Employers facing financial difficulties may apply for wage increase exemptions through bargaining council processes, with applications required to be lodged by 31 July 2026.
Image: Leon Lestrade/ Independent Newspapers
South Africa’s metal and engineering sector is bracing for another fierce battle over wages after the National Employers' Association of South Africa (Neasa) warned that the extension of the Metals and Engineering Industries Bargaining Council (MEIBC) Main Agreement could dramatically increase labour costs for thousands of small and medium-sized businesses.
The warning comes as wage increases contained in the industry’s three-year collective agreement take effect from 1 July 2026, raising minimum wage rates across multiple occupational categories in the sector.
The agreement, concluded between employer associations affiliated to the Steel and Engineering Industries Federation of Southern Africa (Seifsa) and trade unions including Numsa, Mewusa, NUM, Saewa and Uasa, provides for increases ranging from 5% to 6% for the final year of the deal.
Under the agreement, the minimum hourly wage for workers in the lowest-rated category of the main engineering schedule will rise from R66.93 to R70.95 per hour from July 2026.
However, Neasa argues that the actual cost to employers is significantly higher once statutory and industry-related employment costs are included.
In a message directed at employers in the metal and engineering industry, Neasa CEO Gerhard Papenfus warned that the total cost-to-company for an entry-level worker could reach R99 per hour for the most basic unskilled position if the agreement is extended to all employers in the sector.
“This is not hypothetical. This is what happens if you do nothing,” Papenfus said.
According to Papenfus, many smaller employers currently pay wage rates below those prescribed in the Main Agreement because they are not parties to the bargaining council agreement and have benefited from Neasa’s longstanding opposition to the extension of the agreement to non-parties.
The latest industry circular issued by the MEIBC confirms that the wage increases are applicable only to organisations that are party to the agreement and are not currently applicable to non-party employers, including Neasa, the Consolidated Employers Organisation (CEO), the Federated Employers Organisation of South Africa (FEOSA), the South African United Employers Organisation (SAUEO), the South African Engineers and Founders Association (SAEFA), and the union Solidarity.
The dispute now centres on whether the agreement should be extended by the Minister of Employment and Labour to cover the entire industry, including non-party employers.
Neasa contends that such an extension would place severe financial strain on small businesses already grappling with weak economic growth, rising electricity costs and operational challenges.
Papenfus accused larger companies of supporting the extension because higher wage floors would make it more difficult for smaller competitors to survive.
“Big business wants this extension,” he said. “Higher minimum wages price you out and remove competition.”
The employer body has launched a campaign urging small and medium-sized enterprises to join Neasa in an effort to influence the outcome of any future bargaining council vote on the extension of the agreement.
According to Neasa, voting within bargaining councils is weighted according to employee numbers rather than on a one-company-one-vote basis. Papenfus argued that this system gives larger employers disproportionate influence over industry-wide decisions.
“The MEIBC will attempt to extend this arrangement to every employer in the sector. This requires a vote, not a fair vote, a waiters vote.It is not one employer, one vote,” Papenfus said.
“This system is based on the number of employees behind each vote. The vote of one employer with a thousand workers carries the same weight as the votes of a hundred small employers, each with 10 workers.”
He warned that unless more SMEs participate through employer organisations, large companies and major unions would continue to dominate bargaining council outcomes.
The latest wage tables show that minimum rates for workers across the sector will rise by between 5% and 6% from July 2026, with artisans and higher-skilled categories receiving increases closer to 5%, while lower-paid categories receive increases of up to 6%.
Apprentices, drivers and workers in specialised sectors such as structural engineering, electrical cable manufacturing and gate and fence manufacturing will also receive increases under the agreement.
Employers facing financial difficulties may apply for wage increase exemptions through bargaining council processes, with applications required to be lodged by 31 July 2026.
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