‘The issue confronting the firms, the unions and SA generally, is how these cash flows and profits should be best be employed — in reducing debt, paying dividends, making acquisitions or, much more helpfully for economic growth, adding to capital equipment or workers employed.   The answer for SA is obvious — more jobs’.

‘The (annual strike) season might better be described as “the season of further loss of permanent jobs in the formal sector of the economy”.   Wages and benefits will improve for those who keep their jobs, while management will be strongly encouraged to proceed with operating strategies that rely less and less on unskilled labour and more on capital equipment employed’.

Appearing for the first time today in Business Day is a well-reasoned article, Job-loss season is here and unions are to blame, by Brian Kantor, Chief Strategist and Economist at Investec Wealth and Investment and Professor Emeritus of Economics at the University of Cape Town.   Brian Kantor argues that

unions need to promote employment by encouraging the adoption of policies that would make for a more flexible labour market and, as important, a much more mobile labour force that could adapt appropriately to the state of the economy’.

Business Day has kindly agreed to allow me to publish extracts and to provide a link to the article.

‘THE annual strike season is well upon the economy.   The usual well-above-inflation increases are being demanded and accompanied by the usual marches, toyi-toying and some violent intimidation of workers less inclined to put their jobs at risk.   And after losses of production, and presumably also of wages, management and unions will settle on increases above recent inflation rates’.

‘The labour-saving logic practised by management is sensible enough — including its willingness to concede well-above- inflation increases rather than suffer from prolonged loss in production.   The logic driving union action is less obvious to those outside the ranks of union leaders and their rank and file, who seem to appreciate a good fight with their bosses.   One might be inclined, perhaps naively, to think, given the long-established employment trends, that the leaders would rather wish to encourage employment and so union membership and the dues they collect with less aggressive demands for more.   Clearly there is something else at work that makes union militancy rather than co-operation the action that keeps union leaders in their jobs’.

‘The uncomfortable truth is that management has no good reason to alter its ways.   It is reacting to the fact of economic life in SA — that the real cost of capital, in the form of a lower risk premium paid by firms, has come down materially, given a most helpful political transformation.   Over the same period, their real cost of hiring labour has increased materially’.

‘It would seem obvious to all but those who find it convenient to deny the obvious relationship between employment levels and employment benefits that, in the interest of more formal jobs, it is unions that need to become less militant and more co-operative with management’.