected strike and the workers returned to work after the employer obtained a court interdict.

From 16 to 30 July the unprotected strike resumed. It was settled when the workers accepted R1,000 for the remaining bonus.

THE SECOND PROJECT BONUS STRIKE AT NELSPRUIT

In July employees at Nelspruit’s Mbombela stadium downed tools for more than three weeks. Over 500 employees of the main contractors were dismissed, although later they were reinstated. The issue in dispute related to the forfeiture of the project bonus for unprotected strike activity and the workers demanded that the bonus should not be pro-rated according to the amount of time that the employee worked on the site. Again the CCMA facilitated settlement of the dispute.

There were numerous other work stoppages at the Nelspruit stadium; namely 11 and 24 April, 6 May and 9 June 2008. The 6 May stoppage lasted about two hours and was in sympathy with employees of a subcontractor who had not been paid. The other work stoppages related mainly to a land dispute between the community and the municipality. The municipality had allegedly bought the land on which the stadium was being constructed from the community for a very small amount. The local employees at the site came from this community, and the shop stewards on the site were also community leaders. The workers and shop stewards allegedly used strike action as a means of placing pressure on the client municipality.

SOCCER CITY IN JOHANNESBURG

At Soccer City the NUM and the joint venture partners, led by Grinaker-LTA, entered into a “recognition agreement” before the project started. Although it is called a recognition agreement, the agreement is akin to a PLA similar to the one concluded for the Gautrain, although it does not limit the right to strike as substantially. It sets out, for example, the wages and terms and conditions of employment.

Interestingly, 98% of Grinaker-LTA’s workforce is unionised and this includes LDCs. They are all members of NUM. One of the reasons for this is the fact that the employer and union have an agency shop agreement in place, which means that deductions are made from an employee’s salary whether he or she is a union member or not.

There have been no strikes at Soccer City except for a work stoppage of four hours in about March or April of 2008.

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Following the settlement of the strike at Durban regarding project bonuses, the parties concluded an agreement on the payment of bonuses without any industrial action taking place. An agreement was also concluded about transport allowances without any strike action taking place.

The tender for the development of this stadium was issued as a building contract, even though the project was a hybrid of both civil engineering and building work. This resulted in disparities of income for workers depending on whether they were classified to be within the civil engineering or building industries, with building workers generally being paid substantially less. This was resolved after the parties agreed that all employees, irrespective of whether they were permanent or LDC or whether they were employed by one of the main contractors or a subcontractor, were paid according to the civil engineering rates.

In terms of one of the requirements of the tender, the main contractor was required to set up a training centre at the stadium. It has trained about 2,000 people at the centre, most of whom were LDCs. According to management, this had the effect of changing the “short-termist” mindset of some of the LDCs because those that were trained saw the possibility of long-term employment in the industry. Management also believed that this was a factor that reduced the prospect of strike action.

PORT ELIZABETH’S NELSON MANDELA STADIUM

There were two strikes at this stadium. The first strike was unprotected and was for just short of a day and a half. The issue in dispute related to transport, mainly for LDCs. The issue was settled after transport was provided. The second strike was protected. It related to project bonuses. This dispute was settled after the main contractors and subcontractors agreed to pay project bonuses, although their payment was subject to certain conditions relating to unauthorised absenteeism and the completion of work.

THE SUMMIT

Following the strikes in 2007 at the construction sites in Cape Town, Durban and Nelspruit the Department of Sports and Recreation (SSRA) requested the CCMA’s advice and guidance on these matters. Following discussions between the CCMA and SSRA, it was decided to jointly host a summit of 2010 project stakeholders.

The purpose of the summit was to assemble all 2010 project stakeholders with a view to developing a common vision and accord in respect of labour relations. The key labour relations objectives were improving workplace relations, enhancing collective bargaining arrangements and generally ensuring labour stability. Government wanted to see an alignment of the parties’ interests with the national interests of ensuring a successful world cup.

Prior to the summit, the CCMA engaged in bilateral discussions with the main contractors and the unions. The initial plan was to host the summit in February 2008, but this proved ambitious,

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as the CCMA underestimated the time needed for the bilateral processes. In the main, the contractors were initially resistant to the idea of this summit, as they feared that the unions would transform the summit into a wage negotiation or bargaining process. The contractors were ultimately persuaded to attend on the basis that only strategic issues would be dealt with and not wage issues. The summit finally took place in June 2008.

Countering the viewpoint that the contractors were reluctant to attend the Summit, some of the contractors pointed out that when the strike first occurred at the Durban stadium, SAFCEC tried to engage the government on this matter, but it was not interested and argued that this was a matter for the contractors to resolve.

