WORLDVIEW: Here’s why SA’s trade unions are a problem

Trade unions are a good thing (I know not everyone agrees with this statement, but I think it's true)..Fundamentally, unions allow workers to have a stronger voice in negotiation and, thus, to claim a bigger slice of companies' profits. This is good, because workers spend most of their money, circulating it through the economy and helping to boost economic activity. When unions are weak, workers tend to get a smaller slice of the economic pie, and that can have negative implications for people's living standards and the broader economy..However, in the context of SA's particular economic circumstances, trade unions are having some unintended and very negative consequences..___STEADY_PAYWALL___.The first, and by far the most important problem is that in SA, many, many people are outside formal employment. As such, they do not have access to the benefits of trade union membership. Instead, they find themselves locked out of some industries by unions that are using their power to put up barriers..Now, this happens around the world. In some US states, for example, construction unions are very powerful. People who want to work as, say, electricians, have to become union members before they can offer their services because the unions make it a requirement that construction companies only hire union workers..Some unions also encourage states to adopt tough licensing regimes that go beyond the bounds of reason to make it harder for people to qualify to work in construction (this is similar to what, say, doctors and lawyers do with their professional associations). This artificially inflates wages for those who are licensed and keeps out some people who may be good at those jobs but can't afford expensive and lengthy certifications..In most developed economies, this isn't too much of a problem, because there is enough formal employment to go around. In SA, however, strong unions are helping to keep people out of work by making it uneconomical to hire in some sectors and by imposing unnecessary restrictions on employment in others..The second problem – and one that's almost as serious as the first – is that unions are using their power to protect members at the expense of all other stakeholders, including children and the broader economy..For example, the South African Democratic Teachers Union (SADTU) has used its extraordinary political clout to protect members who abuse the children in their care and to protect incompetent teachers who are failing to educate the children in their classes. (It's only fair to note that SADTU also helps teachers facing legitimate problems, including my own mother, who was helped by SADTU in an issue arising from bad behaviour by a rogue governing body and when she had trouble accessing her state pension benefits.).Eskom is another example of unions using their political power as key ANC allies to protect members, in this case, to the detriment of taxpayers. Eskom is, by international standards, overstaffed, and some rationalisation is needed (to be fair, Eskom also needs to cut off people who aren't paying their fair share, clawback stolen funds from the corrupt contracts, and a host of other things)..Now, the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (Numsa) – the two main unions at Eskom, can't really be faulted for defending members' interests (you can make a case that SADTU should be faulted for defending teachers who are clearly unworthy of the title). The point is that, in the SA context, their strength is having unintended negative consequences for the broader economy..Finally, some of the union-related rules in SA – specifically, the rule that wage agreements negotiated in some sectors bind everyone in that sector, regardless of whether or not they participated in the negotiations or agreed to the settlement – are prejudicial to smaller companies..In most countries, small businesses drive employment growth and they usually hire people at lower wages than the big incumbents. It's usually a win-win. The workers often move on to better-paid jobs at big companies once they have some training and experience, and the small business can compete against established players by having lower costs. Binding sectoral wage agreements make it much harder for small businesses to compete and to create employment – especially since small players usually don't get to participate in negotiations in the first place..So, what is to be done about this?.The basic problem is that in SA, other groups, like taxpayers, school-age children, and the unemployed, do not have as much political clout as unions, in part because they are not organised. If SA's parents were marching in the streets, demanding quality schooling every day for a month, I'm sure we'd see some action on bad teachers. But these groups lack the formal organisational structures that make unions so powerful..Political parties should, theoretically, exist to defend the interests of these groups. Indeed, the EFF is doing a decent job of mobilising the unemployed, albeit under a problematic banner, and the DA/IRR have made efforts to organise parents. Unfortunately, SA politics is a shambles with few palatable or realistic alternatives to the ANC..Until a political party with a coherent set of policies that address the real, underlying problems in SA emerges, the trade unions will continue to wield unusual power. And the negative consequences will continue to be felt.

WORLDVIEW: Here’s why SA’s trade unions are a problem

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