With the kind permission of Business Day these are random extracts from the article.
“We can only hope, in the meantime, that populism, youth radicalism, xenophobic violence, tribalism and service delivery protests — all of which are ultimately manifestations of joblessness — do not erupt into an uncontrollable conflagration.”
“It is high time that we recognise that Cosatu is the biggest single impediment to job creation in SA”.
“SA’s labour market is a shambles. About 8,5-million people are out of work or underemployed. Last year, SA lost double the number of working days due to strikes than at the height of rolling mass action against apartheid. This year, labour productivity fell to the lowest level in 40 years.”
“Labour’s share of national income is at a 50-year low. Over the past three years, wages have risen by 11,5% a year on average — treble the consumer inflation rate over the period. Growing numbers of employers are using automation, mechanisation and other labour-saving methods as an alternative to labour, with the result that the economy’s labour intensity has fallen sharply — by 8,1% in the past three years alone. It now takes 36,2% fewer workers to produce a given unit of output than it did in 1960.”
“According to the World Economic Forum, some aspects of South African labour laws are the most restrictive in the world. The International Monetary Fund believes aspects of these laws need to be relaxed, and even the drafters of the 1995 Labour Relations Act have called for reforms. No matter how you look at it, we can surely all agree that labour market outcomes — including the most important, unemployment — demand an urgent rethink of the labour environment.”
“One thing is certain: we will not get the necessary rethink. Employed people, at 13,5-million, outnumber unemployed people, 8,5-million, by a ratio of nearly 2:1. There is a great deal of stealth around membership figures for African National Congress (ANC)-aligned organisations, but the most credible figures suggest the Congress of South African Trade Unions (Cosatu) has 1,2 -million members and the ANC Youth League 360000 members — a ratio of more than 3:1.”
“The voting calculus — if we assume that the circuitous path of democracy in SA derives its ultimate direction from the voting booth — suggests that established workers will trump the unemployed. Minimum wages, which are supposedly intended to maintain a living wage for workers, are in fact designed to keep young and inexperienced job-seekers out of the workplace. Businesses respond to minimum wages by retaining the workers (mostly older, trained and experienced workers) whose productivity justifies the minimum wage, and retrench the rest.”
“Wage subsidies have existed since the 1950s in 45 countries around the world, and Cosatu’s fears have not been realised in any of these countries in any period. The prominence given to Cosatu’s idle conjectures is a measure of the dominance of its sheer membership numbers in the ANC’s electoral reckoning. It is high time that we recognise that Cosatu is the biggest single impediment to job creation in SA.”
“We can do so in several practical ways, all of which are consistent with article 23.1 of the Universal Declaration of Human Rights, the so-called ‘right to work’ [‘Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment’]:
• repeal the ‘closed shop’ laws that compel job-seekers to join a trade union as a precondition for obtaining a job;
• repeal the ‘agency shop’ laws that compel workers to pay union membership fees whether they belong to a union or not;
• require that trade unions ballot their members ahead of a strike, and further require that a two-thirds majority votes in favour of a strike;
• prohibit open ballots and require secret ballots: open ballots lead to intimidation of union members who vote against a strike;
• prohibit employers’ collection of trade union dues on trade unions’ behalf;
• prohibit the automatic extension of bargaining council agreements to entire industries or sectors, so that these agreements are voluntary;
• on a nationwide basis, place an upper limit on wage settlements so that wage increases may not exceed labour’s marginal nominal productivity growth; and
• make unions liable for the loss of earnings that occurs during work stoppages.”
“This opportunity to smash the unions and enhance the economy’s long-term job-creating potential will be lost, for entirely political reasons. Keeping some of the most senior politicians in power and, by implication, out of jail, means that unholy alliances will be made. The clamour for greater disbursement of taxpayer resources means that populist causes and contradictory promises will grow unchecked, as will the disillusionment that follows. A clumsy and haphazard equilibrium will stay in place until the unemployed outweigh the employed in political calculations, which will occur only in about 20 years’ time, given current rates of population, labour force and employment growth.”
Lesley Letsatsi
on May 31, 2012 at 9:50 am
The central argument here is not about growth and job creation but a campaign “to smash unions” in particular COSATU which is nothing new.
