Business Day

Right guys need to win this ‘war’

- David Gleason E-mail: david@gleason.co.za Twitter: @Thetorquec­olumn

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.

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