1. Social Partnership Daimler-Chrysler in South Africa

2. What is a social partnership? ILO view: –social partnership: “all types of negotiation, consultation or simply exchange of information between, or among, representatives of governments, employers and workers, on issues of common interest relating to economic and social policy” In general: –An agreement –between two or more parties –that attempts to benefit all parties –by creating a win-win situation

3. Situation Mid 2001 Daimler-Chrysler South Africa (DCSA) reached a “partnership agreement” with the National Union of Metalworkers of South Africa (NUMSA) Aug 2, 2001 NUMSA starts a general auto strike for 12% wage increase (instead of industry-wide 6.3%)

4. Positions DCSA The strike is a violation of the spirit of the partnership agreement. NUMSA The partnership agreement is a limited trade-off and did not free DCSA from their obligation to pay “Living wages” WHO IS RIGHT…?

5. Effect Base salary Social partnership Salary increase NUMSA Annual $12,000 $6,000 $1,440 $19,440 3.65% DCSA Annual $12,000 $6,000 $756 $18,756

6. DCSA View NUMSA took advantage of DCSA in making the agreement before the strike. DCSA might have based its incentive scheme on the current wages of employees. After the salary increase, the agreement might not make economic sense for DCSA.

7. Goals DCSA (initiating agreement) –Ensuring high quality and timely deliveries for major export contracts won by DCSA through paying special incentives to employees NUMSA (Strike) –Salary increase of 12% to employees from all the auto manufacturers

8. Dilemmas DCSA: Right vs wrong? –Was this a social partnership? NO, was an incentive program Focus on profitability and achieving DCSA goals not considering social impact on employees NUMSA: Short-term vs Long-term –Short term incentive program vs long term salary increase

9. Effect of partnership Designed to balance increasing profitability and providing benefits to employees (or stakeholders) Not in this case – DCSA had a purely financial focus

10. Ethical view of social partnerships Considers all ethical principles Utilitarian: benefits the greatest number Rules based: highest standards apply Care based: look after employees Balanced against profitability Still potential for conflict due to differing priorities of stakeholders