Johannesburg - South African companies took advantage of the
global recession by laying off workers to cut costs, a move that destroyed more
than a million jobs even though the local economy was hit by a short downturn.
This is the view of Richard Pike, the chief executive of
human capital management firm Adcorp Holdings [JSE:ADR], and powerful labour
federations Cosatu and Solidarity, which tried in vain to fend off the massive
job losses.
Said Pike: “Companies used the recession as an opportunity
to get rid of workers...A lot of companies are automating (replacing workers
with machines), outsourcing and offshoring to save on labour costs.”
Gideon du Plessis, Solidarity’s deputy secretary-general,
said about 30% of the companies where the union was organising had exploited
the recession to retrench workers in a bid to boost profits and put more wealth
in shareholders’ pockets.
“When we go through retrenchment consultative processes, we
definitely experience that companies use the recession as an excuse to cut
workers,” said Du Plessis.
He said companies valued profits ahead of workers’ interests
and were insensitive to the country’s objective of creating 5.5 million jobs
over the next 10 years to reduce unemployment.
“Though we support the free market system, there is
tremendous pressure on companies to satisfy shareholders at the expense of
employees and the country,” Du Plessis said.
Cosatu president Sidumo Dlamini also weighed in, accusing
business of accumulating wealth during the recession while workers were asked
to tighten their belts.
“During the recession, many companies made a lot about their
dwindling profits and requested employees not to ask for a high pay to avoid
retrenchments.
“The companies ultimately made a lot of money at the expense
of the employees’ salaries,” said Dlamini.
South Africa’s recession started in the fourth quarter of
2008 and ended in the second quarter of 2009, but by the time it ended it
claimed more than 1 million jobs.
In contrast to the recession that hit the global economy in
the early 1990s - brought about by the Russian debt crisis - the South African
economy slipped into a recession in the first quarter of 1991 and it lasted for
eight quarters until the fourth quarter of 1992.
The South African Chamber of Commerce and Industry disagrees
with the view that businesses used the recession to shed jobs.
The business chamber’s chief executive, Neren Rau, said
companies had to reduce staff because the economic outlook at the time pointed to a serious downturn.
“They expected worst times to come and they adjusted their
resources, human and otherwise, accordingly. We are still suffering and there
is no serious recovery in sight,” said Rau.
He said South Africa’s labour market was too rigid and made
it difficult for companies to hire workers. He also said businesses were under
financial pressure due to rising costs on electricity and fuel, and the planned
tollgate system, which will increase transport costs.
“They can’t pass these costs on to consumers to recover their
costs,” Rau said.
While companies came under criticism for going too far in
cutting jobs, labour unions were also criticised for being too militant when
demanding higher wages.
Pike said wage increases needed to be linked to higher
productivity, which was not the case at the moment.
“I am quite critical of the role of the unions...The unions
are very militant and they are pricing labour out of the market. Business and
labour need a mature dialogue to preserve jobs. Right now, there is mistrust
between the two,” he said.
Pike said the government needed to establish a voluntary
national service programme for the matriculants of 2011 to alleviate
unemployment.
He said the programme could absorb up to 500 000 young
people who could be deployed in sectors such as healthcare, security and
construction.
“It will give young people work experience, dignity,
discipline and make them employable,” Pike said.
Pike and Rau said that since the economy was struggling to
create jobs, workers needed to accept lower wages to preserve or create jobs.
“We need to allow employers to opt out of minimum wages to
enable them to create and preserve jobs. However, this proposal is totally
unpalatable to trade unions,” Pike said.
But it appears that unions are prepared to listen to the
likes of Pike and Rau.
The South African Clothing and Textile Workers’ Union, a
member union of Cosatu, will cut wages for entry-level jobs by 30% to create
jobs in the clothing industry, which has for years been ravaged by cheap
Chinese imports.