FIFI PIETERS: News that came out yesterday from the steel sector related to the strike that could happen there. ArcelorMittal told its shareholders in a Sens statement that unions had issued the company with an intention to strike over pay. The steel company also said it would be approaching the labour court for an interdict because certain workers were quite important to the organisation and their downing tools would not make for a pretty picture in terms of its operations. The company did get that interdict from the labour court, but there’s still a dispute between the two – that’s management and workers – over the way forward regarding pay.
We’ve got the CEO of ArcelorMittal, Kobus Verster, on the Market Update for the latest. Sir, thanks so much for your time. Just talk to us about where things currently stand.
KOBUS VERSTER: Good evening Fifi, and thank you for making the time. In terms of the interdict, we got an interdict of the strike for about 50% of operations, which are our upstream operations where the assets are fairly fragile and one needs the time to make [things] safe for employees. So, in terms of that we’ve got a positive result; but, despite that, we are currently having a strike from the Numsa members, even on that part of the operations.
FIFI PIETERS: Right. But also the other part, the 50% [for which] you didn’t seek the interdict from the court, what are the issues here? According to your Sens statement, the company’s offering a total pay increase of 7%; the unions are wanting – is it a 10% or 15% increase in pay?
KOBUS VERSTER: It depends on the forum. In the strike note they go back to the 15%; prior to that they said they want 10%. It’s either 10% or 15%, depending on their view and the forum, but there’s an additional 15% demand on top of that in terms of housing allowance and many other the requirements.
FIFI PIETERS: What does this mean presently for your operations?
KOBUS VERSTER: Well, it’s affecting our operations quite severely. Firstly, the part that’s not supposed to strike – those that are, as I said, in contravention of the court order – are striking. And then obviously, as normal, the there’s substantial intimidation. Remember, there’s a strike called by only one union, not all unions. And then there’s the intimidation preventing people who actually want to work from coming to work. Overall that impact is quite severe.
FIFI PIETERS: The sentiment on the ground right now – we had our market analyst on the show earlier, and he was talking about inflation and how the price of everything is going up, particularly on the food side, the energy side that speaks to transport costs. Why does ArcelorMittal think that the 7% that you are offering is a fair wage at this stage?
KOBUS VERSTER: The first part of our offer is a 5% inflation type of adjustment, and then an additional 2% taking into account the current socioeconomic environment. But one should also remember that ArcelorMittal is one of the higher payers in the industry, where our lowest level of employee category on average gets R25 000, so the starting point is actually quite high. When you look at the increases, 7% on average for the category that we are talking about is north of R2 500 a month. So it is quite substantial and we believe that it is a fair offer from a high bas of salary which we afford our employees.
FIFI PIETERS: I read a report quoting Numsa, in which they disagree that they are well paid. They say that it’s not true, the kind of salaries that you’re talking about. What do you make of comments such as that?
KOBUS VERSTER: I think we all know that Numsa tends to be very economical with the truth, saying that we pay people R7 000. I can tell you, we have nobody that we pay R7 000, so that’s absolutely not true.
Numsa also yesterday said the holding company made a profit of more than $40 billion. That’s also totally wrong. So I would suggest that one interrogates their statement more – which is far from the truth. Our lowest category employees, as I said to you, on average earn R25 000 – between R21 000 and R25 000, depending on whether you add overtime or not. These are the actual numbers from our April payroll.
FIFI PIETERS: So where to from here, Kobus?
KOBUS VERSTER: Well, we’re still talking. As I said, it’s one union that’s on strike, half illegal. We’ve spoken to them today, so we are open to discussion. Our numbers are fair and we will continue to engage. But it unfortunate that we have to, once again, deal with the illegal part of the strike as well as the high level of intimidation that prevents people from coming to work if they want to work. Hence also ‘no work, no pay’ applies to people who are not willing to support this.
FIFI PIETERS: Do you think that the situation at Sibanye-Stillwater, where their workers have been on strike at the gold operations for over two months over pay. Obviously within that time the market, the public, learning of the pay increase of the CEO, just perhaps find that deal a little bit difficult, do you think that situation has set the precedent of what we should expect in terms of wage negotiations this time around – and the resiliency of workers to hold out for a deal that they think is fair? And are you worried if you think it has set a precedent?
KOBUS VERSTER: I don’t. What I can say is important is that people should understand that the constant increase in the fixed cost base of South African companies becomes a problematic area. It makes us all uncompetitive – and that’s why we have offered a split type of portion, one inflation-linked, and the other portion a cash bonus linked to the performance of the organisation. So we would like much more to move to that type of environment, instead of an automatic increase of the inflation base without any understanding of the productivity requirements to remain competitive in the medium and long term.
FIFI PIETERS: The inflation-linked portion of the increase at 5.5% – is that based on the company’s view of where inflation will land at the end of the year, because presently we are looking at CPI 5.9%?.
KOBUS VERSTER: No, no, no. I think 5% is around where inflation is currently. Last year average inflation was 4.5%. Remember, the 2% on top of that is in addition to sort of assisting people in the current economic environment.
But then you must also remember, in addition to that we have monthly performance bonuses that pay out to the extent that the company performs from an operational perspective. If you take that in context, we are talking about 4 600 people – in the bargaining category – which earn an average salary per month of R39 700.
So it’s not that we are indifferent. We do offer a very fair pay. As I said, if you compare our increase of more than R2 500 a month, relative to discussions in other sectors – whether R850 or R1 000, you can understand that [our offer is] extremely fair and attractive to the employees.
FIFI PIETERS: All right. Kobus, thanks so much for joining us. I will certainly be keeping a close watch on developments there at your operations. We’ll leave it there for now. Kobus Verster is the CEO of ArcelorMittal South Africa.