The construction companies sent representatives to the June Summit from Group Five, Murray and Roberts, WBHO, Basil Read, Grinaker – LTA, Business Unity South Africa (BUSA) and SAFCEC. Union representation was present from NUM, BCAWU, COSATU and NACTU. Other participants included representatives of the SSRA, the Department of Labour and the Western Cape Building Industry Bargaining Council.

The Summit concluded with the adoption of an accord and a programme of action. The accord was broad in nature and committed the parties to the objectives set out above. Two of the key problems identified by the parties were that there was no “early warning system” and that there was poor communication. In order to address these and other problems that were identified, the parties continued to meet under the auspices of the CCMA to deal with matters relating to the construction of the 2010 stadiums. In addition, they requested the CCMA to convene a “social dialogue forum” where the parties’ senior principles are represented and which addresses all the other challenges facing the construction industry, including its sustainability. This forum is scheduled to meet in 2009.

While no concrete agreements have emerged from this process, the general consensus of the interviewees was that the Summit and the processes arising out of the Summit have at least been successful in the sense that the parties are now at least speaking to each other in a mature way, whereas before, the level of mistrust prevented effective communication. In any event, a more detailed process of engagement will begin, but it is unlikely that it will impact upon the stadiums construction. It will, possibly, have a greater impact upon the industry in the long run. This obviously assumes that it will proceed. Some of the interviewees feared that it was and will soon “die a natural death”.

It is, however, important to note that even prior to the summit, the CCMA played a significant role in mediating the disputes that did arise at the stadium sites, including Polokwane, Nelsruit and Durban. The CCMA’s facilitation role in settling these disputes was widely commended.

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THE CAUSES AND CONTRIBUTORY FACTORS

Typical of adversarial relations, many of the interviewees engaged in a “blaming game”. Some of the employers blamed the trade unions for the industrial action, citing opportunism, intimidation and using strikes as a means of trying to increase membership. The NUM came in for particular criticism, although some employer interviewees expressed grudging respect for the union’s tenacity. On the other hand, the unions cited the employers’ questionable labour and anti-union practices and the unfair conditions that prevail in the construction sector. These allegations may have merit to varying degrees, but it is necessary to delve beyond the normal “blaming game”. There are a myriad of factors that underlie or have contributed to the industrial action.

CURRENT ECONOMIC CHALLENGES AND EMPLOYEE EXPECTATIONS

Some of the interviewees cited the current economic downturn with high inflation, particularly food inflation and high petrol costs, as a factor motivating the unions’ demands. They also pointed out that the Substantive Agreement for the civil engineering sector provided for an 8% increase in 2006, 2007 and 2008, which was below inflation.

Coupled to this is the question of employee expectations. Most management interviewees commented that employee expectations were heightened in the 2010 stadium projects because of the high-profile nature of these projects and their importance for the country. Many important politicians and other leaders were constantly reminding the public of the benefits of this high-profile event. The large amounts of money being spent on these projects was often in the media, and workers often felt a sense of unfairness that they were not benefitting more from the monies being invested by government in these projects.

As one newspaper by-line read in relation to the Moses Mabhida strikes in 2007: “We are part of the nation, and we also need a share of the cake” (Mabuza et al, 2007). These sentiments were also echoed by Albert Masuku, President of BCAWU, when he reportedly said in the Sowetan:

... the government has invested R30 billion of public funds to develop the country for the 2010 Soccer World Cup, but workers were not benefiting.

“Employers laugh all the way to the banks while we do not even get to go there because we get peanuts,” he said (Mkhulisi, 2007).

In the view of some of the interviewees, these expectations were fostered by rumours. For examples, a rumour spread that contractors were being paid a R3 billion bonus for timeous completion of the projects, which was supposed to be shared with workers. Other interviewees expressed the view that some of the expectations were not entirely unreasonable given that the main contractors were being paid bonuses to complete the work on time. Employers were also

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criticised for treating these projects as if they were just another project, and failing to grasp their significance for the country and its people.

THE COMPLEXITY OF THE LABOUR RELATIONS REGIMES

One of the most glaring problems relates to the complexity of the labour relations regimes that prevail on a large construction site. There are at least three sets of regimes and approaches to collective bargaining.

• The first set relates to employees in the metal and engineering industry who fall under the jurisdiction of the MEIBC. The MEIBC has to date have negotiated relatively long term collective agreements at sectoral level. Their agreements about wages are actual rates of pay as opposed to minimum rates of pay.

