Be­tween two worlds

Meet the man who headed the much-dis­cussed panel that pro­posed SA’s new min­i­mum wage

CityPress - - News -

Does no­body un­der­stand this thing?” asks Pro­fes­sor Im­raan Valo­dia, head of the ex­pert panel that last week re­vealed the “magic num­ber” for the pro­posed na­tional min­i­mum wage: R20 per hour. “Con­cep­tu­ally, I think peo­ple don’t get the floor idea. That’s ac­tu­ally all that this is: a floor. There is this idea that [ev­ery­one] should now be paid R3 500,” he says. “It could be that a very small pro­por­tion of peo­ple ac­tu­ally earn that.”

The big re­lease was less than two days be­fore our in­ter­view, when jour­nal­ists were sum­moned to the Na­tional Eco­nomic Devel­op­ment and Labour Coun­cil (Ned­lac) on a Sun­day af­ter­noon. We ended up wait­ing sev­eral hours while union and busi­ness groups ar­gued about the wage re­port Valo­dia and six co­pan­el­lists had just pre­sented to them.

There had been a need to work in iso­la­tion from the peo­ple in Ned­lac, who will now be scru­ti­n­is­ing the re­port. “The worst thing would have been to get cap­tured by one of the con­stituents.

“The pol­i­tics of this thing was such that ... it would leak,” says Valo­dia – some­thing am­ply demon­strated that Sun­day.

While we waited, some­one in the know told me that it was go­ing to be R3 500. That some­one was im­pressed – peo­ple who had been part of the bat­tle of ide­olo­gies and eco­nomic mod­el­ling this past year know how strong the push for some­thing much lower had been.

“It is kind of in­ter­est­ing that most of the flak that we are tak­ing is that it is too low,” Valo­dia says when I meet him at his of­fice at the Univer­sity of the Wit­wa­ter­srand (Wits) two days later.

“Now that the num­bers are out, I don’t see why we shouldn’t be open to changes if it makes the pro­posal bet­ter. There is no rea­son we can’t in­crease it if needed.” So, why this spe­cific num­ber? Valo­dia and his co-pan­el­lists were roped in to come up with an in­de­pen­dent rec­om­men­da­tion to solve an in­tractable ideological dis­pute where both sides are backed up by large and ir­rec­on­cil­i­able bod­ies of re­search. They’ve been called sell­outs from the left and job ma­raud­ers from the right.

One stream of re­search, partly com­ing out of Na­tional Trea­sury, has pre­dicted cat­a­strophic job losses no mat­ter how low the min­i­mum wage is set.

An­other stream says higher wages trans­form profit into con­sumer spend­ing, growth and em­ploy­ment.

It is an old ar­gu­ment and Valo­dia’s panel was wary of both holy cows.

“We don’t re­ally know whether this will be the case, this ar­gu­ment that rais­ing the in­come of low-waged work­ers will lead to con­sump­tion-led growth,” he says.

“We have good rea­sons to be­lieve that lots of mar­kets in South Africa are not com­pet­i­tive. For ex­am­ple, if re­tail mar­kets are not com­pet­i­tive, this con­sump­tion-led-growth ar­gu­ment could ac­tu­ally lead to higher food prices and higher prof­its for re­tail com­pa­nies – not to more em­ploy­ment.”

The ac­tual pro­posal is al­ready mud­died, with R3 500 per month and R20 per hour get­ting used in­ter­change­ably.

I point out that for part-time and ca­sual work­ers the hourly rate comes to less than R3 500. He points out that the coun­try’s av­er­age work­ing hours are more than 40 a week, so it comes to more. As dean of Wits’ fac­ulty of com­merce, law and man­age­ment, Valo­dia has been in­volved in the in­sourc­ing process that sprung from the #FeesMustFall move­ment.

“The se­cu­rity guards at Wits work in­cred­i­ble hours and they are happy when you throw more at them.

“There is a hell of a lot we don’t know about what that ad­just­ment process is go­ing to be,” he says.

The hall­mark of the pro­posal is that it rep­re­sents the path of least re­sis­tance for those parts of the econ­omy that al­ready have reg­u­lated wages. It won’t af­fect many unionised work­ers di­rectly and it won’t fun­da­men­tally hike the wages al­ready set by sec­toral de­ter­mi­na­tions for things like con­tract clean­ing, farms or do­mes­tic work. As a mem­ber of the Em­ploy­ment Con­di­tions Com­mis­sion, Valo­dia has a hand in those de­ter­mi­na­tions.

At the rate they are go­ing, they all more or less reach the pro­posed min­i­mum wage by 2019 any­way.

Po­lit­i­cally, the min­i­mum wage can be­come a new ral­ly­ing point for ev­ery­one else.

As an econ­o­mist, Valo­dia’s pub­lished work has zoomed in on the in­for­mal sec­tor and those who work in it. That is where of lot of the in­ter­est­ing ef­fects could be felt as the fig­ure of R20 – or what­ever it turns out to be – gets ham­mered into the na­tional con­scious­ness. It is called the light­house ef­fect and it is the rea­son the panel wanted a “nice round num­ber” – some­thing eas­ily ham­mered into the na­tional con­scious­ness. Some­thing you can cam­paign around. R20 is bet­ter than R20.12, says Valo­dia.

“What is go­ing to hap­pen could be quite in­ter­est­ing. Think about some­one like the Eco­nomic Free­dom Fight­ers say­ing, we are go­ing to or­gan­ise these guys and de­mand a higher wage,” he says.

“The prob­lem is that our unions have for­got­ten how to or­gan­ise. This type of work is also largely ser­vices, a hard sec­tor to or­gan­ise. It would be easy to have one sym­bol.

“You are giv­ing those work­ers there a bit more power by set­ting a kind of ref­er­ence price. Ev­ery­one has to ac­cept it. That is how you change those power re­la­tion­ships.”

PRO­FES­SOR IM­RAAN VALO­DIA by De­wald van Rens­burg What do you think of the pro­posed min­i­mum wage?

SMS us on 35697 us­ing the keyword WAGE and tell us what you think. Please in­clude your name and prov­ince. SMSes cost R1.50

COM­ING OF WAGE Im­raan Valo­dia Pro­fes­sor

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