WORKERS’ DAY: NO CAUSE FOR CELEBRATION
Dave Steward – Executive Director
A significant majority of South Africans – and most of our youth – will have very little to celebrate on Workers’ Day. They do not have jobs – and for many of our young people there is little or no prospect of ever being employed.
The situation is much worse than the official unemployment level of 24,9% would indicate. The figure does not include those who have given up looking for work. If they are added almost 36% of the workforce is unemployed. Among black South Africans the figure rises to over 40,7% – compared with formal unemployment rates of 23,5% for coloureds, 13% for Indians and 5,6% for whites.
However, even these figures do not give the full picture, since they relate only to the percentage of the working age population who are economically active. One of our key underlying problems is that South Africa’s labour absorption rate of 41,3% – that is the percentage of the working age population that is economically active – is one of the lowest in the world.
Unemployment, in turn, is one of the root causes of continuing and unacceptable levels of inequality. It provides fertile ground for crime and is a driving force behind daily service delivery protests.
What are the causes of unemployment – and how can it be addressed? Government and COSATU routinely blame ‘the legacy of the past’. However, unemployment levels were generally lower before 1994. They increased from 9,2% in 1980 to 22,9% in 1994 – coinciding with the rapid expansion of trade unions after the Wiehahn Commission reforms at the end of the 1970s.
Others claim that unemployment has been caused by neo-liberal economic policies – which have exposed South African workers to unfair competition from cheap imports. They argue that fiscal discipline and high interest rates have hobbled the economy. However, similar policies in other parts of the world have led to spectacular growth and to fully employment.
So what are the actual causes of our jobs crisis?
One of them is undoubtedly the failure of our education system to produce properly educated workers – particularly with qualifications in maths and science. Only about one eighth of the children who entered the education system in 2000 emerged 12 years later with university exemption matrics – and of these only a fraction passed maths and science. According to the World Economic Forum Global competitiveness Report South Africa was adjudged 138 out of 142 with regard to the quality of maths and science education.
However, the main cause of unemployment is almost certainly our rigid labour laws, militant trade unions and restrictive regulatory climate. The fact that COSATU is a member of the ruling ANC Alliance has given it a de facto stranglehold over labour policy which it has used effectively to secure routine wage increases that outstrip both inflation and productivity increases. New restrictive labour legislation is about to come before parliament that will further disincentivise companies that want to create jobs. Since 2000 the collective bargaining system has increased wages for unionized workers by 48% above the inflation and productivity levels – compared with an increase of only 17% for non-unionised workers. When faced with such increases employers have only one option and that is to cut employment.
The hostile investment environment created by militants in government and COSATU has also ensured that South Africa has not received anywhere near its appropriate share of foreign investment – particularly during the commodities boom between 2000 – 2008. Continuing threats of nationalization and the openly hostile attitude of Marxist trade unions to the companies in which their members work have further discouraged investment and employment. All this has been exacerbated by one of the worst strike records in the world – 2.8 million work days in 2011 – and (thanks to SADTU) over 14,6 million man-days in 2010. Little wonder therefore that the WEF Global Competitiveness Report graded South Africa 138th out of 142 in terms of co-operation in Employer – employee relations.
Government further discourages small and medium size businesses – which in most countries are the main creators of jobs – by weighing them down with unnecessary regulations and BBBEE requirements. The most recent example is the proposed requirement that all businesses in the formal and informal sectors should have to apply for licences. Small and medium-size businesses are increasingly subjected to collective bargaining wage determinations that they cannot afford – and that were negotiated in processes in which they had no voice.
But all is not well in COSATU-land:
- Union membership has been declining. It reached its peak in 2002 with more than 4 million members. By 2010 membership had shrunk to little more than 3 million – with 2.2 million belonging to COSATU-affiliated unions;
- Some unions have grown complacent and detached from their membership – hence the alarming growth of grassroots upstarts like AMCU. The sweetheart relationship between big business and union leadership was recently exposed by Greg Marinovich who revealed that large companies have routinely paid the generous salaries of union leaders working in their companies. Some have been receiving annual salaries of as much as Rand 1,4 million. Business wants to end the relationship – but unions, understandably, want it to continue;
- There are serious divisions within the COSATU – with some factions wanting to oust outspoken Secretary-General Zwelinzima Vavi – while others, successfully for the moment, support him;
- Relations with the ANC are strained as a result of consistent criticism – particularly by Vavi, of ANC corruption, the Secrecy Act, toll roads, and the flagship National Development Plan (which NUMSA has equated with DA policy).
