Socialists ought to be first to agree that wages are too high. Workers do price themselves out of jobs.
The clothing and textile industry is illustrative. A workforce of about 200 000 a few years ago is now down to a mere 56 000 because of cheaper foreign imports. Manufacturers argue this dire situation is going to get even worse owing to the industry’s uncompetitive wages. Last year 252 firms were closed because they couldn’t afford even the compromise of paying only 70% of the agreed minimum wage. A further 6 427 clothing workers consequently lost their jobs. Many more manufacturers face forcible closure because full compliance with the legal minimum wage is expected.
These realities resulted in the “historic” compromise in which the clothing trade union, Sactwu, agreed to a 30% pay cut for all new clothing workers. The president of the Cape Chamber of Commerce, Michael Bagrain, applauded this trade union recognition of excessive wages: “It would be absolutely fantastic if other industries followed this example,” he said.
The metal and engineering industries were quick to follow. They called for a 50% cut in the minimum wage to prevent job losses over and above the 100 000 shed in less than two years. The union Numsa saw this call as condemning workers to “poverty wages and squalor”.
Similar analyses are brought to bear on workers in the United States and the European Union. Again, the evidence supports the claim that the pay and perks expected by workers in those countries contribute to the outsourcing of millions of jobs to other parts of the world where workers are thankful for having a job — any job at any pay.
These facts are, in general, not in dispute. Neither is the statement that alongside the unaffordable wage rates is the enormous and constantly growing wealth of people who live on profits rather than salaries. This is true of all the countries where labour is said to be far too expensive. The share of national wealth from profit in South Africa, for example, rose from 45.1% in 1994 to 51.3% in 2008. In the US the percentage from profit increased from 32% of national income in 1975 to 43% in 2005. Put differently, an additional R120-billion would have gone to South African workers in 2008 if their portion of the national wealth had remained what it was in 1994.
This growth in profits, alongside growing unemployment, owed in no small measure to excessive wages, indicates that there is more than one dimension to the problem. The socialist’s agreement that wages are too high is thus only part of a bigger picture.
South African wages are both low and high
Filling in this bigger picture begins with a paradox: wages in South Africa are simultaneously excessive and low. The minimum wage in the clothing and textile sector that has caused so much trouble was R336 a week. Clothing companies in Newcastle closed their businesses to demonstrate the unaffordability of even the compromise figure of R235 a week. Yet most restaurants in our big cities would close down if their patrons spent as little as R336 on a dinner for four. Many of the economists who point figures at greedy workers are happy to be seen driving cars that cost R500 000, 1 488 times more than the troublesome weekly wage.
These examples force us to ask troublesome questions. How does one explain poverty wages that are also excessive? How does one explain unemployment caused in part by workers earning poverty wages? What does this unemployment say about our ethics? Where do people and human values fit into this bigger picture? Finally, what is to be said about the economic “experts” who either don’t ask these questions or who are content with an answer involving unquestioning acceptance of the present economic system?
The business of businesses is profit maximisation; capitalism rewards those who make higher profits than their competitors and unsentimentally punish those who cannot compete. The actual wage level (including conditions of employment) is irrelevant in these circumstances. Whether they are high or low in terms of workers’ expectations is of no consequence. The primary requirement for capital is the availability of labour; of people sufficiently desperate and in sufficient numbers to sell their labour power at a cheaper rate than others. Neither the nature of the work involved nor the level of education or skill required is exempt from this logic of the maximisation of profit.
It is not widely known that it is this drive to cheapen labour that gave birth to trade unions. We usually think of trade unions as bodies that negotiate with businesses for better pay and conditions for workers. In fact, the first trade unions, in mid-19th-century Britain, were formed to stop harmful competition among workers. This competition began by setting worker against worker at the point of production; it then set workers against themselves at village, town, city and regional levels. At each level, and at each point in the division of labour, capital was more than ready to profit from workers undercutting each other to work. This intra-worker competition was stopped only by the formation of national trade unions with workers ready to act in solidarity.
The more recent globalisation of capital and the failure of trade unions to transform themselves from national structures into effective international ones is a partial answer to the question of why South African workers who live in poverty are nonetheless overpaid. Asia is now providing labour in sufficient numbers for international capital. Horror stories of the ruthless exploitation of these workers regularly hit the respectable media, causing fleeting discomfort to some.
It is this discomfort that brings us to the second and more important part of the socialist answer. South African textile workers who were recently on strike to protest against their exploitation carried a placard that challenges capitalism to its very core. The placard read: We need to be treated as humans. (There was a photograph of it in the Mail & Guardian on October 7).
It is this need that is incompatible with the logic of capital accumulation. Provided that the labour is available and at the mercy of capital, there is no bottom line when it comes to cheapening the means of production and thereby enhancing profit and securing competitiveness. No matter how poorly paid they are, workers are “expensive” when other workers are compelled to work for even less. This is the race to the bottom made inevitable by the logic of capital.
There is cold comfort for those who would want to argue that things are, at least, not as bad as they used to be. They wrongly think that slavery and child labour, which mark the extremes of exploitation, are evils from our past. Yet, the Child Labour Index 2012 classifies almost 40% of countries as being at “extreme risk”. According to the International Labour Organisation, there are more than 215-million child labourers worldwide, with 115-million involved in hazardous work.
Twenty-seven million men, women and children are held, sold and trafficked as slaves throughout the world today, according to the US state department. That is more than double the 12.5-million Africans who were forced into slavery during the legal transatlantic slave trade. The “trade that refuses to die” is worth $32-billion a year and involves many transnational corporations.
It is slave labour that makes all other forms of labour expensive. Competing with child labour makes our clothing workers seem unreasonably greedy when they defend their measly minimum wage. Labour struggles arise precisely because capital is organically blind to workers also being people. The logic of capital doesn’t allow for this duality. Conflict with capital is inevitable as workers struggle to protect their humanity, often with contradictory outcomes. Ultimately, and in various ways, we all choose one side or another. We do so whether or not we are aware of our choice.
Jeff Rudin is a board member of the Alternative Information and Development Centre