• In the civil engineering industry there is a sectoral determination that prescribes minimum rates of pay and other conditions of employment. The determination does not, therefore, prevent further negotiations about actual rates of pay. However, there are also national agreements concluded between SAFCEC and the main trade unions, NUM and BCAWU. These agreements not only require negotiations about terms and conditions of employment, like wages, to be negotiated at national level, but also set wage increases and other conditions of employment. These agreements are binding upon the unions and their members as well as SAFCEC’s members, which include most of the main contractors. Nevertheless, they are not binding on employees who are not members of NUM or BCAWU, who are in most cases the majority because of the low levels of unionisation in the industry, and, they are not binding on employers who are not members of SAFCEC, which includes many of the subcontractors and labour brokers that the main contractors bring onto site.

• Lastly, there is the building industry that has some regionally specific bargaining councils with collective agreements about wages and terms and conditions of employment that have been extended to non-parties in terms of section 32 of the Labour Relations Act. But in many regions there is no bargaining council and wages and terms and conditions of employment are determined at site level. In Gauteng and Kwazulu Natal there are voluntary bargaining forums where unions and some employers negotiate wages and terms and conditions of employment, but these are only binding on the parties. Again there are many employees who are not members of the trade union parties to these voluntary forums and there are many employers, including many of the subcontractors, who are not members of these forums.

Accordingly, not only are different labour regimes applicable to employees, but these regimes have different bargaining philosophies, which include different approaches to the issue of levels of bargaining. There is no uniformity and there is complexity.

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Moreover, from the interviews it is apparent that there is no common approach to this question. While the unions favour sectoral bargaining, and preferably at a registered bargaining council, the employers are divided on the issue.

BUILDING OR CIVIL ENGINEERING WORK

But this is not the end of the story. There is also the question of whether the 2010 construction projects like the building of stadiums is a civil engineering or a building contract. Radically different industrial relations regimes result from this demarcation.

The Gautrain is clearly perceived as a civil engineering project, but the stadiums were classified by the clients, who are the respective local authorities, as building contracts. The main contractors tendered on this basis. For example, in Nelspruit the main contractors used the wage rates agreed at the voluntary building bargaining forum in another region, namely Gauteng, to cost their tender, which, as we know are decidedly lower than the minima prescribed in the civil engineering’s sectoral determination.

Many of the interviewees argued that the stadiums should have been classified as civil engineering projects because the main character of the projects involved large amounts of concrete and the majority of the project accorded with the various definitions of civil engineering work referred to above. For them it was obvious that the stadiums constituted civil engineering work. However, a few interviewees argued, rather unconvincingly, that the construction of stadiums was building work, asserting that many of the functions performed during the construction of the stadiums, amounted to building work. Interestingly, the main contractors at Nelspruit, in consultation with the client, settled their one strike on this issue by paying civil engineering rates of pay prescribed in the sectoral determination without conceding that it was a civil engineering project. It is also perhaps worth noting that in Cape Town the building terms and conditions of employment as determined by the Western Cape Building Bargaining Council are, in part, more favourable than the civil engineering rates.

Why did the local authorities classify the contracts as building contracts? This is not clear. Did the clients, or perhaps more accurately, their consulting engineers, know the industrial relations implications of their choice?

If it is so obvious that the projects were civil engineering contracts, why did the contractors tender on the basis of building rates? Were they simply following the client’s requirements? Were they naive or were they simply “snatching at a bargain”?

There is no definitive answer to these questions, but what is certain is that the demarcation had a profound effect upon the industrial relations environment and process of collective bargaining. The demarcation that the construction was a building contract meant that in most of the stadiums site level bargaining was possible, as there was no binding collective agreement regulating actual wages and other terms and conditions of employment. Unlike the Gautrain where there was a

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binding PLA, the unions and employees were, therefore, entitled to argue for project bonuses, even if they were wage rates in disguise. The other important implication was that subcontractors were not bound to pay civil engineering rates, but building rates and in many cases these rates were lower than the civil engineering rates and they could be determined unilaterally by the employer.

DIFFERENT RATES OF PAY FOR SIMILAR WORK ON ONE SITE

Unlike the Gautrain project, none of the stadiums except Soccer City in Johannesburg had PLAs or PLA-type agreements. This meant that, except for Cape Town and Bloemfontein, where there were binding collective agreements from a building bargaining council, contractors and subcontractors determined their own terms and conditions of employment, and workers working side by side were often paid different rates of pay.

For some interviewees this was a recipe for disaster, as the differentiation and inconsistency cultivated a sense of injustice. They pointed out that on large projects it was common to have PLAs that set wages and terms and conditions of employment and that it was also normal to bind subcontractors who were on site for a period of time, like one month, to abide by the PLA through the commercial agreements between them and the main contractors. They also pointed out that one of the great benefits of the PLA, as in the case of the Gautrain, was that it set up forums to resolve grievances that arose on site with, amongst others, subcontractors that were not applying the PLA.

