Business Day
*Reformed GEAR won’t bring goose that lays golden egg* *Frans Baleni, Business Day, Johannesburg, 29 November 2010*SA’s previously disadvantaged and disenfranchised masses got their political freedom in 1994 with high hopes that economic freedom would follow soon afterwards.
Sixteen years later, 25% of the population remain unemployed while a significant portion of those employed are underemployed and work as casuals.
When the Growth, Employment and Redistribution (GEAR) strategy was unveiled in 1996, its proponents argued it would deliver 409000 jobs a year and thus reverse the rise in the unemployment rate. That was not to happen and the rest is history.
It is in that context that the New Growth Path, unveiled this week by Economic Development Minister Ebrahim Patel, requires very close scrutiny, to ensure that SA does not end up in the same predicament it found itself in after GEAR.
Job creation is even more pressing given that the country shed 1-million jobs during the recession.
As the adage puts, it "employment brings enjoyment". For many South Africans, their political freedom has become meaningless without jobs.
The New Growth Path promises 5-million jobs by 2020 and argues that it could be achieved through "a developmental package consisting of macroeconomic strategies, microeconomic measures and stakeholder commitments". Patel’s plan moots "moderate wage settlements" for those earning R3000- R20000 a month, "possibly to inflation plus a modest real increase", with "inflation-level increases for those earning over R20000 a month", and a cap on pay and bonuses for senior managers and executives earning more than R550000 a year.
The notion of a moderation of wages is mind-boggling, especially when the country still grapples with apartheid-era wage discrepancies. It therefore remains a mystery as to how issues of inequality will be addressed when wages are capped and moderated at different levels.
Unlike its predecessor, the current strategy fails to acknowledge inequality and how it will be addressed, opting instead to maintain the status quo.
In acknowledging the fragmentation of SA’s labour market, the GEAR strategists wrote: "It is apparent that unregulated low- wage employment has increased significantly since the 1970s, now accounting for the estimated one-third of all job opportunities.
"In addition, a large pool of unemployed men and women, who earn no income or derive sporadic earnings from informal self- employment, make up about a third of the potential labour force."
The new strategy fails to outline measure s to deal with the issue of unregulated low- wage employment, with the assumption that employers will themselves employ the potential labour force that has no income or derive sporadic earnings as a result of savings from capped and moderated wages.
That, of course, cannot be a given, especially as the state itself has failed to decisively deal with labour broking.
In its chapter dealing with employment, wages and training, GEAR argued: "Irregular, subcontracted, outsourced or part-time employment on semiformal contractual terms is becoming the source of labour for many employers."
Nothing will prevent employers from maximising profits even more through irregular labour, and capped and moderated wages, while at the same time continuing as they have done when it comes to inequality.
While the New Growth Path raises the issue of the reduction of wage inequalities through efforts to increase pay, conditions and organisation for vulnerable workers, it fails to indicate how that will be done.
It will be impossible to narrow the gap between the very high and very low earners through wage moderation and wage capping alone. On average, each of the 20 highest- paid directors in JSE-listed companies earned 1728 times the average income of a South African worker.
When the poor worker’s income gets moderated, by what margin will the gap between his salary and the top earners’ be narrowed?
It is with that context in mind that our argument, as labour, is that any growth path that is not redistributive in nature and is not aimed at creating decent work is bound to fail. The current growth path, while propagating employment, will not deliver on the notion of decent work. It is based on assumptions but the material conditions on the ground are different. Economic growth should raise wages in real terms and should improve income distribution.
One of the reasons trade unions affiliated to the Congress of South African Trade Unions opted for a living-wage campaign for next year is precisely due to the fact that decent work hardly exists, decent pay is a pipe dream and exploitation is rife.
To moderate indecent pay would be unacceptable; it would be like glorifying slavery. The current capitalist economic system is a fallible one, full of crises.
It is as clear as daylight that the possibility of creating jobs through wage caps is not feasible and the state should not be allowed to put all its eggs in one basket through pinning its hopes on the private sector for job creation. What if, on saving millions through wage caps, the private sector still fails to pitch up? What mechanisms do we have in place if the economy does not grow as expected?
The current growth path still articulates the economic principles and philosophy of the failed GEAR strategy, which believed that economic growth must occur first, then employment will follow. With employment, income distribution will occur. It fails to set a target for income distribution.
But our experience is also that wage moderation does not necessarily translate into job creation. During the gold crisis, mineworkers volunteered to have their wages capped and, in certain instances, offered their labour without pay.
Those efforts did not stop any of the companies from retrenching them; instead they were retrenched en masse.
But low wages have negative effects on the economy in terms of spending patterns and the consumption of goods, as the economy itself is not stimulated.
The New Growth Path does raise some important elements that need addressing in relation to the economy, such as collusion on price and skills development.
The issues relating to competition policy have detrimental effects on the working class and the public in general as it erodes what they earn.
Issues of skills development are central to the South African economy, where the skills shortage in engineering, as just one example, has become dire. But mechanisms also need to be put in place for the absorption of school leavers, otherwise the plan will be dealing only with a moving target that is never achievable. We may still find ourselves sitting with 25,3% or more unemployment in 2020 if the issue of school leavers is not attended to.
As the African adage puts it: "The lions which do not hunt together may not even subdue an ailing buffalo".
Labour, the government and business have to work together to come up with a strategy that will deliver the goose that lays golden egg.
We cannot afford to have yet another reformed GEAR, nor can we afford to fail the masses of our people on any front — be it job creation, income distribution or equity.
* Baleni is general secretary of the National Union of Mineworkers. *From: http://www.businessday.co.za/articles/Content.aspx?id=128101* ** ** -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] .
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