Ann+Crotty,+B+Report,+How+much+lowere+wages

Business Report, Johannesburg, June 15, 2005
=How much lower do employers want wages to be?=
 * By Ann Crotty**

It is difficult to understand the calls for a dual labour market in the context of the recent report published by the Labour Research Service (LRS).

According to the report's survey of wage agreements and what are referred to as sectoral determinations, a substantial percentage of workers in the formal economy are being paid an average of R253 for a 47-hour week.

The workers covered by the government's sectoral determinations are unskilled and enjoy little or no union protection in the workplace. They are dependent on a wage that is almost 50 percent below the income required for the minimum living level.

This level, as published by the Bureau of Market Research at Unisa, denotes the minimum financial requirements of members of a family if they are to maintain their health and have acceptable standards of hygiene and sufficient clothing for their needs.

So it is not as if we are dealing with a lazy bunch of malcontents who are determined to sustain an extravagant lifestyle.

While all workers who are covered by sectoral determinations fall below the minimum level, the LRS reports that about 33 percent of workers covered by the more generous wage agreements fall below the minimum living level.

The question is how far below the living level employers want to go before they are comfortable that South Africa has a dual labour market.

And presumably it is not just the wages they are concerned with. So presumably, as pay is forced downwards, the hours worked would be forced upwards from the 48 hours that the private security industry demands of, and gets from, its employees.

Sadly, as an economist friend points out, our corporate community is driven by individuals who believe that for R253 a week a company in China could probably get three employees, each of whom would be prepared to work 80 hours.

As a result of this belief there is considerable pressure to drive local wages down far below what is needed to sustain a basic living standard. And if the wages do not go down, the jobs disappear from our shores and reappear in China.

At this juncture it is worth pointing out, yet again, the ambivalent attitude to wages that prevails in the corporate community. As LRS executive director Sahra Ryklief put it, wages at the bottom end of the spectrum are pushed down to the sectoral determination level, while at the top end they are driven up to match the latest exorbitant executive remuneration package.

Many of those who are not forced to live on R253 a week believe this situation reflects the delightfully efficient workings of a free market system and the unrestrained forces of supply and demand.

And they would argue that all of the unemployed in this country would willingly opt for a dual labour market that would give them the opportunity to work 80 hours for considerably less than R253 a week.

It is difficult to argue against this on the basis of short-term economic logic.

As competition tribunal chairman David Lewis said at Monday's hearing into the proposed acquisition of Topics by Edgars Consolidated (Edcon), by sourcing product from China Edcon was providing consumers with quality goods at attractive prices. This, Lewis pointed out, enhanced consumer welfare.

But Ebrahim Patel of the Southern African Clothing and Textile Workers' Union suggested that the tribunal consider a broader definition of consumer welfare: a definition that would allow for the fact that the price of this enhanced consumer welfare was increasing unemployment and therefore steadily reducing the number of consumers.

This of course hearkens back to one of capitalism's old contradictions, which is that competition results in greater industrial efficiency at the expense of the workers, so that the more easily and cheaply goods can be produced the fewer people are able to consume them.

In a reasonably closed economy this has often provided the pressure or ability to advance to the next phase of economic growth.

However, in a totally open economic system such as we are in, it is difficult to see what alternative there is to the loss of jobs to China.

With limited resources being committed to education and training, it is hard to imagine how we can develop sufficient alternative employment opportunities. Perhaps as the jobs being lost to China move up the skills ladder, the political clout of those under threat may force a more coherent response from the government and business.

In the meantime, those of us in the middle can look on as the hundreds of thousands of unskilled workers consider themselves lucky to hold on to R253 a week and hundreds of top executives consider themselves unlucky because their multimillion-rand packages have been topped by the guys running the investment community's current favourite sector.


 * From: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=2558246