General secretary of the Congress of South African Trade Unions, Zwelinzima Vavi, responds to a Business Day article on unions and job creation:
If it were not for our ugly apartheid past, we would probably just ignore Loane Sharp’s article "SA’s trade unions the biggest obstacle to job creation" placed as a centrepiece in Business Day (May 25). Regrettably, we live in a society where prejudice and misinformation are presented in some quarters as heroic pieces of work. Too many people believe the hogwash contained in that article as gospel truth, because it is repeated over and over again in our media.
Having said this, I thought Mr Sharp’s article would have shocked even Margaret Thatcher and Ronald Reagan, the architects of the mantra of neoliberalism. But it would not have shocked one Joseph Goebbels, whom Mr Sharp clearly emulates in his attitude towards unions.
What is shocking is Mr Sharp’s ability to spew lies and statistics sucked from the fingers. None of the figures he uses are backed by scientific research. They are the work of Adcorp , a company of labour brokers. There is neither fact nor economic logic in any of his work.
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Essentially, he sees unions as a threat to the type of society in which he believes, where unions are crushed out of existence, workers are nothing but tools, wages are suppressed to below what is required for human survival, inequalities are celebrated as an act of God - as believed by the architects of apartheid - and poverty reigns supreme. Many South Africans know this path will not only take us back to the conflicts of the past, but will also destroy mass buying power, eventually, and lead to a collapse of the economy itself.
Mr Sharp is letting the cat out of the bag. He cannot wait "to smash the unions". He proposes an eight-point package of measures designed to smash the unions and weaken the power of workers. He calls for a fight to the death with the organisations that stand between workers and utter slavery. According to a United Nations Development Programme report published in 2010, 44% of workers are living on less than R10 a day - enough to buy a loaf of bread. Already, the top 5% earners take 30 times what the bottom 5% earners are paid. Already, 50% of South Africa’s population lives on 8% of the national income, and the top 50% lives on 92% of the national income. Even among the youth, which Mr Sharp seeks to bribe, 30% now earn less than R15 a day, according to the International Labour Organisation.
Let us begin with the usual refrain that the labour market is rigid. This year, Mr Sharp says, "labour productivity fell to the lowest level in 40 years - Labour’s share of national income is at a 50-year low. Over the past three years, wages have risen 11,5% a year on average - treble the consumer inflation rate over the period".
This is plain economic nonsense. First, the so-called "excessive" increase in nominal wages above inflation, coupled with a fall in productivity, should arithmetically deliver labour a steeply rising share of national income. Dick Forslund, economist at the Alternative Information Development Centre, has amply exposed Mr Sharp’s recurrent errors in a debate on Politicsweb.co.za, but Mr Sharp fails to learn. His own admission that labour’s share is at "the lowest level in 50 years" - which means the rate of exploitation of labour is the highest in 50 years - undermines his logic and exposes many inconsistencies in his article.
Second, Mr Sharp’s premise is economic nonsense, because, if we go by his figures, the average consumer price inflation (CPI) rate over the past three years would be 3,83%. This is simply not true. The Reserve Bank’s March 2012 quarterly bulletin reports that nominal unit labour cost increased 8,7% and CPI averaged 5,5%. Labour productivity grew by an average of 2,1% over the past three years, meaning the labour share grew by an average of 1,13%. But these developments occur against a backdrop of a historical and sharp decline in the labour share. Mr Sharp ignores this because he reads his own statistics from another planet.
The Bank report shows that income distribution at the point of production has worsened; employees take 11% less of the economic cake than they did in 1995. This persistent decline in labour’s share makes nonsense of Mr Sharp’s claim that mechanisation and falling labour intensity are driven by the cost of labour. If we are to decompose "employees" by income deciles, the situation is likely to be even worse. We also know from the Presidency’s Development Indicators report (2009) that, broadly, income distribution has worsened in South Africa since 1995.
