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Ignoring the Oliphant in the room

During her Budget speech this week, Labour Minister Mildred Oliphant extolled the virtuous circle of wages and economic growth.

Workers needed to be paid decent wages to drive economic growth, she told MPs. “At the risk of sounding too simplistic” this made sense because South Africa’s economy is largely consumer-driven.

“When workers earn a living wage, it means they have reasonable disposable income to spend on goods and services produced by the economy. If the demand on goods and services rises, the entire supply chain inevitably starts experiencing an increase in output volumes, resulting in direct and indirect positive social and economic spin-offs.”

This is widely accepted theory labour economics, one of the apparent truisms of the modern age. However, in a developing economy there are some big potholes in its practical execution.

Shortly after listening to the minister’s heartfelt words, I this week chanced upon some local authority employees at work on one of these ministerial potholes.

And while I haven’t a clue how many council employees it would take to change a light bulb, I do now know how many it takes to fill a small-to-medium size pothole. Ten. I counted.

Nine had assorted low-skill tasks. This included three men protectively shepherding the cautionary orange cones strung across the road, perhaps in case one of them made a bolt for freedom.

Three, including the supervisor, sat on or stood around, chatting up a storm. They were apparently unfazed that directly across from them was the council offices and that any official glancing out those windows would be able to mark their indolence.

Another three were actually doing some work — I use the word loosely — plying their spades and a pick in a desultory fashion, spasmodically scraping together some rubble to feed the maw of a shiny new R2 million TLB (tractor-loader-backhoe). Of course, in the hands of the presumably technically skilled tenth worker, the TLB could have completed that task unaided, in a fraction of the time.

For the “living wage” advocates — some who argue for a minimum as high as R12 000 a month, as opposed to the present lowest sectoral minimum of R1 500 — the unacknowledged Oliphant in the room is how to reconcile their fine intentions with our finite pockets.

Let’s return to our roadwork crew. It is now some hours later — not being on a guaranteed wage myself, I couldn’t just dawdle in the sun but had to go hustle — and they are just finishing off an uneven, shoddily applied lick of tar to the former pothole. From previous experience, one can confidently predict that within a fortnight the pothole will be back, deeper and hungrier than before.

So, what is the “decent” wage that these men should be paid? It’s simple for a private entity. One pays as much as is necessary to get the skills that one needs.

If the job was being done by a private contractor it would be a simple trade-off: hire a lot of brawn armed with rudimentary tools at a low cost, or use fewer better-paid skilled workers armed with high-tech equipment. Whatever solution one plumps for, one has to earn more on the contract than one spends on doing it.

This economic reality doesn’t apply to state entities. They can have the best of all possible words, for at least a while.

Because they perceive taxpayer resources to be infinite, they can pay whatever they like. As a result, all tiers of government invariably have far higher entry-level wages than any statutory minimum.

And that’s why the state will dole out relatively high wages on unskilled labourers, as well as spend millions on expensive capital equipment and skilled operators. Then — because it mostly lacks the political will to demand that its employees are productive — if it wants the job done competently, it will eventually be forced to hire private contractors.

That is why local authorities have wage and benefits bills that are now so high that in many cases there is no money to pay for the services that they are supposed to deliver. The fiscus is running low.

As I said above, I don’t know how many council employees it takes to change a light bulb. But from experience I predict a sizeable squad that will arrive in two bakkies, armed with a shiny new hydraulic lift platform. And they will drop and break the fixture.

Follow WSM on Twitter @TheJaundicedEye


  • This Jaundiced Eye column appears in Weekend Argus, The Citizen, and Independent on Saturday. WSM is also a book reviewer for the Sunday Times and Business Day. Follow @TheJaundicedEye.