The economic landscape is ever changing with employers trending to distinguish between core functions and non-core functions. These non-core functions are often outsourced. When negotiating on behalf of employees performing such outsourced functions, the unions are often faced with the reality that the employer for the outsourced function is not the decision maker.
Services identified as non-core functions or business and which are often outsourced are security, cleaning, canteen services, maintenance, transport and logistics.
The provider of the core function and the provider of the outsourced function are often not on equal footing. Resulting in the supplier of the outsourced service often being a price taker and not a price maker for the service. The financially stronger companies (providing the core function and holding the market share) co-ordinate the value chain to their advantage and exercises control over others (providers of non-core functions) in the value chain.
Should the supplier of the non-core function not accept the terms offered by the dominant company, the provider of the non-core function is merely replaced with another service provider who is willing to accept the terms. This power and control are what distinguishes a value chain from an ordinary supply chain.
The nature of this relationship of control by one company over another leads to challenges regarding labour negotiations. When a union negotiates with a provider of a non-core service or function the union may be faced with the reality that the employer faced at negotiations has no power to negotiate remuneration or benefits.
Where the control and power are not with the employer, it may also lead to the conditions of service for these employees be worse than that of their equals at the dictating employer. It also influences job security as the non-core service provider employer must ensure that it can terminate employment when the contract with the controlling company ends. Although these employees are employed by the service provider, their conditions and tenure of employment depend on the contract between their employer and the financially stronger company.
This scenario brings a new dimension to labour negotiations and give rise to the question, “To what extend did South African unions adapted to recognise and align to Value Chain Negotiations in Labour Negotiations?”
It is foreseen that the only manner in which unions will be able to enter into meaningful Value Chain Negotiations in Labour Negotiations will be to merge with each other or to transfer powers and money to union federations. This is unlikely to happen as:
- Between unions there is competition for members.
- The office bearers of unions may lose their position should unions merge.
As these barriers were not resolved, it resulted in no real progress on the part of unions to align to Value Chain Negotiations in Labour Negotiations. Also, it is not foreseen that unions will be able to overcome these barriers soon.
