This thought-provoking contribution came via e-mail from a BizNewz reader. It’s a very interesting piece, and a quick read to boot. Basically, this reader – a retired gent in his mid-sixties – considers the unintended consequences of measures intended to improve employment conditions. In particular, he thinks about the effect that minimum wages, unions, and central bargaining. These measures have made it uneconomical for companies to hire what he calls “nice-to-have” employees, people to do unskilled work for not much money. The result has been that average wages have increased, which is good, but it has also meant that there are fewer job opportunities for people with no skills. His thoughtful reflections are a reminder that even policies made with the best intentions can harm those they are meant to help. – FD
I am in my mid-sixties and retired. I was a part shareholder and MD of a medium sized engineering company in Gauteng.
About a year before I sold out I had a call from reception to say that people from the Department of Labour had called to see me. I invited them up to our Boardroom where they informed me that they were there to audit our Employment Equity Report. Fortunately we had submitted timeously and had received an acknowledgement from the Department, something they appeared to be ignorant of. The team leader told me later that the Minister of Labour had stood up in Parliament and announced that teams would begin conducting EE report audits throughout the country from the next day. When this instruction reached the local offices it was found that there was no database of companies required to submit reports or of which companies had complied. Hence the cold calls.
The audit lasted a couple of days with most of our employees being interviewed. Besides a few debates about job descriptions the outcome was satisfactory.
After the closing meeting the team leader told me that she had good feelings towards my company, as her father had worked for us for many years and his earnings had put her through university. It turned out that her father had been a “tea boy“ at the company, a position which no longer existed.
This led to a discussion about the high unemployment figures in the country. Business people of my age will remember that most companies had several “nice to have” employees. Tea “boys” or “girls,” messengers (who spent most of the time collecting takeaways for staff from the local café), gardener (who washed cars) and drivers. These people were paid a lower rate than the factory workers, probably 25% below the lowest production worker, but nevertheless earned a wage and supported families. With the advent of highly unionized factories and closed shop centralized wage agreements, these rates were required to rise substantially and tea “girls” gave way to coffee machines, employees got their own lunches and washed their own cars. And these jobs were destroyed. At my company we had four or five such employees, in a workforce of about 200. Every day when I arrived at my factory I was greeted by name by a dozen or so people at the gate, asking for a job and offering to work for low wages.
I can’t help wondering what the effect on the economy would have been if people were still allowed to work for lower than “ minimum” wage rates , and each company employed an extra 2% of their workforce in “nice to have’ positions.
