Minimum-wage repeal no guarantee of Utopia

Lungile Madywabe reckons South Africa should avoid over-regulation of labour while protecting workers from exploitation.

Summary - When the ANC assumed power it initiated a programme to uplift historically disadvantaged black South Africans. Ten years later the tripartite alliance comprising the ANC, the SACP and Cosatu is still intact, and their common socialist convictions are articulated in the provision of quotas of free water and electricity, increased spending on social grants and the supply of low-cost housing. At the same time, the ANC has tried to attract investment by adopting conservative fiscal policies, maintaining the rule of law and eschewing Zimbabwe-style land seizures. This partial shift from socialism towards a market economy has relegated poor and uneducated people to the margins of society, where they lead a precarious existence. Among them are many who work in restaurants and private homes, who are treated harshly by employers. Drawn to the cities by the promise of a better life, they are soon disillusioned when they discover that they are underpaid and that as unregistered workers they enjoy no benefits under the labour laws. The CCMA receives over 20 000 queries a month, with problems in the retail sector topping the list. Just under a quarter of all calls concern domestic workers’ problems. Cosatu is aware of this and admits that the unions are not doing enough to reach out to members. In a recent paper, Eddie Webster and Sakhela Buhlungu argue that union revitalisation should go beyond strengthening existing organisations to include exploration of ‘imaginative ways of engagement with the unemployed [and] the “new working poor”’. Critics of the government believe that these problems are proof that current economic policies are failing the masses. Margaret Thatcher’s government in Britain dismantled minimum wages in the belief that deregulation and labour market flexibility would create more jobs, but it is unclear whether they succeeded. Tony Shepherd, a former labour relations mediator with 30 years experience in England and South Africa, argues that abolition of minimum wages does not guarantee a long-term increase in jobs. He points out that Thatcher’s successors have returned to the middle ground, ‘regulating, but not too much’. Conditions of employment can’t be left to employers to set, he says: ‘The aim of regulating is to level the playing field.’ Critics of regulation, on the other hand, argue that stringent regulatory laws only serve to protect those who are already employed, and cause employers to keep their staff to a minimum. The ANC’s manifesto was to redress the iniquities of the past while securing economic stability. Pursuit of those two goals has been a journey down a razor’s edge, and has proved painful as economic growth has failed to halt the steadily increasing numbers of unemployed. Future dialogue between business, unions and the government has to focus on ways to achieve both goals without increasing tensions.

Economic oppression is a universal human phenomenon. It usually transcends race, but during apartheid dominant whites held a near monopoly on economic exploitation. In the new post-apartheid open society, growing prosperity has enabled South Africans of a different hue to join them in that practice, causing the increasing usage of class-based, rather than race-based, categorisation.

The benefit of hindsight shows that when the African National Congress (ANC) assumed power it started a well-defined programme to uplift historically disadvantaged blacks, (which, eventually disappointed the ANC’s more radical supporters). Though there was no nationalisation of the mines, banks and monopoly capital, as prescribed in the Freedom Charter of 1955, the framework of a welfare state (of a kind) was put in place to appease the poor and the labour movements.

Tenuous as it appears to be, the ruling tripartite alliance comprising the ANC, the South African Communist Party SACP) and the Congress of Trade Unions is still in tact. Their common socialist convictions, though diluted in the case of the ANC, are articulated in the provision of quotas of free water and electricity, increased spending on social monthly grants and the supply of, low cost housing. The Labour Relations Act gives some protection to workers against unfair labour practices.

The ANC-led government has made every effort to attract investment by embarking on conservative fiscal policies, controlling inflation, not raising excessive taxes and being steadfast in their opposition excessive deficits. Despite mounting pressure to give land to the poor it has maintained the rule of law, promising to eschew Zimbabwe-style land seizures from (predominantly white) commercial farmers.

The ANC’s partial shift away from a socialist doctrine towards a market economy has initiated a future dog-eat-dog scenario. The justifying argument it uses for the shift is that a market economy always rewards the successful. The poor, who are by definition unsuccessful in a soulless market economy, cannot join in the banquet.

