Some blame labour protections and unions for South Africa’s economic malaise. But this claim lacks evidence and stands to leave us in an even worse position. Photo: Delwyn Verasamy, M&G
Nobel laureate economist Angus Deaton recently gave his insight on his profession, which has attracted considerable scrutiny for failing to predict, and possibly prevent, economic crises.
In his article, Deaton revealed his change of heart on the subject of trade unions, admitting to having welcomed their slow demise.
“But today large corporations have too much power over working conditions, wages and decisions in Washington, where unions currently have little say compared with corporate lobbyists,” Deaton added.
“Unions once raised wages for members and nonmembers, they were an important part of social capital in many places and they brought political power to working people in the workplace and in local, state and federal governments. Their decline is contributing to the falling wage share, to the widening gap between executives and workers, to community destruction and to rising populism.”
Deaton raises an important point — one we should consider going into this year’s elections, which will pit parties with vastly different views on trade unions against one another.
Take the Democratic Alliance (DA), for example. The official opposition’s manifesto lays bare the party’s anti-union, anti-worker stance, which is the through line of its economic policies.
The party promises to overhaul the Labour Relations Act, specifically targeting regulations it deems deterrents to hiring. The DA’s flagship economic proposal — namely its Youth Employment Opportunity Certificate — also gives employers an opportunity to flout labour laws, this time by allowing them to “break free from the constraints of the minimum wage”.
The DA also takes aim at trade unions, vowing to make them pay deposits before they can embark on strikes. These deposits will apparently be used to cover any damage caused during industrial action. Earlier in the document, the DA partly blames South Africa’s economic crisis — specifically its impact on the poor and unemployed — on the ANC’s protection of labour federation Cosatu’s vested interests.
Of course, this is not the first time the DA has cast labour protections as a brake on the economy.
The latter manifesto proposal, which would introduce a new deterrent to strike action, appears to be a reworking of the party’s 2014 private members bill which sought to amend the Labour Relations Act.
The amendments, which the party had been working on for five years, would penalise unions for not taking reasonable steps to avoid violence and damage to property during a strike. They were ultimately rejected by parliament.
Two years prior, respected academic and former trade unionist Steven Friedman criticised the DA’s economic policy proposals at the time for making Cosatu the target of its ire, noting: “While the DA would be expected to criticise the African National Congress’s ally, the document goes further — it is an attack on trade unions and worker rights. While it tries to present this as an attempt to end anti-competitive behaviour by both business and labour, the suggested restraints on business are mild in comparison.”
In his article, which appeared in the Business Day, Friedman added that the DA’s proposals repeated the pro-business view that trade unions are South Africa’s chief obstacle to economic growth and job creation.
“Which is a pity, for the claim that unions are our main economic problem lacks evidence,” Friedman wrote.
In 2017, labour experts Chris Doucouliagos, Richard Freeman and Patrice Laroche surveyed more than 300 global studies on the economic impact of unionisation.
They found that, contrary to what many seem to believe, trade unions do not reduce overall productivity. However, the three do link unionisation to lower employer profits.
“Companies are concerned with profitability rather than productivity or its growth … The negative profits effect presumably explains the general business opposition to unionisation,” they write.
Moreover, this study noted the important role trade unions appear to play in staving off rising inequality.
With inequality seeming to pose a greater threat to economies as each year rolls by, this function cannot be disregarded. Whatever profitability trade-off exists for employers is a small price to pay for this defence against inequality.
“Finally, union activities almost invariably trade off some economic efficiency for the greater justice at workplaces and reduced inequalities valued by persons on the left and almost invariably do so in ways that constrain the personal liberties and economic freedoms valued by libertarians on the right,” the study concludes.
Importantly, in the South African context particularly, post-2009 economic stagnation has coincided with trade union weakness rather than strength.
According to Statistics South Africa data, the proportion of trade union members to the employed labour force has fallen from 25% to 22% since 2010. This data does not differentiate between unionisation in the public and private sectors, with the latter known as being particularly badly hit by declining membership.
South Africa’s trade union movement is not particularly strong at the moment — and we are arguably worse off for it. If we go into this election believing that undermining labour protections and unions will bring about economic prosperity, we stand to be sorely disappointed.