The volatile mix behind the strike wave

Posted on July 24, 2011


(First published 15 July 2011)

Nobody should have been surprised at the current strike wave or the anger manifested. In April this column noted that “levels of disgruntlement — the “gatvol factor” — are everywhere in evidence throughout the labour movement, both in terms of politics and economics. Awareness of widespread corruption, of increasing joblessness and a widening wage and welfare gap all add up to a volatile mix…”

That mix became even more volatile in recent weeks with the publication of a report revealing a surge of more than 23 per cent in the pay of executive directors of the top 40 companies listed on the Johannesburg Securities Exchange. The median is now R4.8 million a year.

According to this report by leading accountancy firm PwC, the payments to non-executive directors of these companies rose even faster — by 57.5 per cent to R3.8 million. This is a pattern the unions have complained about for years and while the gap between executive and non-executive pay has been narrowed in the process, the existing gulf between the pay of bosses and the earnings of workers has widened year by year.

Adding fuel the the fires of resentment is a report delivered by the Cosatu research unit, Naledi, to the federation’s central committee meeting last month. It provided the basis for the resurrection by Cosatu of the all but dormant “living wage campaign”. The current strikes are seen as part of this.

The Naledi research paper points out that the top 10 per cent of earners in South Africa receive 94 times more than the bottom 10 per cent. The report breaks this down as R1.1 billion paid to the poorest while the richest share R381 billion or 51 per cent of total income received.

The legacy of apartheid also lingers and makes for ready fuel for demagogues using statistical averages to play the race card. Although the richest and poorest 10 per cent segments of the population have been slightly deracialised, the overall picture of income distribution remains racially skewed: the nearly 77 per cent of “black” households account for just more than 41 per cent of income while the 12.8 per cent of “white” households receive more than 45 per cent.

Against this background, the insistence by public and private sector employers on using the historic rate of inflation in an attempt to justify single-digit pay rises is seen as at least immoral and probably dishonest. Trade unionists, from shopfloor level up, are only too well aware that electricity, fuel, transport and other costs are now in the process of far outstripping the inflation rates of last year.

So the demand by metalworkers for a 13 per cent wage rise is not an example of greed, but an attempt to maintain the buying power of the previous year; in other words, not to fall further behind.

The same applies in the public sector, where the government’s newest “final offer” of a 6.8 per cent wage increase was this week taken back to members of the various unions affiliated to Cosatu and to the Independent Labour Caucus. It was the ILC that warned in May that “levels of frustration are on the increase and cool heads will be required to prevent a repetition (of the strikes) of 2010”.

Cool heads are still being called for, but there is considerable anger, especially since promises by government dating from 2007 and beyond have still to be met. Most of these “outstanding matters” were supposed to have been concluded by April 1 this year. They include a settlement on a housing allowance, equalisation of medical aid payments and a minimum service agreement.

Within the health sector, several of the occupational special dispensation payments agreed in 2007 have also not been met and nurses are up in arms over the non-payment of a uniform allowance agreed in 2005. This allowance — R1 200 a year — was to have been increased in line with inflation on April 1 every year.

This week Democratic Nurses Organisation spokesperson, Asanda Fongqo warned: “Nurses are strongly aggrieved.” And he added: “The employer should take full responsibility for any revolt that arises.”

Given this strength of feeling among the rank and file, it was little wonder that Cosatu general secretary Zwelinzima Vavi ratcheted up the tension with the threat that the economy will be brought to a standstill unless union demands are not met. This, as some unionists cynically remark, is par for the course; there have been similar “blood on the floor” threats in the past that were subsequently swept aside as compromises were reached.

The labour broker issue is also seen by some unionists as something of a red herring. They maintain that government could easily announce a ban on the practice of individuals or companies hiring out workers without providing them with legal employment contracts since it is already illegal to do so. It would merely require the insistence that only agencies adhering to the temporary employment services provisions in section 198 of the Labour Relations Act should be allowed to operate.

The real issue, as these unionists see it, is job creation and retention, the narrowing of the wage and welfare gap and the winning of a living wage. The austerity demanded by government and the private sector, they say, is self-defeating in that it means lower wages, more unemployment and therefore less money to be spent. This, in turn, means fewer goods sold and, therefore produced, leading to lower tax revenues and so putting greater pressure on the government to borrow more from the international money lenders.

And so the battle will continue although, in the absence of any alternative, compromises will again be reached. In the public sector, for example, early shopfloor feedback indicates that most workers may be prepared to settle if government increases its wage offer by as little as 1 per cent. But outstanding matters — and anger — will remain.

Much the same applies in the private sector where employers have taken and even tougher line.