Time to ease the trade union corset that confines SA

Despite the excitement generated among the British hard left by the election of Jeremy Corbyn to lead the Labour Party, trade union influence has over the past two decades been on the wane throughout most of the Western world.

And as in most of the developing world, it has not fared at all well in Africa. On this continent trade unions have rarely advanced beyond being vehicles for the political aggrandisement of canny populists. Populists who have used labour movements in their drive to gain power, then abandoned them to become rusting relics outside the now despotic presidential palace gates.

This is not good news for the workers, but neither is it for employers. Especially in deeply divided and striated societies, organised labour provides benefits beyond the obvious remunerative ones that it secures for its members. When codified effectively, trade unionism is a robust and tested mechanism for resolving conflict.

The challenge, then, is for legislators to strike a balance between the competing interests of labour and capital.

At the International Society for Labour and Social Security Law (ISLSSL) congress in Cape Town this week, one of the organisers, University of the Western Cape Emeritus Professor Darcy du Toit, warned that the challenge was that while the basic principles of labour law remain unaltered, the traditional mechanisms for their application have become “increasingly redundant” and “the urgency for developing new ones significantly vital”.

South Africa occupies an unusual spot in the trade union firmament. As speaker after speaker at the congress pointed out, it has arguably the most protected workforce in the world, making it a rare exception to the sustained international erosion of labour rights by the forces of economic globalisation and neoliberalism over the past few decades.

Such exceptionalism is not only about constitutional protections. SA’s unions have a disproportionate political and economic influence because of their protected status within the African National Congress’ tripartite alliance with the Congress of SA Trade Unions and the SA Communist Party.

That’s all good and well for the unions, but it hasn’t translated into the kind of economic progress that can cut unemployment. The downside of a legal field tilted so heavily in favour of workers is that it diminishes the need for union compromise: to increase productivity, to encourage the creation of low-wage entry jobs, and to resort to strikes only as a last-ditch mechanism.

Like King Canute, SA’s unions have felt confident enough, using violence and intimidation when they deem it necessary, to defy the economic realities that have forced adaptation and flexibility in union movements elsewhere. But there are signs that the tide might be turning.

Ebrahim Patel — the ministerial dead hand at the department of economic development, a sworn enemy of neoclassical liberalism and his own party’s national development plan — hinted at as much at the ISLSSL congress. “Unless labour law is linked to job creation, there will be problems,” Patel said.

It would seem, then, somewhere in the deep recesses of that fog that passes for government thinking, there lurks an awareness that the hijacking of the economy by a relatively small labour aristocracy cannot continue forever. For Patel’s linkage of labour law to job creation has potentially enormous implications. It is the opposite of what the government allowed to happen to the SA textile industry, which was destroyed by unrealistic minimum wages and a consumer preference for cheap tariff-free Chinese imports.

It’s not only the unions that are to blame. The dominance of sectoral wage determinations has suited both labour and big business. The unions demand ever-higher real wages and the corporate big boys have little disincentive to deny them, since these costs disproportionately disadvantage smaller players and new entrants to the market. And with less competition, the higher wages can in any case often be passed on to consumers.

But chickens are coming home to roost. Although it is not a matter of cause and effect, the unionised SA economy is performing far below those of less-unionised sub-Saharan Africa.

And long-term investment flows, hence job creation, have virtually dried up. Not only because of unsustainable union demands backed by tacitly tolerated mob violence, but also because of contemplated legislative changes — changes championed by Cosatu and the SACP — that weaken investment protection and simply make the risk-reward equation unattractive.

The SA government’s failures in almost every sphere can be traced back to administrative impotence caused by ideological paralysis. That’s why teaching unions are destroying education. That’s why small- and medium-business growth is stagnant.

Minister Patel is absolutely correct that without job creation there will be problems. To have him intimate this at a labour law congress is as heartening as it is astonishing. Where he and his colleagues fail us, is in summoning the courage to actually do so — to ease the pro-union legal latticework that constricts growth.

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