Mr Sharp then presents some gibberish and false "political calculus" that prove nothing. He claims the Congress of South African Trade Unions (Cosatu) has 1,2-million members and that trade-union membership has declined from 3,5-million to 3,3-million. The facts are revealed in Cosatu’s organisational report to the fifth central committee in 2011 and in Statistics SA’s quarterly labour-force surveys.
The organisational report shows that our affiliate fees increased 10% in real terms, and 86% in nominal terms, between 2007 and 2010. By April 2010, Cosatu’s membership was 2 018 717; it was growing even before 2006 and during the current economic crisis. This number is 68% above Mr Sharp’s "most credible" figures.
Statistics SA began recording official trade-union membership in its March 2006 Labour Force Survey, reporting a figure of 2 928 000. In the 2012 survey for the first quarter, trade-union membership is officially reported to be 3 327 000. Contrary to Mr Sharp’s propaganda, there has been an increase of 399 000 in trade-union membership. Where does he get his information?
This deliberate misreporting of statistics reaches boiling point when Mr Sharp tries to put rand values to membership. He claims that since 2006, trade unions suffered a "loss of 129 424 members representing membership dues of R9 5773 760 a year". Yes, a year. This is, once again, plain rubbish. It implies trade-union membership declined by 25 885 a year, which we know to be false. Further, based on this false figure and by his own numbers, Mr Sharp implies that each worker lost to the trade-union movement, especially Cosatu, contributed an average of R3700 a year in union dues, which is R308 a month. That is just ridiculous.
The "political calculus" is gibberish because the political parties straddle union and non-union members, the employed and the unemployed, old and young. Mr Sharp tries to draw political conclusions on the basis of some ratio between Cosatu membership and African National Congress Youth League membership, apparently reflecting the employed versus the unemployed youth. He overlooks the fact that the two formations are under one broad political formation led by the ANC; therefore, they share some basic political principles and are united by the Freedom Charter.
These clear facts are non-facts to "guru" Mr Sharp. His ratio has already dictated that the employed will trump the unemployed and, by 2020, the ratio says the unemployed will trump the employed, even when the ANC Youth League (and the Young Communist League and the South African Students’ Congress), an important component of the pre-eminent ratio, pronounces against the youth wage subsidy.
In the midst of this gibberish, Mr Sharp then lurches on to the usual scapegoat when it comes to education: the South African Democratic Teachers’ Union. He decries "the rising cost and deteriorating quality of government education" and theorises that the influence of teachers’ unions over government schools makes black kids unemployable, and that "trade unions keep black youths who, by some miracle, become employable out of work".
Then the ominous words follow: "crush the power of the trade-union movement". Unfortunately for Mr Sharp, the reality is that the unions, together with the ministers of basic and higher education, are forging ahead in an attempt to fix the education system.
In her budget vote speech delivered on May 17, Basic Education Minister Angie Motshekga ended her presentation by saying: "Don’t point a finger, but raise a finger up for education."
Both the basic and higher education ministers are clear that "the basis of any good education system is the quality of its teachers ... Our system is as good as its teachers." These ministers outline the key interventions that would raise the quality of teachers, because they understand the problems are deep and structural - providing basic infrastructure, developing teachers, reducing class sizes, providing adequate learning materials and so forth. However, Mr Sharp is still in a finger-pointing mode and is clueless about the efforts under way to address the challenges in the education system.
He is looking forward to the youth wage subsidy as the magic solution to the problem of youth unemployment, which Cosatu has shown time and again not to be a solution at all but merely a hand-out to employers, with no guarantee of any increase in employment nor any obligation to train the workers for whom they are getting the subsidy.
Mr Sharp says the current levels of poverty, poverty wages and inequality are not enough, and we must adopt an economic model that exists only on his planet, to worsen poverty and inequalities, as we embark on an unprecedented race to the bottom. He is articulating in the crudest language the views of the most backward employers, particularly labour brokers, such as his own Adcorp.
This is nothing but an attack on the living standards of the South African working class. It is a declaration of war and battle lines are drawn. The youth wage subsidy story is just an entry point to a war now being fought in the streets and in newspapers, in research institutes and government departments, in lecture halls and on dinner tables.