Some interviewees indicated that in some instances the commercial subcontractor agreements stipulated that the main contractor paid all the workers’ salaries, including the subcontractors’ employees. The total salary bill was then deducted from the amount paid to the subcontractor. The reason for this arrangement was to prevent a situation where a subcontractor did not pay its employees on time, which is a potential trigger for industrial action.

For other interviewees, the determination of different wages by each subcontractor was a normal practice and it was not in the industry’s interest for contractors to determine the wage rates of its subcontractors. But there was no answer about how the possible negative industrial relations consequences should be prevented or managed.

Interestingly, it was reported that after the bid was awarded to South Africa a proposal to draft a PLA for the stadiums was circulated amongst the main contractors at SAFCEC, but only Grinaker-LTA supported the proposal.

THE RECRUITMENT POLICIES AND THE USE OF LDCS

One of the typical tender requirements for these projects is that about 70% of the employees must be drawn from the local area. The purpose of this requirement is to ensure that there is poverty alleviation in the local community. It is also designed to promote a sense of “buy-in”

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from the local community. All interviewees who addressed this issue recognised that these were noble intentions.

But the policy has some profound implications for industrial relations. The local employees are generally unskilled or semi-skilled and, therefore, are appointed to the lower grade jobs. They are appointed on limited duration contracts (LDCs). These employees are notoriously difficult to organise because they are in employment for only a short period of time. Many LDC workers do not see any benefit to joining a union and paying a subscription fee when they will be employed for such a short period of time.

Many of the local employees have little, if any, experience of the construction industry or being a member of a union. They were generally ignorant of the various collective agreements that set wages and terms and conditions of employment and laid out procedures for resolving disputes, where there are any, and they are more prone to believing rumour, which is common in large workforces.

Because the LDC employees are only in employment for a short period of time, their approach is “short-termist”. They want to get out as much as possible while they are employed because they know they have no long-term future with the company. In most cases, unlike Soccer City where there was a training centre for LDCs, there was little prospect of permanent employment.

Moreover, there are often varying wage rates between permanent and temporary staff. The Sunday Tribune reported in respect of the Moses Mabhida stadium in Durban as follows:

A contract crane driver, who asked not to be named, said there was a big difference between permanent and part-time staff. I am getting R19 an hour whereas permanent staff get about R35 and they are entitled to company benefits while my contract will end when the project ends. It is so unfair. (Makhaye, 2007)

In addition, the temporary employees have no retirement or medical benefits, and because they are drawn from the local community they are not provided with accommodation, transport or food.

The other approximately 30% of the workforce was generally permanent employees brought into the area. Because they were brought to the area, they were supplied with accommodation and transport. The permanent employees also tended to have access to benefits like medical aid and retirement funds. More of the permanent employees tended to be union members, although in many cases this was still relatively low. The permanent employees were generally skilled and semi-skilled workers.

There is, thus, a large schism between the permanent and temporary employees. But the temporary employees are in the majority and, therefore, tend to dictate what will happen when there is industrial strife. Moreover, the possibility of industrial conflict is heightened because the

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temporary employees are motivated by “short-termist” objectives and are less knowledgeable about the industrial relations agreements and processes. The unions, therefore, battle to maintain hegemony over the workforce in the context of industrial action. For example, at the Polokwane and Nelspruit construction sites the trade unions were reported to have, at times, little control over the workers and their membership. Where the unions are unable to exercise control, the temporary employees tend not to be guided by organised leadership, and management finds it difficult to communicate with them because they are not organised and do not have properly appointed leaders.

LACK OF A MEANINGFUL VOICE

Although the sense of unfairness was predominantly articulated as a grievance associated with distributive justice, some interviewees also complained that workers lacked a meaningful voice to express their concerns and grievances, especially in the construction sites that had no PLA and were classified building contracts where there was no applicable building bargaining council. They argued, in line with the findings of Lind and Tyler (1988) that had structures, mechanisms and processes been put in place, like at Soccer City, conflict would have been less likely. Moreover, they confirmed the views of Folger and Cropanzano (1998) that workers would probably have responded less negatively and with less hostility had the process of decision-making about industrial relations matters not been perceived to one-sided, unfair and unduly dominated by the employers’ interests.

WEAK TRADE UNION ORGANISATION

NUM professes to have 54,000 members in the construction industry and BCAWU 28,000. Many management interviewees expressed doubt about the accuracy of these figures, suggesting that the figures were actually much lower. According to the Quarterly Labour Force Survey for quarter 3 of 2008, there are about 1,102 million employees in the construction industry (Statistics South Africa, 2008). It is evident, therefore, that trade union density is very low.

