SA battles with pay rises

SOUTH Africa’s economic growth could be hampered by the double-digit wage increases being demanded by unions, finance experts have warned.

As unions and employers head for a fresh round of wage negotiations with the threat of industrial action looming over several industries, there are growing fears that companies will not be able to meet the demands of unions.

Zeph Ndlovu, president of the South African Chamber of Commerce and Industry, said companies could not afford double-digit increases, especially with the declining gross domestic product (GDP) at 0.24% from an original base below 1%.

“We are not growing at all,” he said.

Ndlovu said South Africa was among emerging economies struggling to achieve decent growth on exports, and the country was at the bottom of the growth curve and “relatively flat” compared with other Brics countries.

“Sadly, our productivity rate compared with global scale is below 2%; the labour costs are between 6 to 7%.

“We could capitalise on improving productivity to use it as a competitive strategy in attracting foreign investment.

“Clearly companies cannot pay what they cannot afford and with the unemployment rate at 27.1% we cannot risk expanding this figure further,” Ndlovu said.

He urged unions and management to work together to preserve jobs and grow the economy.

“At the moment, investors are hoarding cash while exercising their options.

Owe

“Organised labour and business must work together and not against each other and we owe it to the South African economy to succeed as an integrated powerhouse,” said Ndlovu.

Economist Dawie Roodt said companies were the engine of economic growth and should not be overburdened because this would exacerbate slow economic growth and inflation.

“There needs to be an increase because of increases in food prices and other costs of living. Even more so for poor families because the economy is growing slowly, at less than 1%, so people are poorer,” he said.

However, Roodt said the situation was tough for both employers and the workforce.

He urged people to be responsible in their demands.

“A salary increase at the current inflation rate or slightly better would mean that you’re doing pretty well,” said Roodt.

The National Education Health and Allied Workers’ Union (Nehawu) recently settled on an 8% incremental salary increase for its members with the University of South Africa management.

Nehawu also settled on a 7% increase across the board with the Durban University of Technology management.

Their initial demand was for a 9% increase.

Sonja Carstens, United National Transport Union spokesperson, said they would demand a double-digit increase across the board from the Passenger Rail Agency of South Africa, although they were still consulting with their various branches on one figure to demand.

Sizwe Pamla, Cosatu national spokesperson, said the country’s economy looked dull.

He said people were the driving force behind the economy, but their meagre salaries were “repelled” by the high cost of living.

“We urge unions to demand real increases when negotiating for the people because we are looking at the 6.5% inflation rate as the bottom line and we want any employer to put a figure above that 6.5% as the basis of negotiations,” he said.

Pamla said with 47% of the country’s 14 million people in the workforce on less than R3 300 a month and another 50% on less than R5 000 a month, the price increase of basic necessities such as food, compounded by the drought and increase in petrol prices, meant people’s salaries were negated by these factors.

Pamla said with no National Health Insurance in place, it meant people had escalating medical bills and most people also ended up dependent on an over-burdened health system.

“There’s also an overburdened education system where people can’t afford to send their children to good schools, and government has failed to come up with a comprehensive transport system among other things,” Pamla said.

He said with constant fuel hikes, workers needed to pay more to get to work and for their children to get to school.