An economic slump made by ourselves

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khomanani REUTERS Members of the mining community carry food parcels donated by the Gift of the Givers at the Khomanani mine in Rustenburg. The writer says collective bargaining reduces the productive skills that some workers can bring to an operation and defines the group by the lowest common denominator. Photo: Siphiwe Sibeko

As the rest of the world recovers from the 2008 recession, SA grapples with the fallout of the damaging strikes in the platinum sector, writes Pietman Roos.

 

The 0.6 percent contraction in the economy is likely to repeat in the second quarter, officially placing South Africa in a recession. This is because the strike in the platinum

sector, which is mostly responsible for the contraction, has already extended beyond half of the second quarter.

Reports suggest that a return to full operations would require a few months’ lead time to ensure that the maintenance of mine shafts is up to scratch.

The potential recession is unique since it is entirely of our own making.

In 2008, the rest of the world could comfortably blame the US for its sub-prime loans and the complex financial instruments that muddied bank credibility throughout the world and brought on a credit freeze.

But the rest of the world is in fact doing rather well at the moment.

While it may be fashionable to apportion blame across all social partners, the reality is that exorbitant wage increases in a world of falling platinum prices and rising administered costs is simply not financially feasible.

Blaming mining companies for not conceding to double- and tripledigit wage increases is somewhat hypocritical – no institution or company can realistically be expected to endure such demands and cost pressures while complying with the perennial additions to regulatory requirements and managing policy uncertainty.

Despite their indifference to the cost pressure on business, labour is the most headstrong in refusing to consider any necessary price increases that would indirectly impact on their constituency.

Consider how the strictly regulated electricity price increases necessary to keep the lights on are normally met with howls of outrage from labour.

So it’s okay if an entire industry is brought to a standstill because of unrealistic wage demands, but the carefully negotiated outcome of the Nersa process will always be unacceptable.

Business is apparently an endless source of funds, but the laws of economics apply to the household budgets of union members.

The point is that labour has to bear a large burden of the responsibility and it is simply unfair to suggest that mining companies are complicit in closing their own operations.

If there is any blame to be directed, then it is necessary to look at the very policy that regulates interaction between labour and

business.

The debilitating industrial action currently taking place within the platinum sector raises a question fundamental to our constitutional state: are we adequately protecting the rights of individual workers to work if they so wish?

The severity of the impact of the strike has now passed industry and even economic considerations; it has become a societal issue.

While the right to organise as labour and engage in industrial action is beyond question, the real issue is whether the rights of the

union and its management are balanced against those of individual workers. The reports of the victimisation of those workers who choose to return to work is evidence to the contrary.

At the core of the matter is how the South African legal system views individual workers.

Collective bargaining reduces the unique productive skills and synergies that some workers can bring to an operation and defines

the group based on the lowest common denominator.

So while some workers in the industry would most likely earn a living well in excess of R12 500 a month thanks to their own initiative and hard work, the reality is that collective bargaining commoditises labour and extinguishes any possibility of a dynamic labour market.

This is not to mention worker intimidation; it is perfectly illegal to even hint at meting out violence to another employee who decides to keep on working, and yet there is a flood of depressing reports of violence and even murders committed against mineworkers.

It is doubtful whether South Africa can claim to respect the rights of workers if a handful of strikers can disrupt one of the most

important sectors in our economy and prevent individual workers by force from earning a living.

The situation that individual workers find themselves in is not incidental to the broader problem of an economic contraction.

Workers have legitimate concerns that require union representation, but the problem is that the power relationship between worker

and representative seems to have been turned on its head, with union bosses commanding their own armies instead of giving voice to their constituencies.

It is very possible that if workers had the option to a secret vote on whether to accept earlier wage increase proposals, the strike would have ended far sooner.

That there is no sudden push towards conciliation among the rank and file after enduring months without pay possibly says something of the mindset that has taken hold of the sector through intimidation.

It is not about contracting your services for remuneration and working your way towards prosperity, but about joining a group and sticking with them through strikes, unemployment and wage increases.

This plays into the hands of union bosses, since workers effectively abdicate responsibility for their own wellbeing and place that

responsibility in the hands of an individual with other priorities.

It is a view that is archaic and out of sync with the notions of individual freedom and responsibility entrenched in our constitution.

This situation could only change if workers could contract and unionise as they wished without fear of violence.

So, while the concept of economic growth and the latest disappointing contraction in activity is associated in the common mind with capital flows, spreadsheet voodoo and economic jargon, the reality is that South Africa’s economic trajectory very much depends on how a low and semi-skilled worker is treated by law. The well-known problems of infrastructure bottlenecks and weak investor confidence have a more acute and immediate impact on our growth rate, but our labour market regulation and the treatment of workers is arguably far more fundamental and chronic.

The latest government response has been to appoint a technical task team. This is certainly a necessary step to solve the immediate crisis and sends out a powerful signal that government is serious about getting the productive economy back on track.

But the team is at best a temporary solution to the deeper problem and does not offer a long-term solution.

Essentially, the strike continues to eat up South Africa’s wealth because labour market policy has become outdated.

It is clear that the duration and severity of the strike in the platinum sector requires direct government assistance, but in law the situation is no more special than industrial action elsewhere.

It is unlikely that a high-level government delegation will intervene if a smaller company risks being put out of business because of a protracted strike.

That is why quality policy and responsible legislation are so important.

The task team can be a good auxiliary to resolve disputes, but it cannot be everywhere at once.

 

* Roos is a Senior Policy Consultant at the South African Chamber of Commerce and Industry.

** The views expressed here are not necessarily those of Independent Newspapers.

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