I FOLLOWED with some interest last week's DA march for the
youth wage subsidy. Not so much because I think the subsidy is a good idea, but
rather that the idea of a clash with the Congress of South African Trade Unions
(Cosatu) gets the journalist in me excited.
Personally I have a view that trade unions in South Africa
are losing relevance. Leon Louw from the Free Market Foundation sums it up
quite well when he says: "One person's minimum wage is another's zero
Trade unions make it quite difficult to confirm whether they
are losing their relevance, as they are very cagey about releasing financials
and membership statistics. We therefore need to look at other data points to
try to confirm whether they remain a pertinent factor in South Africa.
So let's find a starting point. The years 1994–2008 were
effectively the best economic period the country has experienced in the last 50
Our gross domestic product grew at about 3% and we added
roughly 1 million jobs by the end of 2007. Then the global financial crisis
came along and eliminated these 1 million jobs.
By January 1 2012 we were sitting with a net job creation of
somewhere around 250 000.
I am no economist, but I think the last five years tell a
very interesting story. From 2007 to January 1 2012, the net loss is roughly
Cosatu and its affiliates would probably argue that it could
have been a lot worse without their intervention, but let's throw in a stat
from the Bureau of Economic Research which says that while 3% growth was good,
we needed 6% over that period to make a dent in unemployment.
If we apply the same logic over the last five years it would
suggest that real job losses are nearer 1.5 million to 2 million per year,
taking into consideration discouraged workers and those who are coming into
"working age" but with no real chance of employment.
Which brings me to an interesting statistic from Adcorp
economist Loane Sharpe, according to which roughly 900 000 black South Africans
over the same period moved into the "high-income bracket".
So 900 000 black South Africans got richer, while 750 000
people lost their jobs and another 1 million or so can't get into the labour
That number doesn’t add up. Factors like a bloated public
service and home ownership impact this figure, but anecdotally South Africans
are getting richer without being part of a structured labour force.
That suggests they are either working on a contract basis,
freelancing or building small businesses to sustain them.
My question to Cosatu and its members, as well as those
students who are being prejudiced by not getting the youth subsidy, is: in the
last five years have you been part of the group who lost their jobs and/or are
going through the trauma of multiple retrenchments, or are you part of the 900
000 whose incomes rose substantially?
That will probably answer the question about whether your
trade union still has relevance.
* Marc Ashton is the editor of Finweek magazine, South
Africa's leading financial news publication. Follow him on
Twitter @zamarcashton; you can follow Finweek on Twitter @finweek or visit