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EVERY South African citizen should regard the decision by General Motors to quit South Africa as a wake-up call, says Terry Bell in his latest Labour Wrap. Yet it highlights a fundamental economic question that continues to be largely ignored or fudged.
This, says Bell, is the reality of surplus capacity and surplus production in an environment of cut-throat competition. Instead of dealing with this issue openly and comprehensively, he maintains that the local blame game has again emerged, with everything from the recent Cabinet reshuffle to the junk status downgrade and “greedy workers” being held responsible.
The fact that the announcement was made before consulting the majority union at GMSA, he says, showed both insensitivity and arrogance. However, as GMSA chief, Ian Nicholls, noted, the local political situation and wage rates have nothing to do with the decision to withdraw. It was part of a “global review” which will see GM pulling out of India and closing offices in Singapore.
This explanation provides an excellent example of the dilemma facing more and more companies as they struggle to remain profitable in a world of gluts. And, says Bell, the cliché that there is no gain without pain also applies; but for every bit of corporate gain it will be workers who will bear the pain.
In the local context this will probably mean up to 1 000 GMSA jobs being lost. But as the National Union of metalworkers (Numsa) has pointed out there is likely to be considerable impact “on companies along the value chain as well”. With every worker, on average, supporting four or more dependants the pain will be widespread.
Bell points to the massive increase in new car makes reaching the market over the past 10 or 20 years. Advances in technology mean that they are made with fewer and fewer workers so who, asks Bell, will be able to buy and drive them?
This, he maintains, is the question we should all be addressing.
* Add your voice or just drop Terry a labour question. Follow Terry on twitter @telbelsa.
