Inside Labour: Living wages versus poverty wages

Feb 17 2017 05:01
Patrick Craven

WHEN the Congress of South African Trade Unions (Cosatu) delayed signing the R20 an hour minimum wage agreement, Business Day wrote that “there was something ironic about this week’s signing by all the social partners - except Cosatu...  It was, after all, Cosatu which had long pushed for a national minimum wage, mooting it for the first time ahead of its 2012 national conference.”

For many workers however what was more then just “ironic” is how on earth Cosatu - plus the National Council of Trade Unions and the Federation of Unions of South Africa - could ever have agreed to sign an agreement which would have legitimised paying poverty wages to millions of workers.

That was not the living wage that Cosatu delegates voted for in 2012, and certainly not what workers today are demanding.

South Africa’s biggest union the National Union of Metalworkers (Numsa)has registered “its disgust at the proposed amount of R3 500 per month, [which] reinforces South Africa as a haven for cheap labour, just as it was under Apartheid… This was done without any consultation, let alone any mandate from the South African working class. If this agreement were to be implemented, it would be the final nail in the coffin for the workers’ struggle in South Africa.”

R3 500 a month is nowhere close to a living wage. Economists have calculated that South Africa’s “working-poor line" is R4 125 a month, and that 54% of full-time employees - 5.5 million workers - earn below that. So the Nedlac agreement condemns millions of workers to live below in poverty.

"The Steering Committee for a new union federation too has condemned the ANC… R3 500 will mean that about 60% of workers live below the minimum living level and therefore in poverty.”

READ: R20 per hour for workers is an insult - Numsa

And, even worse, it is being suggested that the final legislation could include “exemptions” which would allow employers to pay even lower wages to certain workers. The National Minimum Wage Commission has been tasked to decide whether expanded public works programme (EPWP) participants should be excluded from the minimum wage.

Public Works Deputy Minister Jeremy Cronin says the government position was that EPWP should be excluded. “Presently they are paid R83 a day. If we increase that to R20 an hour, 310 000 will be out of work opportunities in a year”. Thus the 1st deputy general secretary of the South African Communist Party condemns a third of a million young super-exploited South Africans to dire poverty, doing jobs which should be done by paid employees.

Spurious capitalist argument

Anne Bernstein, head of the Centre for Development and Enterprise, even complains, in Business Day, that these proposed minimum wages are too high, using a spurious capitalist argument that “The balance of risk is that a high national minimum wage would increase rather than diminish our exceptionally high levels of poverty and inequality through job destruction in the short term and reduced labour absorption over the long term; possible reductions in GDP growth leading to lower per capita GDP, less redistribution through the fiscus, and higher inflation.”

She was partly answered by Imraan Valodia, chairperson of the National Minimum Wage Advisory Panel, for basing her argument on a false view that market forces dictate that the price of labour, and that like any other commodity, it is ruled by laws of supply and demand, and that if the price (wages) is too high firms will not employ workers.

Valodia correctly dismisses her idea that “labour markets operate just like a market for tomatoes - let the free market work and, just like tomatoes, labour supply will equal labour demand and unemployment problems will be solved”.

As he says: “Unlike a seller in a tomato market who is easily able to go to another buyer if the price offered is too low, a relatively skilled unemployed worker has very little option (except perhaps to starve) but to take employment that is offered, however low the wage.”

It is the workers’ labour that generates profits

But what both Bernstein and Valodia, and indeed everyone else in this debate, are missing is that the fundamental difference between a worker and a tomato is that it is the workers’ labour that creates wealth and generates their employers’ profits. A tomato only acquires value because workers plough the field, plant the seeds, harvest the fruit, transport it to the markets and sell it in a shop.

At every stage in the process value is added by the worker who sells his or her labour, but receives only a faction of that value in wages; the surplus value goes to the employer as profit. So the demand for a living minimum wage, like the R12 500 demanded by union Amcu and now Numsa, is not a plea for charity but for workers to get back a bigger share of the wealth their labour creates.

And, far from reducing gross domestic product, higher wages lead to higher demand for goods and services, which then leads to more jobs to meet that demand.

What is particularly outrageous about calls for workers to accept poverty wages is that in South Africa workers get back an even smaller share of the wealth they create than in other parts of the world. CEOs earn more than 500 times the per capita GDP. In the US, the figure is 300; in most of Europe, less than 200.

If further proof were needed of why we need the new workers’ federation, which is to be launched in March, it is this battle for a basic living, minimum wage.

Patrick Craven is a former national spokesperson of Cosatu and Numsa and a supporter of the Movement for Socialism, which aims to build a new revolutionary socialist workers’ party. Opinions expressed are his own.

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patrick craven  |  minimum wage  |  labour  |  inside labour



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