Manufacturing salaries vary according to skill levels with skilled workers earning much more, writes Teigue Payne.
Most businesspeople will dismiss the fiery debate about the wages of South African workers being conducted between Mike Schussler of economists.co.za, union federation Cosatu and Alternative Information and Development Centre-aligned economists as a storm in a statistical teacup.
Schussler’s conclusions, contained in the latest annual United Association of South Africa study on employment in South Africa, which he wrote, include the following statements that have proved to be incendiary to its critics: “The average worker … gets (earns) about R13200 per month at present … The working class can now be called the comfortable class.”
Schussler concludes that, following high-percentage wage increases in recent years, unskilled and semiskilled South African workers are overpriced and this is probably the leading factor in their high rate of unemployment.
By contrast, he concludes, many management and skilled categories are slightly underpaid by international standards.
The association represents a wide range of industrial and service industry workers, including some miners, hairdressers and fast-food franchise KFC employees, for instance. It is affiliated to the Federation of Unions of South Africa, not Cosatu.
The critics of Schussler’s conclusions have attacked his sources of statistics and his use of an average wage, which is artificially inflated by high earners in a society that is notoriously unequal.
The critics state the obvious – that it would be great if South African “workers” did indeed earn an average of R13200. But the truth, using other statistics, is probably that they earn less than half that amount. Of course, much depends on what you mean by “workers”.
Paraphrasing Schussler’s conclusions to debunk him, one of his critics, Dick Forslund from the development centre, said: “The report recommends draconian cuts in the lowest wages and says that the country needs more inequality.”
Both Schussler’s and his critics’ analyses suffer from the problem of averages, although they also fight about “median” (or typical) wages.
The problem with averages is that if your head is in the oven and your feet are in the fridge, you should be, on average, comfortably warm. But, in reality, in that situation you are probably in very bad shape.
The statistics, with which both parties can hardly argue, in Statistics South Africa’s “Quarterly Employment Statistics” report show that employment numbers have fallen in recent years in major industry subsectors whereas gross earnings have soared. The “Quarterly Employment Statistics” published in March show that between March 2008 and December 2011 employee numbers in the manufacturing industry fell by 12%, but their gross earnings rose by 45%. In mining and quarrying, employee numbers rose by 2% and gross earnings rose by 83% in the same period. In the electricity, gas and water supply sector, employee numbers rose by 3% and their gross earnings rose by 96%, probably a reflection of high wage increases in state departments and state-owned enterprises.
The number of employees in both private and public sectors other than agriculture was marginally lower at 8.381-million in December 2011, compared with 8.417-million in March 2008, but their gross earnings were 55% higher.
What ‘workers’ are paid
How valid is the figure of R13200 as an average monthly wage for South African workers? According to Schussler’s critics, not at all. Even employers in major sectors in South Africa believe it is too high for shopfloor “workers”.
It is not surprising, because the figure is an average not restricted to industry shop floors but includes all levels of employees.
It appears that Schussler’s critics are deliberately falsifying his position to discredit his case. The R13200 figure is taken directly from “Quarterly Employment Statistics” and is not a derivative figure. Page 29 of the November 2011 report shows the figure of R13284 as the actual figure of earnings (derived from survey results) for the formal, non-farm sector for that month. The figure includes earnings, bonuses and overtime payments.
The industries included in the figure range from mining and quarrying to manufacturing, electricity and gas and water supply, construction, wholesale and retail, transport and financial and community services.
To get a sense of how much shop-floor workers are being paid, the Mail & Guardian canvassed employers in four major South African industries that have centralised bargaining and therefore have published wages for that approximate category of workers.
In the mining industry, newly recruited underground workers with no qualification or training can, with production incentives, come within striking distance of the R13200 mark. But in none of three other industries canvassed – engineering, motoring and clothing – is there any workable and widely applied productivity-related wages system. In these industries, R13200 is a distant dream for rookie recruits.
One industry observer said that both big labour and big capital have been guilty of allowing entry-level wages to rise without focusing on increasing the skills of workers so that higher wages generally would be economically sustainable.
The mining industry
Wage rates in this industry are no longer published, but for the gold and coal industries they are negotiated centrally by the Chamber of Mines. Although the platinum and diamond mining companies are members of the chamber, they negotiate individually.
Dr Elize Strydom, chief negotiator for the Chamber of Mines, said wage rates for underground workers exceeded those in almost any other industry and were sometimes higher than for equivalent jobs in the public sector. Combined with production incentives, an underground worker would in general exceed R13200 by a considerable margin. She said the higher rates were partly in recognition of the difficult conditions of heat, humidity and darkness underground, but not in recognition of danger, for which other money was set aside in the quest for a zero-harm workplace.
At present, a new entry-level recruit – a sweeper or lasher – receives R4400 a month, following a 10% increase last year and in 2010. This will increase again by 10% on July 1. But the employee can more than double that amount with merit and performance bonuses, although these differ from mine to mine, and with the living-out allowance of R1520 in the gold industry (that is if they have opted not to live in a mine hostel, where accommodation and food are free). For every year worked, an underground worker also gets a “service increment” of 1%.
The engineering industry
In the engineering industry, there are 12 different pay scales and sub-scales, A to H. Unlike the clothing manufacturing industry, workers are not paid according to how long they have been employed in the industry.
According to the published wage rates of the engineering industry, minimum wages range from about R4500 a month for the least skilled workers (grade H) for a 40-hour week to nearly double that for the most skilled workers (grade A).
A bargaining council official commented that from the middle of the pay scales, D downwards, most employers would probably pay the minimum wage rate as prescribed by law and agreed in the bargaining council. They would do this because of the oversupply of semiskilled and unskilled workers in these grades, as shown by the groups of unemployed who stand outside factory premises and engineering works.
But in the higher skill grades, above D level, the minimum wages prescribed by law were “academic” and employers were in practice probably paying much more because of the skills shortage. Workers might well be earning somewhere around R13200, especially in the public sector where wages are higher.
However, because the vast majority of engineering workers are in the lower skill grades, the official thought that R13200 would be well above the average earned by a non-managerial worker in the engineering industry.
An important consideration is that whenever a percentage increase to wages is agreed in the bargaining council for this industry, it is added to the actual wage of the worker, rather than to the minimum wage.
The motoring industry
Wage rates vary widely in this sector because the industry ranges from original manufacturers, component manufacturers, reconditioning and repair and retreading establishments to fuel dealers, sales and distribution establishments and automotive parts outlets.
In the premier geographical area for the industry, the minimum rate for the lowest grades is about R2598 a month, going up to about R7729 a month. A bargaining council official said that in the higher skill levels the minimum rate was generally exceeded by larger employers, but small employers generally stuck to the minimum wage.
The clothing industry
In this industry, the bargaining council-agreed legal rates are about half of those in the engineering industry and employers still complain that they cannot be competitive against imports at legal wage rates. As a result, at least half the industry – by employee numbers – defies the law and pays rates that are illegal and below the bargaining council rates.
Legal wage rates increase with the number of months an employee has spent in the industry and vary according to locality. On the lowest rung they are paid R2269 to R2784 a month in the first six months. It goes up to between R2823 and R3161 a month for higher-category and longer-serving workers.
An employer commented that, unlike in the engineering and motoring industries, most employers paid the minimum rate in both lower-skill and higher-skill categories. This is because of the pressure the industry is under and also because skills are gained quickly on the factory floor and are not generally the result of apprenticeships or academic qualifications.