Evil exists. There are truly evil people among us. The narcissists who believe they know better and will enforce their will on the rest of us, irrespective of the cost. But for the most part, humanity has more good people than bad. Except in a few isolated examples, this weight of numbers prevails. So why are South Africa’s political leaders struggling to come to terms with the realities of its labour market. Despite all the evidence of growing unemployment, Government persists in defending the indefensible. Occasionally grabbing some respite by pointing to growing employment in the Public Sector – ignoring the reality that this is actually exacerbating the problem. Public servants need to be paid by taxes harvested from the private sector. And if that’s contracting, spending more on your staff while getting in less from your funders is a path to obvious disaster. Leaving that economic reality aside, and starting from the premise that everyone would prefer a growing labour force to a contracting one, it baffles me why the governing political party has such an obvious blind spot on this critical issue? Where does the mental block come from? In this superb contribution, Adcorp’s senior labour economist and Exco member Loane Sharp offers the best explanation I’ve yet heard. And suggests a plausible, face saving option for an embattled President Jacob Zuma. – AH
To watch the video of our interview on CNBC Africa’s Power Lunch, click here.
ALEC HOGG: The component manufacturers strike in South Africa’s automotive sector has come to an end. However, several other strikes continue, including at Anglo American Platinum and a potential strike at the Post Office. Joining us to discuss the labour issues – and it’s a very broad subject – is Loane Sharp, a labour analyst at Adcorp. Loane, thanks for coming through to the studio. You were standing on the other side of the cameras when Herman Mashaba was discussing his concerns about the path we’re going on. You guys have written books on it. You’ve spoken about these issues continuously. I ask you the same question I asked him. Where is the blockage?
LOANE SHARP: The blockage is in Parliament. When the ANC came to power it had a very small number of people available to take senior positions in government, particularly in Parliament. Large numbers of COSATU leaders ended up in Parliament in all sorts of portfolios, particularly in the labour portfolio, and COSATU’s agenda has dominated all the laws that have been presented to the legislature. So to me, it’s a straightforward matter why Parliament is so worker-oriented. It’s because of a dearth of leadership within the ANC at the time of democracy and a large number of union leaders who fitted into Parliament.
ALEC HOGG: Say you come from a small town. You look around the town – like for instance Mooiriver – and see an 80 percent unemployment rate. Say I get put into Parliament as an ANC MP, I go home every year, and I see my people not having jobs. At some point in time the penny has to drop that we’re doing something wrong.
LOANE SHARP: You know, union action is in the interests of union officials which is something quite different from union members, and union members are something quite different from the workforce. In the private sector only 15 percent – one in seven workers – is unionised. The union movement is dominated by the public sector where 81 percent of the workforce is unionised. So our unions are substantially unrepresentative, not only of broader society but specifically of people who work with only one in four workers in total being unionised. And we have one of those extraordinary situations where, due to a deal with the ruling party – a very explicit deal – those one-in-four workers and the union officials who control them, dominate our political landscape.
GUGULETHU MFUPHI: You mentioned the topic about unions in particular not really understanding how businesses operate. Why then not allow businesses to engage unions so as to understand how operating revenue works, how to drive a business, and how productivity is the gearbox of that?
LOANE SHARP: Unions understand a great deal more than you realise. They understand the cost of strikes. They know that neither companies nor workers benefit from a strike. It takes up to three and a half years to earn back in income the money lost while on strike if you’re a worker. Unions understand this incredibly well. There’s no lack of understanding of the mechanics of business within unions, and of course they use that understanding to their full advantage.
ALEC HOGG: How do they use it to advantage? The guys who work are members of yours, go on strike and they know – because we all understand what hits our pockets – that it’s going to take them three and half years to actually claw that back. How can that be to their advantage?