Trade union density in the construction sector has, however, been low since 1979 when black trade unions were recognised for the first time. In 2005 the trade union density in the construction sector was 10.5%, which is the lowest industry except the domestic and agriculture industries (Statistics South Africa, 2005). The low trade union density is as a result of a number of factors, including that since the early 1980s the industry has relied upon LDCs making organisation difficult, the industry is project based and cyclical in nature and it sustained a long period of decline or limited growth prior to 2004.

Trade union density tends to increase in large contractors who operate on large projects like the 2010 stadiums, but then generally only amongst the permanent employees. The only exception is Soccer City where there is high union membership. The unions claim that about 1200 of the 2000 employees on the site, which includes the subcontractors, are unionised. Moreover,

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Grinaker-LTA, which is one of the main contractors at Soccer City, has about 98% union membership nationally, including LDCs. It seems that one of the main reasons for this is that there is an agency shop agreement operative at Grinaker-LTA.

The difficulties of organising employees in this sector are well known. The reasons relate primarily to the short duration of projects and the extensive use of LDCs, but there is also the fact that some employers’ industrial relations strategy seems to be, at least implicitly, based upon the standpoint that it is better for business to work in an environment where there are weak unions and fragmented bargaining.

Site and fragmented bargaining tend to promote strike activity (Finnemore, 2006). It is usually difficult to deal with industrial strife when there are weak trade unions that have little influence over the work force. This is, of course, the lesson of the 1973 Durban strikes when management discovered that without unions and established worker leadership, it was difficult to liaise with the workforce and settle disputes.

UNION RIVALRY

Most interviewees did not perceive union rivalry as a major factor that promoted industrial strife. However, the second and third strikes in Polokwane were promoted by NUM after BCAWU entered into certain agreements with the employer. NUM allegedly promised the workers a better deal than BCAWU. NUM is now the majority union at the Polokwane construction site.

LABOUR BROKERS

Two strikes related to the use of labour brokers. The first was at Polokwane where the workers alleged that one of the labour brokers was not paying the industries’ minimum wages. The other was in Bloemfontein. Labour brokers were used on all sites.

Some interviewees believed labour brokers played an important role in the industry, although they quickly added that they needed to be carefully and properly managed, as there were “bad apples like in any industry”. On the other hand, many of the management interviewees warned that labour brokers could easily trigger strikes. The reasons for this included that there were many unscrupulous labour brokers in the industry who might not, for example, pay workers on time or who pay workers substantially less than what the labour broker received from the contractor, setting up possible concerns amongst the workforce about differential pay for similar work. One of the interviewees alleged that contractors sometimes used labour brokers to side-step the SAFCEC collective agreements because most of the labour brokers were not members of SAFCEC and, therefore, were not bound by its collective agreements. It was also pointed out that contractors generally had less control on the process of recruitment if they used a labour broker.

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Predictably, the union interviewees were scathing of the use of labour brokers pointing to their devious labour practices. Citing proposed Namibian legislation, the union interviewees unequivocally believed that labour brokers should be banned.

Other interviewees suggested ways to regulate labour brokers, which included:

• Only using the labour broker to source labour. This meant that the contractor was always the employer of the worker, and not the labour broker as envisaged by section 198 of the Labour Relations Act.

• Binding the labour broker, like any other subcontractor, to the PLA so that the employees of the labour broker were paid the same rates of pay as other employees. This meant that the labour broker’s fees were above and beyond the workers’ wages and not drawn from those wages.

Labour brokers are required to register with the MEIBC if they are operating in the metal and engineering industry. Through this registration, the bargaining council hopes to exercise better control over them and weed out the unscrupulous operators.

THE FAILURE OF THE STAKEHOLDERS TO ENGAGE IN DIALOGUE BEFOREHAND

Despite a highly complex and irregular industrial relations environment, it is evident that prior to the construction tenders being awarded, none of the stakeholders came together and agreed upon the principles and framework within which the 2010 construction projects would be built. In the words of one of the interviewees, “the significance of labour to the successful hosting of 2010 was only realised after the strike actions”.

The Summit was a reactive response to the strikes. While all the interviewees welcomed it, in general, most people acknowledged that it was “too little, too late”. The Australian example of the Sydney Olympics where they negotiated a framework agreement and a special dispensation was not followed. In fact, government did not engage with the unions before the tenders were awarded and the unions have accused the government, especially at local level, of trying to play a neutral role when industrial conflict arose.

