IN-DEPTH REPORT: STANDARD BANK STRIKE AND COLA NEGOTIATIONS
Since early this year, Standard Bank Eswatini employees, through their union, the Swaziland Union of Financial Institutions and Allied Workers (SUFIAW), have been engaged in a protracted negotiation over cost of living adjustments.
Such negotiations are a common annual practice where employees negotiate adjustments based on the inflation rate.
Inflation rate refers to the percentage increase in the price level of goods and services over a period of time, typically a year. Employers use the inflation rate to adjust salaries so employees can maintain the same standard of living despite rising prices, known as the cost of living adjustment (COLA).
A COLA offer should be above the inflation rate. In some instances, additional compensation is provided based on performance (merit increase), so that the total increase includes both the COLA and the merit adjustment.
In a conversation with The Bridge, Labour Expert Fundizwi Sikhondze noted that in many regions globally, cost of living adjustments are standard practice and are typically integrated into company policies. While COLA adjustments are primarily driven by the inflation rate, other factors such as company performance also play a role in determining the final increase.
“In contrast to the public sector, where increases are often standardized, private sector companies, which generate profits, factor this into their negotiations,” explains Sikhondze.
Standard Bank Eswatini is proposing a 5.5% COLA before applying any merit increases. Given the current inflation rate of 4.4%, this offer is generally considered acceptable.
For context, negotiations between trade unions and employers over salary increases or cost of living adjustments involve several steps. Both parties begin by preparing proposals based on financial data and member expectations. Initial proposals are presented and discussed in meetings where evidence is exchanged, and compromises are sought. This process includes multiple rounds of bargaining to find a middle ground, often involving package deals that combine salary adjustments with other benefits. Once a tentative agreement is reached, it is drafted, reviewed, and ratified by both union members and the employer’s decision-making body. The formalized agreement is then implemented, with both parties monitoring compliance. If negotiations fail and an agreement cannot be reached, unions may call for strike action.
In the Standard Bank case, following failed negotiations, the employees resorted to a strike action. On 19 July 2024, Jabu Shiba, the Secretary General of SUFIAW, wrote to Eswatini’s Labour Commissioner, Mthunzi Shabangu, informing him about the intended strike action by Standard Bank workers, beginning Tuesday, 23 July 2024. The same letter was copied to Standard Bank Eswatini’s Chief Executive, Mvuselelo Fakudze, as well as the Executive Director of the Conciliation, Mediation and Arbitration Commission (CMAC).
Subsequent to this correspondence, the workers embarked on a strike that saw demonstrations at Standard Bank branches throughout the country. This impacted banking operations and services to the extent that the bank’s management had to step in to assist customers. The bank’s Chief Executive issued a statement encouraging customers to use the digital services offered by the bank.
As of Wednesday, 31 July 2024, the strike action had entered its eighth day, with clashes between the police and some political activists who had joined the strike alongside the protesting workers at the bank’s headquarters at the Corporate Place in Mbabane.
Now, what is the bank offering, and what is the position of the workers through their union? The bank initially offered a cost of living adjustment of 5.15%, while the workers demanded 7.5%. The bank then revised its COLA offer to 5.5% plus performance merit - 2% for "setting example" employees, 1% for "right on track" employees, and 0.5% for "making progress" employees.
This means that "setting example" employees would get a 7.5% increase, "right on track" employees would get a 6.5% increase, and "making progress" employees would get a 6% increase. Employees with a performance rating of "time to step up" would receive a minimum 5.5% increase.
The Bridge has learned that if this offer is accepted by the employees, most staff would get a 6% increase when including performance merit, with only six employees receiving below a 6% increase due to non-performance.
Reached for comment by The Bridge, SUFIAW’s Jabu Shiba confirmed this information and said they were aware of the offer by Standard Bank, which had been tabled before their strike action notice on 19 July 2024.
“Our members rejected it. The problem is that meritorious increments at Standard Bank are derisory compared to other institutions. If I sign 5.5% at Nedbank, for instance, a ‘making progress’ employee will be sitting at 6.5% as their merit is: ‘making progress’ at 1%, ‘right on track’ at 3%, ‘setting example’ at 5%. Clearly, based on the meritorious increment levels, the offer is, by any standard, inferior,” says the SUFIAW Secretary General.
Shiba stated that the strike action would continue as there was no headway at the negotiation table. By Wednesday afternoon, SUFIAW had gone down to a 6% demand.
Meanwhile, Standard Bank remains adamant that their offer is reasonable. Addressing a press briefing on Wednesday afternoon, 31 July 2024, the bank’s Chief Executive said the bank has offered 5.5% as COLA to their employees, which is available if the union signs before Thursday, the 1st of August at 5:00 pm after which the offer will fall away.
The bank maintains that their staff is paid far better, arguing that they also offer a 13th cheque in addition to the COLA and merit increase.
“Comparatively to other institutions that have settled; one at 5.5% and 5.6%, our offer is aligned,” reads the bank’s statement circulated to the media soon after Wednesday’s press briefing.
Through the statement, Standard Bank reminded striking employees of the lockout notice which stipulates that all bank assets must be returned to the bank and that they shall not be permitted to enter company premises; they will only be confined to the designated picket areas.
“We would like to clarify that currently all staff members on strike have been deactivated from the bank’s systems as a risk measure and for security reasons. We would also like to state that the bank believes the current offer on the table is reasonable and competitive,” continued the statement.
Labour Expert Fundizwi Sikhondze considers Standard Bank's proposed 5.5% COLA increase to be reasonable, especially when considering the additional merit increase tied to performance. However, Sikhondze cautions that merit-based increases can sometimes be subjective. “For example, an employee who is not favoured by management might receive a lower performance rating, which could result in no merit increase. Such employees would then rely solely on the basic COLA adjustment,” he points out.
Sikhondze believes that with the union currently seeking a 6% COLA and the bank offering 5.5%, the two positions are relatively close, making it feasible for both parties to reach an agreement.