When strikers gain Pyrrhic victories
AS is the case with people who play the Lotto, it sometimes seems that trade unions and their members do not have a decent grasp of arithmetic.
Do union officials and their members calculate the tipping point at which a strike results in a net loss to the worker — a loss that, in some cases, can take years before being recovered, if ever?
This was addressed in a study published in the Accountancy SA journal by Professor Johannes de Wet of Pretoria University and Gaisang Diale. They took into account variables such as the opening demand of the union, initial offer of the employer, length of the strike and the final agreement.
They concluded that in the Passenger Rail Agency of South Africa strike, the workers emerged with a net present-value loss of R4 675 after striking for 17 days.
In this case, the union demanded 15% against the employer’s offer of 11%. They settled on 11% plus a 1% of annual salary one-off payment. Even with the slightly better terms negotiated during the strike, the workers were still worse off by R4 675 on average per worker per annum owing to the loss of pay during the strike.
Some are forced to turn to loan sharks, who bleed them dry for years to come.
In the car strike, on the other hand, members emerged with a gain of R5 102 after striking for 13 days. They asked for 16% against an offer of 8% and accepted 10% plus a one-off R1 000.
Workers should demand of their union leaders to explain to them the consequences of extending a strike and making demands that are unlikely to be met. They might also suggest to office-bearers that they make some sacrifice if the workers emerge with a net present-value loss.
Decades ago, workers at the OK Bazaars went on strike for several months before settling at what the employer had originally offered. It was calculated at the time that these members would never in their working lives recoup their losses.
When the government partners with labour, a shift in the balance of power must lead to uncertainty and economic damage, as we now see in the collapse of the rand and as was seen in the ruin visited on Britain under Old Labour.
A state beholden to labour has dim prospects in today’s hitech environment. And even when it does embark on labourintensive projects such as Medupi, the thanks it gets is strike action.
It was the intransigence of the unions that brought Britain to its knees before Margaret Thatcher came to power. She called for limits on the power of unions. At the time, strikes crippled hospitals and even the dead went unburied. In light of innocent patients becoming the victims of strikes, Thatcher asked: “What has happened to our sense of common nationhood and even of common humanity?”
It seems to escape union leaders that they are hurting South Africa’s attraction as a home for investment and discouraging entrepreneurs from starting new enterprises, particularly when they are labour intensive. They are destroying the prospects for the very job opportunities they want their members to have. They are stimulating mechanisation and automation as they render the costs of labour to levels where its utility becomes questionable.
Is there an inverse relationship between union power and national prosperity? In the US, unemployment is 7.4% and private-sector union density is less than 7%. In Japan, the total union membership has fallen from 56% in 1949 to 18% in 2012. In Australia it has fallen from 25% in 1999 to 17% in 2012.
There is a role for collective bargaining between business and workers. But it needs to be conducted in a rational manner that addresses the realities of a modern world in which a strong back is no longer enough and the march of technology is irresistible.