Analysis

Labour income stagnates as profits increase

Niall Reddy

The ANC has strong words for labour brokers, but fails to take concrete action against them, writes Niall Reddy.

The past 20 years have been brilliant for SA's capitalist elite, but not for the rest of us. (Madelene Cronjé, M&G)

To pose questions about the conditions of labour under democracy is to question the success of the ANC’s national project itself. As the liberation party embraced a liberalised economic system, it turned away from the more radical restructuring and redistribution envisaged in the Freedom Charter.

This meant that righting the material injustices of the past and reimagining the basis of social citizenship would not be achieved through the national control and subjection of capital, but through the redemption and universal achievement of waged labour.

The super-exploitation of a semi-proletarianised labour force had been the material logic to the old system; the dignifying of work and just reward for productivity was to be the gateway to the new. Labour’s access to the state through the tripartite alliance was to establish corporatist institutions that would allow conflicts to be managed for the good of the economic whole.

But South African corporatism did not constitute a system of shared compromises from both labour and capital. Rather, it meant labour submitting to the ANC’s tailoring of economic policy to the evolving interests of the capitalists entwined with the party’s top brass.

What were sold as the fruits of co-operation were a set of labour regulations meeting the minimum standards of a liberal constitutional state, but not immune to informalisation.

The mistake, if it was a mistake, was to think a globalising South African capitalism had space for a world of work that was dignified and fairly compensated. The system was built for the effective use of cheap labour; historically, it rendered about a third of the population “surplus”.

From 1994, the ANC’s considerable popular support provided cover for large corporates to hive their loot off to foreign metropoles and for the reproduction of the cheap-labour system.

Labour got formal protections in the amended Labour Relations and Basic Conditions of Employment Acts, but informalisation hit secure employment. South Africa’s latest score on the OECD (The Organisation for Economic Co-operation and Development) employment protection index is 1.25, the lowest of all G20 emerging markets and well below the OECD average. As capital structured itself into the world economy, merging, unbundling and financialising, it appropriated the latest techniques of labour management and efficiency to which these laws presented little obstacle.

Labour-broking’s R44-billion turnover shows its effectiveness in delivering “flexibility” to employers and in segmenting workplaces. ANC ministers utter strong words against brokers, but their failure to take any concrete action is a sign of workers’ powerlessness in the alliance.

The only real safeguard against capital’s tactics is strong, unified organisation. But Cosatu lost its flexibility and militancy, moving worker struggles from the factory floor and the street to the boardroom, sapping worker control. It replaced regular oversight from the rank and file with full-time officials, administrators and those with the skills to thrive in capital’s own corridors. The rewards for taming labour demands were handsome, as reflected in the personal trajectories of heavyweights such as Gwede Mantashe or Thula Nxesi.

The private sector supported the domestication of a once-radical movement, widening the “social distance” between leaders and the rank and file. The wholesale absorption of National Union of Mineworkers structures into the human resources division of Lonmin is the most salient example of this.

Though labour’s political sterility is recognised, the union movement retains an image of militancy because of frequent and seemingly severe strikes, which the business media depicts as a grave threat to the national interest.

So why is the reality of a defanged union movement and institutions that offer little protection for workers so completely at odds with the outlook of business, which regards our labour relations as the worst in the world (according to the World Economic Forum) and rails against excessive regulation and strikes that are “bringing the country to a standstill”? The answer is in the continuity of the apartheid-era labour relations in today’s domestic capital.

There is no greater register of labour’s defeat over 20 years of democracy than a plot of real wages by percentile. The majority of workers saw no improvement (or small declines) in their inflation-adjusted wages. In 1997, half of all workers in the economy earned R3 274 per month (in 2011 prices); in 2011 it was R3 028. Yet the wages of the “top 10%” of workers (“highly skilled” professionals and managers) increased substantially, driving up the average.

Overall, labour income lagged far behind productivity. Take out the wages of supervisory workers (that is, bosses), and the working class’s share of value produced in 2007 was 10% less than in 1994.

The obverse of this was soaring profitability. The past 20 years have been exceptionally good for South Africa’s capitalists. But their good fortune, despite all the promises, hasn’t trickled down to the rest of us. A recent study by Credit Suisse looked at financial returns to shareholders and long-term per-capita growth in various countries, finding that the two are negatively correlated.

South Africa had the widest discrepancy between what shareholders got and how much the economy grew. The unemployment crisis is not the result of the power of organised labour, but the fruit of the increased power of organised capital.

Niall Reddy is a member of the editorial collective of Amandla! Its next issue focuses on 20 years of democracy.

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