THE RICH GET RICHER
Oxfam report shows inequality greater than ever
ATORRENT of dissenting views regarding a national minimum wage has been unleashed following yesterday’s release of Oxfam’s inequality report at its South African headquarters in Braamfontein, Joburg.
The NGO’s report, titled “An Economy for the 99 percent”, shows how the combined wealth of three men in South Africa is greater than the wealth of the bottom 50 percent of the country combined; and advocates for progressive wage policies which it says will bridge income and wage disparities.
Meanwhile, the report claims the gap between rich and poor is greater than had been feared, detailing how big business and the super-rich are fuelling the inequality crisis by dodging taxes, driving down wages and using their power to influence politics.
In South Africa, the richest 1 percent of South Africans have 42 percent of the total wealth.
“Such inequality is the sign of a broken economy, from global to local, and the lack of will from the government to change the status quo,” said Oxfam SA executive director Sipho Mthathi.
“Governments, including the South African government, can act to help everyone, not just those at the top. They can build an economy where businesses pay their taxes and contribute to the wider good, where everyone is able to be healthy and educated and where poverty wages are a thing of the past,” Mthathi added.
The chief economist at the SA Institute for Race Relations, Ian Cruickshanks, expressed sympathy that 42 percent of the country’s wealth is concentrated in the hands of the top 1 percent of earners, adding that the government needed to implement its own policies to help bridge the inequality divide.
“President Jacob Zuma has been promising to spend roughly R900 billion on infrastructure developments in past State of the Nation addresses, which he said would propel economic growth and assist in alleviating poverty and inequality. This has not happened at the pace the government said it would,” Cruickshanks said.
Regarding the proposed national minimum wage, the report drew on research from Brazil under the leadership of the country’s former president Luiz Inácio Lula da Silva, showing how “between 2001 and 2012 real wages of the bottom 10 percent increased more than those of the top 10 percent thanks to progressive minimum wage policies”.
Cruickshanks said a national minimum wage would be detrimental to the country as it would lead businesses towards mechanisation. This he said would drive jobs away for semi-skilled and low-skilled workers, which he said would lead to a greater burden on the state in terms of more social grants and more social demonstrations because of a lack of jobs.
Cosatu spokesperson Sizwe Pamla said the labour federation favoured a national minimum wage, which he said would help alleviate “an apartheid-inherited labour market system deliberately designed to exploit black people, and structured to ensure low wages for blacks”.
Pamla also argued what he asserted was an economic imperative for a minimum wage policy, saying it would address the “dysfunctional” aspects of South Africa’s economy where workers cannot afford the products they produce.
“If you have 60 percent of South African workers taking home less than R5 000 a month, what is it that you are producing as an economy that those workers can afford? A minimum wage is good for the country because when you give people more money, they will be able to spend that money in the economy,” said Pamla.
But Cosatu’s views were repudiated by Leon Louw, executive director of the Free Market Foundation (FMF), who labelled Cosatu “mean” and “cruel”, saying they were advocating for a minimum wage at the expense of unemployed South Africans.
“If you have nearly 40 percent of South Africans who are unemployed and desperate – relying on welfare, family, friends, crime, informal trade and so on – and you then propose raising the cost of employing people, I cannot believe that a moral and ethical human being would want to do that. I find that absolutely astounding,” Louw emphasised.
“The first thing in economics is that if you raise the price of something – including labour costs – people will buy less.”
Louw also denounced Oxfam, calling the organisation “a giant scam, like a Ponzi scheme, that parades as charity”, adding that Oxfam’s “laudable” work to alleviate poverty had been “hijacked by this new propaganda – what I call ‘prosperity denialism’. They are denying the fact that the world has achieved an astounding explosion of prosperity over the last generation.”
Pamla said he was not surprised at the FMF’s opposition to a minimum wage, saying the FMF were lobbyists for big business and fighting its battles. “All big business has to say is ‘we want labour costs to be cheap for us to maximise profits’. And big business will unleash the FMF on its behalf.”