Labour tensions ‘result from workers’ real wages falling’

Note: The declining real wages, crippling debt burdens of Canadians, and the continuing struggles of the small business man to achieve profits is not only a problem in Canada, as this next story illustrates from South Africa; yet South African firms (large corporations and multinationals) are now among the most profitable in the world. Sounds familar….right?

August 26 2013    By Ann Crotty

Johannesburg – Two decades of declining real wages despite increases in productivity and crippling debt burdens were some of the reasons behind the heightened tensions in the current bargaining season, labour analysts said at a seminar last week.

In recent weeks media headlines have been dominated by reports of workers making “reckless” demands in wage negotiations and of strikes and pending strikes. Another major story of recent weeks has focused on the disappointing results from JSE-listed retailers, who are struggling to grow profits in the face of weak consumer demand.

The two sets of stories are, of course, intimately connected. It is one story told from two perspectives – that of workers across the economy and of investors in retail companies.

Workers are demanding above-inflation increases because they are unable to survive on their current wages – they have run out of cash and increasingly they are running out of the ability to access even the extremely expensive debt provided by unsecured lenders. The evidence, as investors in the retail sector will confirm, is that they have run out of money for consumer goods, even for the most basic of goods such as food.

At a seminar convened by the Progressive Economics Network to discuss labour productivity and the need for higher wages, Niall Reddy, a researcher with the Alternative Information Development Centre, dismissed the charge that high wage demands were “greedy” or “reckless”. Reddy said they represented “a rebellion against two decades of declining livelihoods and a challenge to the economic structures of unequal, profit-led growth”.

He pointed out that Statistics SA’s household survey revealed that most workers experienced virtually no improvement in real wages from 1997 to 2011. The median real salary for a formal sector worker in 2011 was R3 800 a month, the same as it was in 1997.

However, real wages of the top 10 percent of earners increased from R11 670 to R15 500 over this period. “The data show that the 22.7 percent increase in the formal sector average wage over the last 15 years was entirely due to increases for the top earners, which is confirmed by numerous firm-level studies that show the ‘high wage’ distortion to be largely due to bloated salaries for managerial staff.”

Reddy pointed out that the insistence by corporate executives that companies could not afford decent wages should be seen in the context of reports that South African firms were now among the most profitable in the world. He said trade unions would have to align themselves with the social anger that has been caused by the lack of decent wages “or fall victim to it, as the example of the National Union of Mineworkers shows”.

Roger Etkind of the Learning Company told the conference that workers consistently lost out by bargaining for pay increases linked to the consumer price index (CPI) because the inflation rate experienced by workers, which had a much higher proportion of items such as food and transport, was considerably higher than the official CPI inflation rate.

As was evident from last year’s tragic events in Marikana, heavy debt burdens and the crippling impact of garnishee orders was also referred to as a factor behind the high wage demands. The audience, which included trade unionists and labour advisers, questioned why Cosatu had not made sufficient effort to push the issue of garnishee orders. Requiring employers to audit garnishee orders was an issue that should be placed on the bargaining table, one delegate suggested.

Trenton Elsley of the Labour Research Service told the delegates that despite the adversarial nature of the current bargaining season, workers did not want to strike. “There is a specific dynamic playing out in the mining sector and it’s not just inter-union rivalry,” Elsley told Business Report, adding: “In other sectors workers don’t really want to strike, they are too stretched but they have expectations and want results from their unions.” Elsley said the media had focused on a few high-profile strikes.

Neil Coleman, the strategies co-ordinator at Cosatu, told the seminar a national minimum wage should be a key element of a “coherent wage and incomes policy”. The union movement was calling for “legislated comprehensive sectoral bargaining to improve on the national minimum wage floor”. A national minimum wage would create a basic wage floor below which no one could fall, said Coleman, pointing out that having one national minimum wage was preferable to having many sectoral minimum wages. One of the many advantages was that because of its simplicity every worker would be aware of his or her rights.

Coleman said the current bargaining was happening “in the context of unprecedented attacks on the bargaining system by employers and free market ideologues and the fight back against the increase in the farm workers’ minimum wage”.

Coleman argued that the “apartheid wage structure” had not been fundamentally altered, with the majority of black workers, particularly in the private sector, “continuing to live in poverty”. – Business Report


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