An article by Loane Sharp, a labour economist at Adcorp, appeared for the first time in Business Day today and should be read in its entirety – SA’s trade unions the biggest obstacle to job creation.
With the kind permission of Business Day these are random extracts from the article.
“We can only hope, in the meantime, that populism, youth radicalism, xenophobic violence, tribalism and service delivery protests — all of which are ultimately manifestations of joblessness — do not erupt into an uncontrollable conflagration.”
“It is high time that we recognise that Cosatu is the biggest single impediment to job creation in SA”.
“SA’s labour market is a shambles. About 8,5-million people are out of work or underemployed. Last year, SA lost double the number of working days due to strikes than at the height of rolling mass action against apartheid. This year, labour productivity fell to the lowest level in 40 years.”
“Labour’s share of national income is at a 50-year low. Over the past three years, wages have risen by 11,5% a year on average — treble the consumer inflation rate over the period. Growing numbers of employers are using automation, mechanisation and other labour-saving methods as an alternative to labour, with the result that the economy’s labour intensity has fallen sharply — by 8,1% in the past three years alone. It now takes 36,2% fewer workers to produce a given unit of output than it did in 1960.”
“According to the World Economic Forum, some aspects of South African labour laws are the most restrictive in the world. The International Monetary Fund believes aspects of these laws need to be relaxed, and even the drafters of the 1995 Labour Relations Act have called for reforms. No matter how you look at it, we can surely all agree that labour market outcomes — including the most important, unemployment — demand an urgent rethink of the labour environment.”
“One thing is certain: we will not get the necessary rethink. Employed people, at 13,5-million, outnumber unemployed people, 8,5-million, by a ratio of nearly 2:1. There is a great deal of stealth around membership figures for African National Congress (ANC)-aligned organisations, but the most credible figures suggest the Congress of South African Trade Unions (Cosatu) has 1,2 -million members and the ANC Youth League 360000 members — a ratio of more than 3:1.”
“The voting calculus — if we assume that the circuitous path of democracy in SA derives its ultimate direction from the voting booth — suggests that established workers will trump the unemployed. Minimum wages, which are supposedly intended to maintain a living wage for workers, are in fact designed to keep young and inexperienced job-seekers out of the workplace. Businesses respond to minimum wages by retaining the workers (mostly older, trained and experienced workers) whose productivity justifies the minimum wage, and retrench the rest.”
“Wage subsidies have existed since the 1950s in 45 countries around the world, and Cosatu’s fears have not been realised in any of these countries in any period. The prominence given to Cosatu’s idle conjectures is a measure of the dominance of its sheer membership numbers in the ANC’s electoral reckoning. It is high time that we recognise that Cosatu is the biggest single impediment to job creation in SA.”
“We can do so in several practical ways, all of which are consistent with article 23.1 of the Universal Declaration of Human Rights, the so-called ‘right to work’ [‘Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment’]:
• repeal the ‘closed shop’ laws that compel job-seekers to join a trade union as a precondition for obtaining a job;
• repeal the ‘agency shop’ laws that compel workers to pay union membership fees whether they belong to a union or not;
• require that trade unions ballot their members ahead of a strike, and further require that a two-thirds majority votes in favour of a strike;
• prohibit open ballots and require secret ballots: open ballots lead to intimidation of union members who vote against a strike;
• prohibit employers’ collection of trade union dues on trade unions’ behalf;
• prohibit the automatic extension of bargaining council agreements to entire industries or sectors, so that these agreements are voluntary;
• on a nationwide basis, place an upper limit on wage settlements so that wage increases may not exceed labour’s marginal nominal productivity growth; and
• make unions liable for the loss of earnings that occurs during work stoppages.”
“This opportunity to smash the unions and enhance the economy’s long-term job-creating potential will be lost, for entirely political reasons. Keeping some of the most senior politicians in power and, by implication, out of jail, means that unholy alliances will be made. The clamour for greater disbursement of taxpayer resources means that populist causes and contradictory promises will grow unchecked, as will the disillusionment that follows. A clumsy and haphazard equilibrium will stay in place until the unemployed outweigh the employed in political calculations, which will occur only in about 20 years’ time, given current rates of population, labour force and employment growth.”
The central argument here is not about growth and job creation but a campaign “to smash unions” in particular COSATU which is nothing new.