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?

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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.

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