- Relations have also soured with traditional comrades in the SACP. COSATU claims that the SACP’s (entryist) project of remaining President Zuma’s principal support base – and the entanglement of its leadership in government posts – has led to a dilution of its traditional revolutionary principles.
None of this is likely to change soon. There is no NDP Maggie Thatcher waiting in the wings with the will, the power or the ability to tame the unions. COSATU is likely to continue on its present course for the foreseeable future – to the immense disadvantage of the country, the economy and particularly of the unemployed.
That is why Workers Day should be an occasion for deep introspection – and not for celebration.
Therefore, get rid of all moral filth and the evil that is so prevalent and humbly accept the word planted in you, which can save you. (Jam 1:21 NIV)
Commentary on Worker’s Day
Dave Steward – Executive Director
A significant majority of South Africans – and most of our youth – will have very little to celebrate on Workers’ Day. They do not have jobs – and for many of our young people there is little or no prospect of ever being employed.
The situation is much worse than the official unemployment level of 24,9% would indicate. The figure does not include those who have given up looking for work. If they are added almost 36% of the workforce is unemployed. Among black South Africans the figure rises to over 40,7% – compared with formal unemployment rates of 23,5% for coloureds, 13% for Indians and 5,6% for whites.
However, even these figures do not give the full picture, since they relate only to the percentage of the working age population who are economically active. One of our key underlying problems is that South Africa’s labour absorption rate of 41,3% – that is the percentage of the working age population that is economically active – is one of the lowest in the world.
Unemployment, in turn, is one of the root causes of continuing and unacceptable levels of inequality. It provides fertile ground for crime and is a driving force behind daily service delivery protests.
What are the causes of unemployment – and how can it be addressed? Government and COSATU routinely blame ‘the legacy of the past’. However, unemployment levels were generally lower before 1994. They increased from 9,2% in 1980 to 22,9% in 1994 – coinciding with the rapid expansion of trade unions after the Wiehahn Commission reforms at the end of the 1970s.
Others claim that unemployment has been caused by neo-liberal economic policies – which have exposed South African workers to unfair competition from cheap imports. They argue that fiscal discipline and high interest rates have hobbled the economy. However, similar policies in other parts of the world have led to spectacular growth and to fully employment.
So what are the actual causes of our jobs crisis?
One of them is undoubtedly the failure of our education system to produce properly educated workers – particularly with qualifications in maths and science. Only about one eighth of the children who entered the education system in 2000 emerged 12 years later with university exemption matrics – and of these only a fraction passed maths and science. According to the World Economic Forum Global competitiveness Report South Africa was adjudged 138 out of 142 with regard to the quality of maths and science education.
However, the main cause of unemployment is almost certainly our rigid labour laws, militant trade unions and restrictive regulatory climate. The fact that COSATU is a member of the ruling ANC Alliance has given it a de facto stranglehold over labour policy which it has used effectively to secure routine wage increases that outstrip both inflation and productivity increases. New restrictive labour legislation is about to come before parliament that will further disincentivise companies that want to create jobs. Since 2000 the collective bargaining system has increased wages for unionized workers by 48% above the inflation and productivity levels – compared with an increase of only 17% for non-unionised workers. When faced with such increases employers have only one option and that is to cut employment.
The hostile investment environment created by militants in government and COSATU has also ensured that South Africa has not received anywhere near its appropriate share of foreign investment – particularly during the commodities boom between 2000 – 2008. Continuing threats of nationalization and the openly hostile attitude of Marxist trade unions to the companies in which their members work have further discouraged investment and employment. All this has been exacerbated by one of the worst strike records in the world – 2.8 million work days in 2011 – and (thanks to SADTU) over 14,6 million man-days in 2010. Little wonder therefore that the WEF Global Competitiveness Report graded South Africa 138th out of 142 in terms of co-operation in Employer – employee relations.
Government further discourages small and medium size businesses – which in most countries are the main creators of jobs – by weighing them down with unnecessary regulations and BBBEE requirements. The most recent example is the proposed requirement that all businesses in the formal and informal sectors should have to apply for licences. Small and medium-size businesses are increasingly subjected to collective bargaining wage determinations that they cannot afford – and that were negotiated in processes in which they had no voice.
But all is not well in COSATU-land:
None of this is likely to change soon. There is no NDP Maggie Thatcher waiting in the wings with the will, the power or the ability to tame the unions. COSATU is likely to continue on its present course for the foreseeable future – to the immense disadvantage of the country, the economy and particularly of the unemployed.
That is why Workers Day should be an occasion for deep introspection – and not for celebration.
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