A time of possibility

A minimum wage is key to ensure meaningful redistribution of wealth in SA — and it means a shift in power

It’s an old truism that the Left focuses on the distribution of wealth and the Right on its production. It is true, as the Right argues, that a singleminded focus on the distribution of wealth will soon lead to a state without the resources to meet basic needs. It’s also true, as the Left argues, that a single-minded focus on the generation of wealth will lead to great inequality and, ultimately, social crisis and instability.

But what’s often forgotten in this debate is that the Right is also concerned with the question of distribution. By driving wages and taxes down it strives to ensure that wealth is accumulated among the rich.

Since the visit of economist Thomas Piketty to SA there has been growing support for a wealth tax. Piketty is also a strong supporter of increasing the minimum wage. This mechanism for redistribution has received a lot less attention in the wake of his visit. The Right always opposes minimum wage increases, arguing that it makes our labour uncompetitive on the global stage. We have to find another way forward.

In advanced economies, Germany stands out as a country in which unemployment and inequality are not as rampant as, say, in the US, the UK or the crisis-ridden economies of Southern Europe. In the developing world, Brazil is one of the few countries in which inequality is slowly declining.

Germany and Brazil are very different economies but they both have a minimum wage that makes it impossible for their economies to compete in a race to the bottom.

The increase in the minimum wage has been a vital part of Brazil’s relative success. It has improved the circumstances not just of people with formal employment but also of their families and communities. It allows people to ensure the health of their families, to educate their children and to support local businesses in their own neighbourhoods.

In SA we have mass unemployment. It is clear that social grants will continue to be a lifeline for millions of people and, if they can be steadily increased, an important redistributive mechanism. It is also clear that land reform, particularly in cities, will have to be a vital part of any redistributive agenda.

But no strategy for decreasing inequality and reducing poverty will get far without a major increase in the minimum wage.

After apartheid our economy was largely organised around the interests of capital on the understanding that profits would trickle down to all. We all know that didn’t happen.

In recent times there has been an increasing organisation of our economy around patronage and clientelism. Parastatals in particular have been excessively abused.

The time has come to organise our economy around the interests of society.

This will require taking on capital, locally and internationally. But it will also require taking on the political class that has a direct interest in sustaining a culture of patronage.

Knowing what needs to be done is just part of the puzzle. The best ideas in the world mean nothing without the political instrument to realise them in practice.

The recent struggle by students has marked another moment in the political opening that we have seen in recent years. It began with the urban poor, spread to the mines and then engulfed our campuses.

Of course organising these new energies into a political instrument is no easy matter. The National Union of Metalworkers of SA’s United Front appears to have been stillborn but the Economic Freedom Fighters have recently put on an impressive show of their support in Gauteng. They have shown what is possible.

There are no guarantees about the way ahead. But this is a time of real possibility. And the minimum wage should be the critical focus now.