Publications
Partners
Pretoria - “If you give your workers a little bit more, it’s going to enable them to save more and spend more,” says Johan van Tonder, economist at the Personal Finance Research Unit at Unisa.
Van Tonder was speaking at the presentation of the Consumer Financial Vulnerability Index (CFVI) Report for Q4 of 2013, a collaboration between MBD and Unisa.
“You might sacrifice your profit in year one, as a company, but in year two, because you have a bigger domestic demand, more people working, less poverty, your profit will start going up at twice the pace it’s going up now.
"But to do this would require patience; we don’t have patience, we want profits and we want it now, we want higher salaries and we want it now. The chances of this happening are zero.”
Seasonality – the seasonal factors which affect consumer behaviour, such as the festive season – was an issue under the spotlight at the presentation.
In previous years, South Africa’s clearly defined ‘strike season’ occurred in the third quarter, with marked impacts on consumer spending and saving.
In the past, says van Tonder, strikes were an understood phenomenon, the last resort when bargaining broke down. Now we have begun a new year with one of the biggest strike events in recent times – nearly 200 000 platinum miners on strike – which has many pundits wondering if the strike factor has leapt the fence and is doomed to become a year-round phenomenon, the first port of call for angry workers.
Bad news for the economy – with each strike, workers lose pay, pay that is then withdrawn from circulation. Workers will take years to claw back their losses, even if they win an increase, but at the same time, the economy suffers.
Asked how South Africa should deal with this crisis of labour relations, van Tonder was blunt: “That’s not too difficult, you need to get all the major company bosses in South Africa together with the government, and their analysts have to agree, for just one year, to exercise patience.”
Patience to raise basic wages and live with a reduction in profit, perhaps, or a little trimming of fat and tightening of belts.
Workers strike for better pay, and van Tonder points out that the median salary for working South Africans is R3 500 – an amount that is almost impossible to live on when we take into account food, transport, electricity and other needs.
“We know immediately what will happen; there will not be any strikes that year because they’ve paid their workers better, so you force higher growth domestically.”
Van Tonder says a new platinum mine will soon be opening, owned by a Canadian. “He criticised our mining bosses, saying ‘Why do you pay your employees the way you do?’ He said he’s going to pay his employees three times more.”
The knock-on effect of releasing more money into the economy would be powerful. “Once we create more demand, we can start producing for ourselves, instead of importing. Right now we have, what, 5-6 million consumers actively participating in the economy, out of 50 million people. If we can double that, we can double the number of companies that produce in this country, creating more jobs.”
Van Tonder was speaking at the presentation of the Consumer Financial Vulnerability Index (CFVI) Report for Q4 of 2013, a collaboration between MBD and Unisa.
“You might sacrifice your profit in year one, as a company, but in year two, because you have a bigger domestic demand, more people working, less poverty, your profit will start going up at twice the pace it’s going up now.
"But to do this would require patience; we don’t have patience, we want profits and we want it now, we want higher salaries and we want it now. The chances of this happening are zero.”
Seasonality – the seasonal factors which affect consumer behaviour, such as the festive season – was an issue under the spotlight at the presentation.
In previous years, South Africa’s clearly defined ‘strike season’ occurred in the third quarter, with marked impacts on consumer spending and saving.
In the past, says van Tonder, strikes were an understood phenomenon, the last resort when bargaining broke down. Now we have begun a new year with one of the biggest strike events in recent times – nearly 200 000 platinum miners on strike – which has many pundits wondering if the strike factor has leapt the fence and is doomed to become a year-round phenomenon, the first port of call for angry workers.
Bad news for the economy – with each strike, workers lose pay, pay that is then withdrawn from circulation. Workers will take years to claw back their losses, even if they win an increase, but at the same time, the economy suffers.
Asked how South Africa should deal with this crisis of labour relations, van Tonder was blunt: “That’s not too difficult, you need to get all the major company bosses in South Africa together with the government, and their analysts have to agree, for just one year, to exercise patience.”
Patience to raise basic wages and live with a reduction in profit, perhaps, or a little trimming of fat and tightening of belts.
Workers strike for better pay, and van Tonder points out that the median salary for working South Africans is R3 500 – an amount that is almost impossible to live on when we take into account food, transport, electricity and other needs.
“We know immediately what will happen; there will not be any strikes that year because they’ve paid their workers better, so you force higher growth domestically.”
Van Tonder says a new platinum mine will soon be opening, owned by a Canadian. “He criticised our mining bosses, saying ‘Why do you pay your employees the way you do?’ He said he’s going to pay his employees three times more.”
The knock-on effect of releasing more money into the economy would be powerful. “Once we create more demand, we can start producing for ourselves, instead of importing. Right now we have, what, 5-6 million consumers actively participating in the economy, out of 50 million people. If we can double that, we can double the number of companies that produce in this country, creating more jobs.”
