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Trade unions vs big business-is it a question of semantics?

Christelle du Toit

Big business and trade unions have always been at loggerheads. While the unions fight for their workers, big business fights for the bottom line. But is it really that simple? Earlier this year Loane Sharp, a labour economist at Adcorp, set of a war of words when he wrote in Business Day that unions are South Africa’s biggest stumbling block to job creation - seemingly a strong contradiction of what unions stand for, namely the protection of workers’ rights and work security.

Sharp’s argument was based, amongst others, on the following pillars:

  • While 8.5 million people in South Africa are unemployed, South Africa lost more work-days to strike actions in 2011 than at the height of the mass action against Apartheid
  • Labour productivity is the lowest it’s been in 40 years
  • Wages have increased by treble the consumer inflation rate over the last three years

According to Sharp, minimum wages, which were meant to maintain a living wage, are keeping young, inexperienced workers out of the labour market, as is opposition to the proposed youth wage subsidy. He points out that fact that it costs the South African government R500 000 for each pupil it takes through from grade 1 to grade 12, in his opinion due to “relentless” increases in teachers and bureaucrats’ salaries.

He summarises: “teachers’ unions’ influence over government schools makes black kids unemployable, and trade unions keep black youth, who by some miracle become employable, out of work. It is high time, in other words, to crush the power of the trade union movement.”

In his argument against trade unions, Sharp points out that union membership has fallen from 3.5 million in 2006 to 3.3 million in 2012, and that only 1.4 percent of union members turned out for strikes since 2006.

After writing extensively based on fact, Sharp entered the terrain of politics though by concluding his piece by saying that the opportunity to “smash the unions” has been lost.

“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."

“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.”

This means war

It’s fair to say that once the Congress of South African trade Unions (Cosatu) saw Sharp’s piece, all hell broke loose.

Zwelinzima Vavi, the trade union federation’s General Secretary, attacked the basis of Sharp’s statistics, stating: “What is shocking with Mr Sharp is his ability to just spew lies and statistics sucked from the fingers. None of the figures he uses are backed by scientific research. But they are the work of Adcorp, a company of labour brokers. There is neither fact nor economic logic in any of the Mr Sharp’s work.”

Vavi quotes the South African reserve Bank (SARB) as he questions Sharp’s statistics on wage increases versus inflation, saying Sharp read his statistics “from another planet," He also contests Sharp’s statements regarding union membership, saying that this is steadily growing since 2006.

Cosatu maintains that the youth wage subsidy is no magic solution, but rather a hand-out to employees, with no guaranteed returns.

Vavi concludes: “This is nothing but an attack on the living standards of the SA working class. It is actually a declaration of war and battle lines are drawn!”

You say potato…

Clearly big business and labour unions are not singing from the same hymn sheet. Economist Mike Schüssler said in 2010 already that this is due to the very nebulous nature of terminology that is exposed in the Sharp/Vavi debate.

The problem starts with the mere definition of who is unemployed. “Unemployed” refers to those who are actively seeking work, and are available to work on short notice. However, it does not include an entire category of the potential labour market, which is termed “not economically active”.

According to Schüssler, “What is of concern is that the “Not Economically Active” part of the adult population (which includes discouraged work seekers too) increased by 5% over the last year 2009/2010, or by 711,000 people.” He says this category has been increasing at the highest growth rate of all the categories in the quarterly Labour Force Survey, and is the most consistent economic trend in South Africa over the last two decades.

“What concerns me is that these survey statistics rely on definitions. And by making small changes to these definitions, countries all around the world have succeeded in bringing down their official unemployment numbers for years,” says Schüssler.

He says that since the definition of “unemployment” has become so complicated, it’s hard to keep track of what is actually is. “Summing up, it is very easy to be employed but it is becoming increasingly difficult to be unemployed based on changes in definitions in South Africa and in other countries around the world.”

The SARB explains in its glossary of terms that the definition of unemployment used has a significant impact on statistics: “In 1999, for example, the South African unemployment rate was 23,3% according to the strict (official) definition and 36,2% according to the expanded definition. Irrespective of the definition used, there can be no doubt that unemployment is the most important socio-economic problem in South Africa.”

Christelle du Toit has worked as a journalist at various media houses in South Africa over a period of more than ten years, including The Citizen and the SABC. She has trained and worked in the areas of newspaper, magazine, television, and radio, online and photographic journalism. She has a specific interest in government, politics and community empowerment news.

Christelle has worked as Head of Communications for the Royal Bafokeng Nation in Phokeng, North West, South Africa. She has also served as Provincial Head of Communications for the Department of Public Works and Rural Development in the Free State Province, South Africa.