Guest post: Workers’ day – a perspective on labour unrest in South Africa 1

This week we are happy to host a guest post by Prof Raymond Parsons:

Prof Raymond Parsons

Prof Raymond Parsons

WORKERS’ DAY – A PERSPECTIVE ON LABOUR UNREST IN SOUTHAFRICA

As we internationally recognize Workers’ Day on 1st May, we need to briefly take stock of the overall situation in SA at this particular moment. Returning from the IMF and G20 meetings last week Finance Minister Pravin Gordhan said he did not see much faster growth in SA over the next three years, given the combination of overseas and domestic factors shaping our economic trajectory. Locally, he saw labour instability, electricity supply shortages as well as low consumer and business confidence as defining elements in SA’s economic performances in the period ahead. So where does the current industrial unrest fit into the bigger picture? What is the role of collective bargaining here? What parameters may shape the outcomes?

We should remember that the purpose of collective bargaining is precisely that employees and employers should lock horns from time to time to get agreed outcomes about future wage levels. This may or may not involve a strike, depending on how much pragmatism prevails among both employees and employers. Realistic negotiations should nonetheless be driven by a recognition that capacity to pay is a major factor in deciding what employers in various sectors can afford but that the room to manoeuvre can nonetheless be enhanced by productivity gains. There can therefore be no ‘one-size-fits all’ in terms of wage increases for the economy as a whole, except to use the inflation target-range of 3%-6% as a baseline for wage negotiations, in the context of a sluggish economy. It is not only workers who are struggling with higher costs but also business itself, especially small business. An excessive wage bill for business today can simply mean job losses tomorrow, even more so in present economic conditions.

What also matters for the economic climate in the current negotiation cycle is whether the proper ‘rules of engagement’ are adhered to during the collective bargaining process or whether it degenerates into violence, intimidation and disruption. The events at Marikana in August last year still cast a long shadow over the mood, and industrial action which gets seriously out of hand will have a negative impact on business confidence, already at relatively low levels according to most indices. It is in the mutual interest of both employees and employers to conduct wage negotiations in both the letter and the spirit of the labour law framework to demonstrate that robust wage negotiations need not have a damaging effect on investor perceptions of SA.

We must, however, not entirely detach the wage claims from two other considerations, which are not easy to assess but nonetheless feature strongly on the current collective bargaining radar screen. The first is an undoubted feeling on the part of many workers that, to the extent that they do not feel ‘better off’ as a result of the broad redistributive policies of recent years, the redress must therefore come by using the collective bargaining system for what might be seen as extraneous social demands. This puts a great strain on labour relations geared to more ‘normal’ expectations around wage negotiations, and undermines the ‘social solidarity’ sought in the National Development Plan (NDP). It would be helpful if part of the Workers’ Day celebration could be devoted to emphasizing the importance of collaboration in seeking to make the SA economy bigger, stronger and better in future.

The second element is that fact that, although the next election in SA is about a year away, the campaign has in essence already started, whether among political parties or within the ANC-Cosatu-SACP Alliance. The latest tension between the government and Cosatu over the NDP means that the respective groups will wish to demonstrate their power, in the case of Cosatu by emphasizing their desire and ability to ‘call the shots’ on the economy. The delay to the Medupi electricity project because of industrial unrest might fall into this category. Although formally committed as a political partner to helping the ANC fight the election next year, that does not exclude from Cosatu strategically positioning itself on the economic front in the meantime. These elements need to be built into any assessment of the current wage negotiation cycle.

As Workers’ Day will remind us, labour market issues always lie at the crucial intersection of economic, social and political policies, and this will be intensified under present circumstances in SA. Businesspeople will need strong nerves and a cool head to navigate through the political ‘silly season’ that lies ahead. The collective bargaining system will also again be severely tested.  At the same time, taking into account the Finance Minister’s comments above we must not underestimate the key vulnerabilities in the economy that may be aggravated if the ‘rules of engagement’ at different levels are not respected and enforced. In that event it will be growth and development that will be weakened and SA will have again needlessly exposed itself to the casualties of ‘friendly fire’.

(Parsons is a Professor at the Graduate Business School at North West University)

One comment

  1. Good afternoon Prof. Thank you for sharing this peice. My mother always says that one needs to learn something each day they are alive, and today I have learnt. I now understand what implications labour unrests (and/or violent strikes) have on business (both local and international). It seems to me that it is important for our country to have a collective bargaining drive – everyone working in harmony, through proper communications from employee to employer and vice versa. After all, “WE ARE NOT ANIMALS!”

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