Stop listening to trade unions, says economist

Cosatu March to Parliament to hand over a memorandum. Picture: Armand Hough/African News Agency

Cosatu March to Parliament to hand over a memorandum. Picture: Armand Hough/African News Agency

Published Feb 27, 2020


Cape Town - Economist Martin van Staden said South Africa must stop allowing trade unions to dictate economic policy.

“South Africa’s economic growth is in economic contraction and there are no net job creations in the economy, which means the over 10 million unemployed will only swell with time.

“So it is time the country stopped listening to the unions,” said the free market expert.

“Trade unions are an important part of any free society.

“Where the problem comes in, however, is when these unions, which are private lobbyist organisations representing the interests of their members, are granted statutory powers in terms of legislation.

“This has happened in South Africa in terms of the Labour Relations Act, and now we are in a situation where unions can effectively use coercive powers against employers if those employers do things they do not approve of.

“For instance, the unions do not want SAA, which has an unnecessarily bloated workforce, to be trimmed down, and certainly not privatised or closed. A short while back the unions also violently protested the proposed moratorium on wage increases at Eskom.

“Tough decisions need to be made, and these decisions must necessarily include hefty cuts in public expenditure, of which the public sector wage bill is a massive part. It might seem counter-intuitive, but unproductive jobs in the public sector need to be cut as part of a process to ensure productive jobs in the private sector - where most jobs are - are saved and created.

“These powers wielded by unions disincentivises employers from creating new jobs, instead opting, where they can, for fewer employees, mechanisation, or computerisation.

“In the worst cases, they disinvest from South Africa, or refuse to invest here in the first place; instead going where the labour regulation environment is friendlier.”

Economist Dawie Roodt said: “Trade unions are not the biggest problem. They have a great role to play.

“Our biggest problems are in fact the political leadership.

“They have no vision, they are weak and are in total denial. What we need is for the president to stand up and say we are in deep trouble.

“After that he must be tough and show leadership. Only then can we fix the finances of the state.

“The finance minister can only take his lead from the president, it’s hard for him to do anything without presidential support.”

On Tuesday the Public Servants Association (PSA), one of South Africa’s public sector labour unions with 230 000 members, said the government approached the Public Service Co-ordinating Bargaining Council to alter the terms of the existing wage agreement for the financial year 2020/21.

Speaking ahead of the budget, Absa economist Peter Worthington said: “Cosatu said that it viewed the proposal as a ‘direct attack on collective bargaining which will never be accepted’ and that it would view any government efforts to lower the previously agreed pay increases as a ‘declaration of war’. It will be interesting to see if the government manifests the appetite for a fight with the unions in this afternoon’s Budget.”


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Cape Argus

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