One of the interviewees from government acknowledged this problem and suggested that in hindsight it would have been better to publish a special sectoral determination for the 2010 construction projects, which, in view of the procedures envisaged by the Basic Conditions of Employment Act, would have involved all the stakeholders and determined uniform and minimum terms and conditions of employment. Such a sectoral determination would not have guaranteed that strike action did not occur because it could only have stipulated minima, but the interviewee who proposed this believed that it would have gone a long way to settling the industrial relations environment of the 2010 construction projects.

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Be that as it may, the fragmented nature of collective bargaining in the construction industry, and the failure to facilitate dialogue and bargaining in the industry prior to commencement of the 2010 construction projects, was perceived by some interviewees as a major oversight in the prevention of industrial action in the 2010 stadiums. Mike Sutcliffe, Durban City Manager, put it rather succinctly in the Daily News in November 2007 after the Durban stadium strike:

People will now see the need to make sure there are stronger partnerships between labour and contractors around a commitment to completing projects (De Boer, 2007).

CONCLUSION AND RECOMMENDATIONS

In the complex and irrational industrial relations environment, industrial trouble was inevitable. In line with mobilisation theory, it is evident that workers perceived a sense of unfairness. They were earning increases less than the inflation rate. There was differentiation between employees working for contractors and those working for subcontractors, differentiation between workers on the respective sites and differentiation between permanent and temporary workers (for example, with the provision of transport). Most of the temporary employees had no sense of a future in the industry and were, therefore, motivated to get as much as possible now. The 2010 stadiums provided the opportunity for action because the stadiums were in the spotlight. The large amounts of money that they were costing and their progress was regularly quoted in the media. Perhaps more importantly, the construction of the stadiums had strict deadlines and penalties associated with their completion. For example, the consortium building the Gautrain is reported to be liable for a penalty of R150 million plus inflation if it did not have the first phase completed in time for the World Cup (le Roux, 2007). Despite relatively weak trade union organisation, workers were able to mobilise, making the control of these strikes even more difficult, possibly accounting for why the majority of them were unprotected.

But the fact that most of them were unprotected is worrying from an industrial relations point of view. It meant that there was insufficient time for the conciliation mechanisms recognised by industrial relations system to negotiate agreements. It also reflects a failure on the part of the industrial relations systems to cater for the new conditions. Where does the fault lie? It lies with government and the parties.

From the onset government should have involved the parties, including labour in the plans for the 2010 stadiums. Their failure to facilitate a labour relations dispensation, or at least properly clarify the appropriate labour relations dispensation and the nature of the construction contracts, failed to prevent the strike action. The contractors should also have anticipated this situation. They failed to put in place PLAs, which meant that different wages and terms and conditions operated at each site and meant that subcontractors and labour brokers were not managed properly. It also meant that industrial relations matters were often determined unilaterally by the employer, fostering a sense of procedural justice on the part of unions and workers. The fact that

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the unions are weak and struggle to recruit employees and exercise leadership over the workforce, especially LDCs, did not assist the situation.

In the light of the above, the parties should consider, for the future development of the construction industry, a number of issues.

THE OBJECTIVES AND ROLE OF THE PUBLIC AUTHORITY CLIENT

In line with Britain’s NEDO Report (1970), it is recommended that government should not play a neutral role when it comes to industrial relations on large construction sites. Government should face up to the threat that a bad industrial relations practice could have for its interests. It is committing large sums of public money to these projects and, therefore, it should be concerned about the nature of the industrial relations practised by the contractors and its subcontractors. For example, part of its tender evaluation process should be to evaluate the competence of the contractor in industrial relations and health and safety.

But before determining its role, government should consider its industrial relations objectives with large construction projects. In line with the objectives of the ILO’s Labour Clauses Convention, 1949, it is recommended that government should not allow labour costs to be used as an element of competition among bidders for public contracts and should require all bidders to comply with certain minimum labour and health and safety standards. In addition, government’s policy should not act as a downward pressure on wages and working conditions. It should also ensure that structures for ongoing engagement and dispute resolution mechanisms are in place and are working so that perceptions of procedural justice are dealt with.

This will assist in levelling the playing fields for competitors and prevent unscrupulous international contractors who wish to enter our industry by under-cutting our contractors on labour costs.

Government can use various mechanisms to ensure that minimum standards are adhered to. These include:

• The publishing of sectoral determinations, as it has already done for the civil engineering industry;

• Facilitating national agreements for specific projects, like the 2010 projects, before the commencement of those projects;

• Publishing sectoral determinations for specific or large projects; and • Requiring through the tender process that the contractors establish properly executed

PLAs that are binding upon all contractors, subcontractors, applicable unions and employees and that the PLA ensures minimum and consistent standards, wages and other terms and conditions of employment, consultative and bargaining structures for effective engagement during the project, and other fair labour practices.

