Right guys need to win this ‘war’
THE articulate Public Enterprises Minister, Malusi Gigaba, has some nerve. Delivering more populist speak to the congress of the National Union of Mineworkers this week, he said members must put pressure on business to invest in SA. “They must come to the party and partner with government and labour,” he told members. This demand comes as the government of which he is a powerful member stands foursquare alongside its union ally, Cosatu, in devoting time and energy to hammering private enterprise.
In column after column over recent months I have bemoaned the state of the mining sector, now plumbing the depths (no pun intended) with one month after another of steadily worsening output statistics. And this is the fault of the owners?
It has as much to do with shootfrom-the-hip responses (on ministerial instructions) by the Department of Mineral Resources to lethal mine accidents, as anything else. When mines or sections of mines are shut down arbitrarily, it can take days and weeks before the rhythm of steady production is restored.
When Loane Sharp writes (Business Day, May 25) that SA’S labour market is a shambles, he makes very good points. There has long been cause for deep concern about the state of the education sector. The powerful South African Democratic Teachers Union is both aggressive and uncompromising. It is also highly obstructive. As Sharp makes clear, it has long “persistently refused to allow any performance agreements at all”. Teachers are above the irritating and humiliating demands of managerial assessment.
Is it true, as Sharp suggests, that “teacher unions’ influence over government schools makes black kids unemployable, and trade unions keep black youth who by some miracle become employable out of work”? Cosatu’s general secretary, Zwelinzima Vavi, a committed communist, is having none of this and nor is he inclined to ameliorate his view that the proposed youth wage subsidy is anything but a crude weapon forged to enable business to attack “the living standards of the South African working class”.
He sees it is a declaration of war. If it is, then for the sake of the country and future generations we had better make sure the right guys win. WHY has Germany prospered, and why does it defy the effect of the eurozone crisis? According to Mickey Levy, chief economist of the Bank of America, keeping wages low is what makes its industry competitive and keeps its economy humming.
In a tightly reasoned article published in January, Levy says there is a clear need for the troubled eurozone nations (read those in the south) to rein in unsustainable government finances and address their lack of competitiveness. Germany is one example of success; by the same token, China’s tradition of low wages (rapidly changing) is what has given it that critical competitive edge.
However much Cosatu general secretary Zwelinzima Vavi may argue differently, South African labour productivity simply doesn’t cut it. There are many reasons and no doubt some are outside the compass of workers to fix — outdated equipment, poor technological application and low managerial skills.
But there are factors for which workers are responsible, and this is where trade unions need to play a part. Their aggressive demands for increased wages and better compensation packages are damaging, perhaps irreparably, SA’s already modest competitiveness. It is one of the reasons factory owners keep crying for a weaker rand — the only way they can compete is to offer product at ever cheaper dollar rates.
That is the easiest — and cheapest — way out of an increasingly serious impasse. As Gigaba says, South African companies are sitting on an enormous cash pool, which he estimates at R520bn. If he is right, he needs to ask why the reluctance to invest it. One answer is that the fragile nature of the global economy means that company bosses want to hold on to their corporate savings.
Another is the extensive confrontation between government and business, and the suspicion with which many ministers and whole departments approach business. If the government wants to persuade companies to invest, it needs to repair its attitude towards them.