Every country has workers who are relegated to the margins. These are most commonly people who are uneducated and whose lives are defined by their precarious existence on the edges, or even in the midst of poverty. They usually have to take whatever comes their way.

Included among them are many of those who work in restaurants and private homes. Despite the legislation that protects them, they regularly face harsh treatment from their employers.

For a 24-year-old woman, whose countryside existence is spent trudging uphill, under backbreaking buckets filled with water, the promise of a better life in Johannesburg is a powerful draw-card. But for many of these women, who are usually between the ages of 18 and 30 and who hail from the countryside or from neighbouring countries, disillusionment often follows their move to the city.

To their horror they often find they are underpaid and that their stay in South Africa’s major cities is entirely at the whim of their employers. When they are taken into employment no contracts are signed. Their status is that of unregistered workers who enjoy no benefits under the labour laws.

A waiter at a well-known restaurant in Johannesburg recently took his employers to the Commission for Conciliation, Mediation and Arbitration (CCMA). He complained of his employers: “They asked me not to come to work for a few days. They did not tell me what the problem was.” He had effectively been fired and had to seek redress from the CCMA to be reinstated.

The CCMA has not be able to provide statistics on the number of cases that come to them pertaining to these sectors save to say that the retail sector still tops the list. CCMA head of operations Nersan Govender said their call centre receives more than 20 000 queries a month, 23 per cent of them being on domestic workers’ problems.

Kagiso Moleme, the Labour Market Policy Co-ordinator of the Congress of Trade Unions (Cosatu), says the federation is aware of these sorts of problems. He puts the blame squarely on the unions. He states that the problem occurs as a result of the inability of unions to reach out to members. “We have been lacking in the servicing our members and (rectifying) that is the answer to the problem. We need to have a situation where we find workers flocking to our offices as opposed to us going to their places of work.” That sounds like an admission that unions are not marketing themselves properly.

In a paper titled: Between Marginalisation And Revitalisation? The State Of Trade Unionism in South Africa, Eddie Webster and Sakhela Buhlungu note, “We understand union revitalisation to entail more than simply trying to fix or strengthen existing union organisations. Instead we avoid this conservative bias by conceptualising revitalisation as those organisational innovations that go beyond the defence of existing union members and traditional union structures to explore imaginative ways of engagement with the unemployed, the ‘new working poor’, their own members, governments, the new social movements and labour in other countries.”

Critics say these problems are a consequence of the dilemma which confronts the government as to whether to regulate the industry or follow the direction Britain took during the eighties under the hard-line Tory government of Margaret Thatcher.

When countries like Poland, Hungary and Bulgaria abandoned communism, which effectively meant getting rid of a totalitarian state and moving towards a market economy, people claimed that they were better under communism. Hankering for the past, their plaintive cry was: “There was bread and butter on the table.” Opponents of the government cite similar statements to try and prove that the ANC is failing the masses with its economic policies.

When Thatcher took over the reins in Britain in 1979, her Tory government dismantled minimum wages, changed laws regulating unions and effectively marginalised the labour movement. Thatcher believed that deregulating would create employment. But it is unclear whether her strategy of flexibility in the market actually created more jobs.

Professor Webster, veteran sociologist and fundi on labour issues, argues that it is difficult to give cut and dried answers on whether or not to regulate the market. He explains that limited studies have been conducted on the subject and that over time their findings have pointed to contradictory results.

He cites a study that was carried out in Italy in 1997 dealing with the deregulation of the market. According to Webster the results of that study revealed that, “after four years there was an increase of 2 per cent in employment, but two years later there was a decline.” Commenting on the Thatcher government, Webster adds: “Their argument was that it is better to have a job than not. In fact, generally speaking, it did not really create the kind of jobs it had promised. There was a disappointing outcome.”

Critics of the Iron Lady’s government argue that the main aim of deregulating the market was to erode the power of the unions in England. Tony Shepherd, a retired former labour relation’s mediator who has worked in London and South Africa, argues that the abolition of minimum wages in favour of a freely negotiated wage between employer and employee is no panacea. It does not guarantee an increase in jobs. “It is a short-term measure that does not produce results in the long term,” Shepherd, who has worked in the field for over 30 years contends.