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The public authority must also properly categorise the nature of the construction project, bearing in mind that different labour regimes apply to metal and engineering, civil engineering and building.

The client should also ensure compliance with the legislation, including health and safety legislation, and national agreements. It should also monitor the implementation and control of proper and appropriate incentive schemes.

Public authorities cannot justify a neutral role in industrial relations matters when they can have such a dire impact upon the project as a whole. It is also apparent that given the state of collective bargaining in the construction industry, a neutral role is an abdication of government’s leadership responsibilities. At the same time, these recommendations should not be read as meaning that government should intervene in every labour dispute. But public authorities should ensure that consistent and fair agreements, systems and procedures are in place to deal with the industrial relations issues as and when they arise.

RATIFICATION OF THE ILO’S LABOUR CLAUSES CONVENTION, 1949

In the light of the argument above, government should consider ratifying this Convention. Although it will not guarantee harmonious industrial relations, it will assist in clarifying government’s objectives and role.

THE NEGOTIATION OF PLAS FOR LARGE PROJECTS

In a large site where the wage rates and other terms and conditions of employment are not immediately apparent, the conclusion of a PLA is essential. The PLA should set out clearly the substantive terms and conditions of employment, the forums for engagement and the procedures for resolving disputes. It must bind contractors, subcontractors operative on the project for a period of at least one month, including labour brokers, applicable unions and employees. This will ensure consistency, provide for a sense of procedural justice, and should prevent many strikes and work stoppages.

Soccer City, where there is a PLA-type agreement, and which was praised by some of the union interviewees as a site where there is good engagement between management and union, is an example of this. Interestingly, very little industrial action took place at this site. Similarly, at the King Shaka International Airport where a PLA is in place and no industrial action has been reported. Even the Gautrain Rapid Rail Project, where there is a PLA, has had relatively little industrial action. These sites point to the fact that PLA’s are essential and a key instrument for harmonious industrial relations.

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CLASSIFICATIONS BETWEEN CIVIL ENGINEERING AND BUILDING

It is evident that this distinction is difficult and complex. If the distinction must be maintained, then it must be properly clarified in legislation. The wrong classification may have profound implications for industrial relations, in particular, the uniformity of wage rates on a site. The lack of uniformity about wages easily and unnecessarily promotes industrial strife.

In the medium to long term, it may be better to work to a situation where building and civil engineering rates and other terms and conditions of employment are harmonised so that the classification has a lesser impact upon industrial relations.

THE REQUIREMENT THAT 70% OF THE LABOUR BE RECRUITED LOCALLY

There is no doubt that this policy has good intentions, but it must be reviewed because its effect upon industrial relations is disastrous. The rift between permanent and LDCs is difficult to manage, even for a union. LDCs are difficult to organise and are often not trade union members. This makes it difficult to deal with them when they embark upon strike action, which is often unprocedural or illegal. They have short-term objectives – to make as much as possible now. They do not have a career path or prospects of future employment. Moreover, it is questionable whether decent and sustainable employment is being created because in most cases their employment is not linked to a skills development programme.

Therefore, if the policy is to be maintained, then perhaps government should, in order to foster some prospect of future employment:

• Insist that the local employees or all LDCs at large construction projects be trained and provided with skills development, such as at Johannesburg’s Soccer City;

• In line with Britain’s NEDO Report (1970), require contractors to maintain a voluntary register of employment of LDCs for large construction sites so that these people can be offered additional training and other employment opportunities. The 70% requirement may then be relaxed if employees from this register are re-hired as a LDC.

Government can also insist that the contractors and unions set up an agency shop at the site so that LDCs contribute to the process of collective bargaining. This would ensure that they also have a stake in the industrial relations system, and possibly motivate some of them to join a union, making for, in general, more orderly collective bargaining and industrial relations.

COLLECTIVE BARGAINING

There is no prospect of establishing a bargaining council for the construction sector at present, even though the parties to the Civil Engineering Industry Interim Procedural Agreement envisaged this in 2004. Ideally, a bargaining council should exist for the construction sector as a whole. This would include the civil engineering and building sectors. This would level the

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playing fields for all competitors and remove labour costs as an element of competition among bidders. It would also prevent international companies, like construction companies from China, from undercutting our local competitors by simply paying abnormally low wages. Representative trade unions that bargain at a sectoral level would reduce the prospect of strike action, especially unprocedural and wildcat strike action.

But setting up a sectoral bargaining council is not immediately possible. There are two reasons for this. The first is that union representation in the civil engineering industry is far too low and even lower in the building sector. The second is that in the building sector there are thousands of small operators who operate outside the confines of any bargaining arrangement, regardless of whether it applies to them or not. This is partly the reason why the Gauteng Building Bargaining Council collapsed.

