Published On: Fri, Mar 13th, 2015

SA analyst warns against unrealistic labour demands

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JOHANNESBURG – A South African economist has warned another round of destructive wage disputes will have a crippling impact on job creation, workers’ welfare and the economy at large.

Rian le Roux, Chief Economist at Old Mutual Investment Group, warned the economy would struggle to recover.

His sentiments come after South Africa fared poorly in terms of labour/employer co-operation, flexibility of wage setting and hiring and firing practices in the recent World Economic Forum global competitive rating.

This coincided with this year’s wage negotiation season getting underway.

Le Roux said while 2014’s platinum strikes made the headlines, it should be
remembered that there were many other strikes, which led to 11,6 million workdays lost during the first nine months alone.

Despite the major industrial action, not much was gained in terms of increased remuneration.

“It was calculated that collective bargaining wage settlements during the first nine months of last year came to 8 percent which was only marginally up from the 7,9 percent for the corresponding period in 2013.

“And the headline wage settlement data masks the fact that workers involved in the strikes did not get paid while on strike,” he said.

“Referring to the platinum strike in its September Quarterly Bulletin, the Reserve Bank noted that it could take years before workers recover the wages they had foregone during the five month strike.”

Indeed, by the time the 5-month strike ended in June last year, the revenue loss to the companies came to R23.9 billion rand and workers had lost R10.6bn in wages.

Le Roux said a host of factors continue to dog the economy, tainting South Africa’s attractiveness as an investment destination, and inhibiting job creation.

“As far as labour issues are concerned, not only is SA close to rock bottom out of 148 countries in terms of flexibility in wage setting, hiring and firing practices and labour/employer co-operation, but our restrictive labour regulations coupled with an inadequately educated labour force rank as the two top obstacles to doing business here.”

“Faced with this reality, driving wages higher through aggressive industrial action is a recipe for disaster and could lead to less job creation, more mechanisation and government missing its ambitious growth and employment targets.”

The economist called for labour to be realistic during the negotiation period.

“So as this year’s two key wage negotiations get under way, the country desperately needs a far greater degree of pragmatism, and a labour leadership that fully understands that excessive increases in wage costs are simply not sustainable in the absence of matching productivity gains.”

– CAJ News

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