To substantiate his point he observes that Thatcher’s successors, prime ministers John Major and Tony Blair, have returned to the middle ground, “regulating but not too much”. He adds, “The trick is to create a fair and equitable market environment. You make sure that you don’t force employers out of the market. The difficult situation in South Africa is to first try to close the wage gap. You can’t over-regulate, but workers here were for a long time disenfranchised. You can’t leave it to the employers to set conditions of employment. The aim of regulating is to level the playing field.”

Those in favour of deregulating the market point to the fact that there will always be people bargaining at the margins. They cite the issue of “wetbacks” from Mexico who go to North America to volunteer for jobs that Americans are averse to doing.

Webster shoots back at those who favour deregulation and neo-liberal globalisation, accusing them of hypocrisy. “They are happy to accept the free flow of capital but not happy with the free movement of labour”, he observes. Webster adds with a chuckle: “I favour the free flow of labour in the Southern African Development Community region”. He is obviously aware that his view is highly contentious.

An unregulated sector means that employees will always be at their employer’s mercy, as employers will set wage levels and other conditions of employment that will improve their balance sheets.

Shepherd moots a novel scenario. Instead of being bogged down on the issue of whether to regulate or not, maybe a different levelling option should be considered: that of setting up district minimum wage limits. Employees would be paid according to the affluence of the area in which they work.

Critics of regulation believe that stringent regulatory laws only serve to protect those people who are already employed, ensuring they get good salaries. Employers respond by keeping their personnel to a minimum.

A survey conducted by the Domestic Workers Union (DWU) in the parliamentary village in Cape Town two years ago revealed a sordid picture. The parliamentarians were short-selling their workers. Their reaction to the public disclosure that parliamentarians were paying their domestic workers below the minimum wage was to reduce their hours of work, according to DWU general secretary Myrtle Witbooi. Their stratagem was to remunerate their workers hourly to avoid paying the monthly minimum wage. The hourly rate is around R4.50 and the monthly minimum urban wage R864, Witbooi notes.

Witbooi says the union receives ongoing complaints about this kind of treatment. “We still get two or three workers visiting us from time to time. They tell us that they are not being paid the minimum wage. There are still many parliamentarians and ordinary families who are doing exactly what they accused others of doing.

Generally the DWU has to help more than 20 young women a month to return to their rural homes. They include women who have been dismissed, underpaid or who are unable to find employment.

Witbooi says that racketeers operating under the guise of employment agencies swamp Cape Town, offering to place would-be domestic workers in jobs. She believes the city has a constant circle of employment agencies that manages to receive illegal licences, and they operate illegally. “We have gone with the department of labour to these places and some were closed down, but after a few weeks they managed to get licences to operate again. They argue that they are providing jobs.”

Domestic Unlimited is a Cape Town-based agency run by Amina (she refused to give her surname). She says she only recruits “girls from up country” (she cites Kimberley and Bloemfontein) because residents don’t want girls from here.” Asked why, she replies: “They say they steal from them.” She says that her clients pay her R1300 for her services. She would not say whether her clients pay her directly and she in turn pays the workers. She also refuses to disclose her cut. She says, though: “I get R100 for registration from my clients and when the girls run away they don’t pay for replacements.”

Although Witbooi acknowledges the strengths of the LRA, she believes that some of the problems besetting the labour industry will be solved only if the labour department could be more forthright. She says, “the labour department does not take us seriously.”

The people most hurt by these scams are young and often vulnerable women. They often end up in the streets as prostitutes, notes Witbooi. Some are taken back to their families by the DWU but somehow they find their way back to the big cities. The lucky one avoid being sucked into the cesspools of exploitation.

The ANC’s original socialist manifesto since it assumed power has been to redress the social iniquities of the past, while at the same time securing economic stability. Their journey down razor’s edge has proved painfully difficult as economic growth has failed to halt the steadily increasing number of unemployed South Africans. It has become clear, as articulated in the ninth National Economic Development And Labour Council (Nedlac) summit recently, that future dialogue between business, unions and the government has to focus on how to hedge the two without necessarily increasing tensions.