Government, therefore, needs to develop a strategy to foster sectoral collective bargaining in the construction sector and determine at what level collective bargaining should take place.

One way of supporting collective bargaining is encouraging unionisation by requiring in public tenders that contractors and subcontractors have agency shop agreements in place with unions having members on the site above a predetermined threshold. This will possibly promote unionisation and solve some of the representivity problems. Another way is to require in the tenders that the unions with members above a certain threshold are granted organisational rights such as the right of access to the site so that they are able to organise and recruit better. In addition, where agreements are made, but the parties are not sufficiently representative, government should consider making sectoral determinations that give expression to the process of collective bargaining.

Government and the parties also need to develop some form of consensus on what sufficiently representative is in this industry. Majoritarian principles are probably not appropriate in an industry that has a history of low trade union density and where there are large numbers of casual or temporary employees. Orderly and harmonious industrial relations are probably better served with a lesser threshold.

LABOUR BROKERS

The use of labour brokers is often controversial and fraught with possible problems. Government tenders should possibly regulate this area as well, requiring labour brokers to be restricted to sourcing labour, but ensuring that the contractors are the employers. If labour brokers remain the employers of the sourced labour, the government tenders should require the:

• labour broker to abide by the terms and conditions of employment set out in the PLA so that the labour broker’s employees are not paid less than other workers on the site; and,

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• contractor or subcontractor to pay the wages of employees deducting this from the fee payable to the labour broker. This will better ensure that workers are paid, and will lessen the potential for industrial action.

CONCLUSION

The industrial action in the 2010 stadiums and Gautrain was not simply about opportunism. Certainly these projects presented an opportunity for collective action unlike in the past, but the strike action could have been averted had there been better industrial relations planning and management. It is evident that the industrial relations environment in most construction sites was complex, irrational and in most cases poorly managed. This stemmed from the way in which the projects were procured and classified – building as opposed to civil engineering projects – to the role played by government, the failure to involve unions in the 2010 projects as a whole and provide workers with a meaningful voice, the failure to implement Project Labour Agreements and the resulting senses of unfairness that therefore prevailed, the lack of unionization, the recruitment of labour, labour brokers and collective bargaining.

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Appendix A: Schedule of Interviews

Item Date Name Designation Place of interview

1 4 August 2008 Rob Burn Murray & Roberts HR Director

Johannesburg

2 9 August 2008 Levy Lepota BCAWU Senior Shop Steward at Polokwane Stadium

Johannesburg

3 11 August 2008 Ian Macun Executive Manager: Collective Bargaining, Department of Labour

Johannesburg

4 12 August 2008 Mike Willey Chairperson of the Board of Directors

Johannesburg

5 12 August 2008 Wayne Reddie WBHO Director: Group Human Resources

Johannesburg

6 13 August 2008 Afsal Soobedaar and Itumeleng Mosege

CCMA National Senior Commissioners: Mediation

Johannesburg

7 15 August 2008 Ernest De Jager Industrial Relations Consultant

Johannesburg

8 19 August 2008 Bhekani Ngcobo NUM National Co-ordinator of Construction

Johannesburg

9 26 August 2008 Daniel Kgonyane BCAWU 2010 Campaign Co-ordinator

Johannesburg

10 5 September 2008

Muller Uys Past HR Director of SAFCEC

Johannesburg

11 15 September 2008

Hazzy Sibanyoni Director: Department of Sports and Recreation

Pretoria

12 16 September 2008

Archie Welman Human Resources Manager, Civil Engineering Business Unit, Grinaker-Lta

Kempton Park

13 17 September Louis Brackenridge Executive Director, Johannesburg

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Item Date Name Designation Place of interview

2008 Construction Engineering Association (South Africa)

14 22 September 2008

Patrick Hlengisa NUM Western and Northern Cape Regional Construction Co-ordinator

Cape Town

15 22 September 2008

Joe Brown BCAWU National Organiser based in Cape Town

Cape Town

16 23 September 2008

Arnold Williams Deputy Secretary, The Building Industry Bargaining Council (Cape of Good Hope)

Cape Town

17 23 September 2008

Eddie Cottle Building Woodworkers International 2010 Campaign Co-ordinator

Cape Town

18 18 October 2008 Mr Mboyi NUM Senior Shop Steward at Soccer City

Johannesburg

19 28 October 2008 Bernard Johnson HR Director: Basil Read Boksburg

20 11 November 2008

Junaid Allie HR Director: Group 5 Kempton Park

21 15 November 2008

James Ramafolo BCAWU Senior Shop Steward at Polokwane Stadium

Telephonic