What impact do the unions have on SA’s economy? Detractors argue that union-supported strikes are making the economy less competitive, but is this really the case? And what is the impact of unionisation on the lives of local workers?
unions have played an integral role as a voice for social transformation in South Africa. During apartheid, their objectives were distinctly political. Their formal influence grew with the deregulation of black trade unions in the early 1980s.
But how have they fared in the democratic period? In particular, to what extent have unions used labour-friendly laws to negotiate better conditions for their members? The answers to these two questions suggest two things: that trade unions remain a force to be reckoned with in South Africa; and that they deliver benefits to their members, particularly those who work in the public sector.
The pros and cons
Some consider the effect of unions on the broader economy to be negative. In 2014, 670 working days per 1 000 employees were lost to strikes, placing pressure on affected firms’ outputs. And the Global Competitiveness Report continues to rank the relationships between employers and employees in South Africa as the worst in the world.
Business perceptions suggest that employers may be more constrained in their ability to pay wages in line with labour productivity than in most other countries. Postapartheid labour laws – such as the Basic Conditions of Employment Act of 1997, the Labour Relations Act of 1995 and the Employment Equity Act of 1998 – have been designed to protect workers from historical discrimination. They also empower unions in defence of their members. But some researchers assert that rigidity resulting from this legislation provides a central reason for SA’s high and growing unemployment rate in the democratic era.
Economist Haroon Bhorat and his colleagues place the existing evidence in context. Statistics for union membership, strike prevalence and lost productivity resulting from industrial action are shown to be internationally comparable. Unions may not necessarily be “too powerful”, as the Global Competitiveness Report may have us believe.
My own research shows that, while unions do contribute to wage inflexibility in the short run, agreements tend to be more flexible in the long run.
SA may, therefore, not be very different from the rest of the world when it comes to labour-market rigidity. It therefore seems unlikely that this feature is the only or dominant reason for high unemployment.
Public- vs private-sector unions
appears to be yes: average wage settlements of 7.8% in 2014 improved the household welfare of unionised workers. Strike activity (measured by lost working time) tripled between 1994 and 2014, showing that unions have increased their influence in the workplace. Membership statistics also indicate that unions are still considered relevant. As shown in the graph below, the share of publicand mining-sector workers who are union members has grown over time. In contrast, manufacturing and other private-sector workers have become less likely to join unions.
Why have these trends diverged?
It is plausible that the benefits of union membership differ by sector. The alliance between the governing ANC and Cosatu suggests that the public sector and unions share a common interest in enabling and implementing democratic-era policies. This includes enforcing labour laws and fairness towards workers. A number of indicators can be used to assess whether the public sector has fared better than the private sector in defending workers’ rights. A first clue may lie in the different wage increments across sectors. Union members are paid about 7% more than similar non-union members in all sectors. This figure has remained remarkably stable over time: wage increases or decreases resulting from workers’ transitions in and out of union membership amount to roughly 9% in both the 20012004 Labour Force Survey and the 2008-2010 National Income Dynamics Study panel datasets.