The shocking news of the closure of Goodyear in Kariega is a devastating blow to the economy of the region.
The concerns for not only the more than 900 employees who could join the unemployment queues in SA, but also the impact such a closure will have on the economy of Kariega, as well as the greater Eastern Cape, are huge.
Goodyear announced its restructuring earlier in June, which simultaneously included the closure of the company’s manufacturing plant in Kariega and issuing a total of 907 employees with Section 189 retrenchment notices.
This may translate to more than 1,800 families who will be severely affected by the closure, as well as the knock-on effects these job losses and the shutting down of the production facility could have on the automotive industry in general and other companies which are suppliers to Goodyear.
The extent to which the sustainability and viability of these supplier businesses will be affected is yet to be determined.
With Nelson Mandela Bay fondly known as the “Detroit of SA”, the automotive industry has for many years been considered the backbone of the local economy.
As a city which embodies SA’s rich automotive heritage, the Automotive Business Council recently announced that the 2025 SA Auto Week will be hosted in Gqeberha in October.
But it is not just the province that is affected.
More than 32,000 people are employed across SA in the automotive manufacturing industry.
The motor industry is undergoing wage negotiations, which should be considered by all parties — not in a vacuum — but in the current economic climate where jobs are extremely scarce.
These factors need to be taken into consideration when wage demands are made and balanced with the right to a living wage.
The National Union of Metalworkers of SA (Numsa) is in what I assume would be sensitive and vigorous wage talks with the OEMs and other governing bodies to reach another three-year wage agreement.
It could not have come at a more volatile time with global trade uncertainty and low growth rates in the SA economy.
Wage-increase demands of 10% upwards are not only unreasonable, but perilous considering the current economic climate and polarised conditions South Africans live in.
Instead of advocating for massive wage increases which threaten the sustainability of organisations, it has been argued that unions can positively assist employees in safeguarding a significant number of jobs by being mindful of the conditions affecting the local labour market, particularly during wage negotiations.
Too rapid increases in wages can negatively impact employment growth, whereas more flexible labour regulations can promote job creation.
Experts argue that under certain conditions there is a link between pervasive unemployment and the high price of labour.
And where jobs are available but remain vacant, the unemployed are not suitably skilled to fill these positions.
SA, and particularly the Eastern Cape, have an oversupply of unskilled workers and a shortage of highly skilled workers with qualifications which match industry needs.
Therefore, our ideal future labour force needs to be highly skilled, in alignment with the needs of industry.
The last Stats SA survey of households where income sources were divulged (2022) revealed that salaries (62.2%) and grants (50.5%) were the most common sources of income reported by households in SA.
While salaries in provinces like the Western Cape (74.6%) and Gauteng (69.3%) were relatively high, salaried sources of income were significantly lower in the Eastern Cape (51.2%) while grants were notably more prevalent as a source of income in the province (65.4%).
In the war against an over-reliance on government grants for survival and empowering more people to join the workforce in the province, we will need all role players — including the critical and powerful voice of the unions — to fight for the sustainability of our companies and jobs in the city and province.
- Dr Luvuyo Bono qualified with a doctorate in labour law (LLD) at Nelson Mandela University in 2023, where he also holds the title of adjunct professor of law. He was admitted as an advocate of the high court in 2000 and has contributed to key labour law legislation in SA in his career. Bono is the current board chair of the Coega Development Corporation and writes in his personal capacity.
The Herald
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