LOANE SHARP: What’s happening is; union membership is gradually declining. Last year alone unions in the COSATU stable lost R95m in union dues because of declining membership. Declining membership in turn, is causing unions to go out on strike more. Three years ago the strike season lasted three months. This year it has lasted – or will last – over ten months. So unions are coming out on rampage in a desperate attempt to reinvigorate their membership which is declining. There’s a lot going on. When you look at the media you get the impression that unions are on the rampage. And yes it’s true, if you look at the exchange rate of the Rand, manufacturing and mining production, mining exports etcetera; there have been setbacks. But for the country generally, businesses have many new alternatives. One of the rights under-utilised in the South African Constitution is the right to trade. And businesses, during the initial negotiations in over the 1996 Constitution only agreed to the right to strike if they had a corresponding right to trade. So we’ve seen the emergence of temporary employment agencies. We’ve seen the emergence of temporary employment. These are people/workers who fill in for workers on strike. So the total disruption to business of strike behaviour is much less. Unions are well aware of it and as a result; intimidation and violence related to strikes is rising. Last year we had 153 000 incidents of strike-related violence and intimidation. Violence and intimidation is now the fifth leading cause of absenteeism in the country. Unions are on the rampage because they’re on the back foot, if that makes sense.
ALEC HOGG: So what do you do about it if you’re the government?
LOANE SHARP: You have to change the law.
ALEC HOGG: So Herman Mashabe is on the money?
LOANE SHARP: Yes. You have to change the law. It’s the law that grants asymmetrical power between businesses and unions. Our Labour Courts are populated with people who have not been fairly selected. Our CCMA is incredibly hostile to business. Last year the CCMA waged 185 000 attacks on small businesses. The CCMA, the Labour Courts, Nedlac, every single one of our labour market institutions is supposedly well-meaning. But in fact, it has turned into a total disaster. Because it’s never going to be politically possible to change the law, what I favour, there’s a unique moment of opportunity now for the President to call a Commission of Inquiry into the Labour Market. A Commission has wide-ranging powers. It’s normally headed by a retired judge. It could be a judge of the Labour Court. Once the President has set a Commission of Inquiry in progress there is no way for government to stop it. The recommendations of the Commission are inevitably implemented because of the Constitutional litigation that would follow. And the Commission of Inquiry has incredible powers – way more powers than a judge has, only within the terms of reference. So if the President was thinking clearly or he was receiving good advice, now would be the perfect opportunity for a Commission.
ALEC HOGG: I remember talking to a former Finance Minister of Spain and he said it was impossible – politically – for Spain to make the changes everybody knew they had to make in the country, until they joined the EU. When they joined the EU they could blame it all on the European Union and as a consequence everybody accepted it. Are you saying this is similar moment?
LOANE SHARP: This is a similar moment. There hasn’t been a moment since the last Commission of Inquiry in 1977. There hasn’t been an equivalent moment to take the gap. COSATU is in crisis. COSATU will probably splinter into two unions; a private and a public sector union. The Tripartite Alliance on a five to seven year view will probably collapse. The time over the next 12 to 18 months will be absolutely ideal for government to have a Commission.
GUGULETHU MFUPHI: So in the long-term, Loane, who might be the winners and the losers?
LOANE SHARP: You know, the losers might be those workers who are protected in their jobs. Take the recent fuel industry strike: 70 000 workers went out on strike across the whole fuel retailing industry at the expense of 21 million daily commuters. You’d think government would do the calculations and say 70 000 workers or 21 million commuters. How can we get more votes? Government is infected with an ideology that sees workers as exploited and business as the exploiters. The National Consumer Council sits within the Department of Trade and Industry whose stated motive is to protect business against foreign competition. We need to split out the National Consumer Commission, make it an independent body like the Public Protector, and give it similar powers. So, for example, where fuel is subsidised and we pay fuel subsidies to protect those 70 000 workers, let the Consumer Commission declare that invalid. Where we have chicken imports protecting workers but now charging consumers more for chicken; let the National Consumer Commission declare that invalid. We’ve got an absolutely incapable Consumer Commission, and it worries me that – without being political – that the opposition parties don’t have a concrete set of actions that would alter our labour relations framework.
