A minimum wage could save SA from implosion
Workers and the poor should not be the only ones tightening their belts
OUR economy is in serious trouble. Promises of a 6% growth rate have come to nothing, and our economy is hardly growing at all. At the same time, talk of industrialisation has also come to nothing, and the country is, as commentator Moeletsi Mbeki often points out, rapidly de-industrialising.
The Eskom debacle has exacerbated the situation, and with millions of blacks — especially the young — out of work, the situation is not sustainable. If we continue down this road, there will be a real risk of a social explosion.
One of the important debates about the future of our country relates to the proposed introduction of a national minimum wage. At the moment, minimum wages are only set for some sectors of the economy, but the proposal is to establish a national minimum wage that would apply to all workers in all sectors.
And Deputy President Cyril Ramaphosa is pretty determined to see this happen, as indicated when he addressed the annual Nedlac organised-labour conference earlier this year.
Those who favour labour-market flexibility argue that our workers are not able to compete with workers in China in terms of wages, or workers in Germany in terms of skills and productivity, which means that the only viable way to create employment is to avoid a minimum wage, and to allow bosses to hire and fire at will.
The introduction of a minimum wage, so this argument goes, will lead to a rapid escalation of our already dangerous levels of unemployment.
For the proponents of this view, the solution is for the state to support business, not labour, in the hope this will produce economic growth, leading to increasing employment.
Others argue that CEOs receive obscene salaries, so wages need to be increased for workers to reduce the gross inequalities that characterise our society. This is similar to the trade union slogan of the ’80s in which workers demanded a “living wage”.
Organisations aligned to labour, such as the German social democratic think-tank, the FriedrichEbert-Stiftung, often make an economic argument for the introduction of a minimum wage. At a recent seminar organised by the think-tank in South Africa, the minister of economic affairs for the German state of Thuringia, Wolfgang Tiefensee, said that the first evaluation after 100 days of a minimum wage in Germany was clear: business’s argument that it would lead to job losses was wrong. On the contrary, the new minimum wage in Germany led to informal work becoming formal — and including social benefits.
It is often argued that the introduction of a minimum wage in Brazil has been central to the reduction of inequality there, and that increasing the amount of cash in poorer com- BOTTOM OF THE PILE: Minimum wages have not led to job losses in Germany, according to initial evaluations, while in Brazil inequality has been reduced
It is possible for the state to set a wage cap at the top of the earning spectrum
munities offers a vital boost to economic activity. Trade unionists have often pointed out that unemployment actually fell in Brazil after the introduction of a minimum wage.
But it is also clear that although it’s certainly important to focus on the wages paid to the people at the bottom of the economic system, there is not nearly enough focus on the massive salaries paid to people at the top. It is absolutely shocking that some CEOs earn tens of millions of rands, over and above share options.
Some commentators on the right of the political spectrum portray workers as lazy and overpaid — but are silent on the excessive salaries earned by many CEOs.
The question of how the wage bill is divided is at least as important as the question of how much money is allocated to the wage bill. We need a much more vigorous conversation about this.
It is perfectly possible for the state to set a wage cap at the top of the earning spectrum along with the introduction of a minimum wage to protect workers at the bottom of the earning spectrum.
Because the gains made by social democracies in the ’80s have been steadily eroded, the approach of mainstream economic analysis nowadays has been that when belts need to be tightened, it should be workers and the poor who take the pain.
This was the logic that US President Barack Obama and UK Prime Minister David Cameron applied to the financial crisis that began in 2008.
But this logic is not an objective economic truth: rather, it is a consequence of power relations. When the working class and poor are politically weak, they will always be vulnerable to the sorts of experts who present the interests of the rich and powerful as being the same as the general interest.
The only people who have an interest in CEOs being paid tens of millions of rands a year are the CEOs and their families. However, we all have an interest in the lowest-paid and most vulnerable workers receiving a living wage. This is because we all have an interest in living in a more just and sustainable society.
Buccus is a research fellow in the school of social sciences at the University of KwaZulu-Natal and academic director of a university programme on political transformation