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Response to Loane Sharp by Zwelinzima Vavi`s letter published in Busines Day
28 May 2012
If it were not because of our ugly apartheid past, we would probably just ignore Loane Sharp’s article “SA’s trade unions the biggest obstacle to job creation” placed as a centrepiece in the Business Day, 25 May 2012. Regrettably, we live in a society where prejudice and misinformation are presented in some quarters as heroic pieces of work. Too many people believe the hogwash contained in that article, as gospel truth, because it is repeated over and over again in our media.
Having said this, I thought Mr Sharp’s article would have shocked even Margaret Thatcher and Ronald Reagan, the architects of the mantra of neoliberalism. But it would have not shocked one Joseph Goebbels, whom Sharp clearly emulates in his attitude towards unions.
What is shocking with Mr Sharp is his ability to just spew lies and statistics sucked from the fingers. None of the figures he uses are backed by scientific research. But they are the work of Adcorp, a company of labour brokers. There is neither fact nor economic logic in any of the Mr Sharp’s work.
Essentially he sees unions as a threat to the type of society he believes, where unions are crushed out of existence, workers are nothing but tools, wages suppressed below what is required for human survival, inequalities celebrated as an act of God, as believed by the apartheid architects and poverty reigns supreme. Many South Africans know that this path will not only take us back to the conflicts of the past; it will eventually destroy mass buying power and lead to a collapse of the economy itself.
Sharp is letting the cat out of the bag! He cannot wait “to smash the unions”. He proposes an 8 point package of measures designed to smash the unions and weaken the power of workers. He is calling for a fight to the death with the organisations which stand between workers and utter slavery. According to the UNDP report of 2010, 44% of workers are living on less than R10 a day – enough to buy them a loaf of bread a day! Already top 5% earners take 30 times what the bottom 5% earners take. Already 50% of SA population lives on 8% of the national income and the top 50% lives on 92% of national income. Even the youth, which Sharp seeks to bribe, 30% of them currently earns less than R15 a day according to the ILO.
Let us begin with the usual refrain that the labour market is rigid. Mr Sharp says “labour productivity fell to the lowest level in 40 years…Labour’s share in national income is at a 50-year low. Over the past three years, wages have risen 11.5% a year on average — treble the consumer inflation rate over the period”.
This is plain economic nonsense. Firstly, the so-called “excessive” increase in nominal wages above inflation, coupled with a fall in productivity, should arithmetically deliver a steeply rising labour share of the national income. Dick Forslund of the AIDC has amply exposed Sharp’s recurrent errors in a debate in Politicsweb, but Sharp fails to learn. His own admission that labour’s share is at “the lowest level in 50 years” - which means that the rate of exploitation of labour is the highest in 50 years – not only undermines his logic but exposes many inconsistencies in his article.
Secondly, Sharp’s premise is economic nonsense, because, if we go by his figures, the average CPI inflation rate over the past three years would be 3.83%. This is simply not true. The SARB March 2012 Quarterly Bulletin reports that nominal unit labour cost increased by 8.7% and CPI inflation averaged 5.5%. Labour productivity grew by an average of 2.1% over the past 3 years, meaning that the labour share grew by an average of 1.13%. But these developments occur against a backdrop of a historical and sharp decline in the labour share. Mr Sharp ignores this because he reads his own stats from another planet.
The SARB report shows that income distribution at the point of production has worsened; employees take 11% less of the economic cake than they did in 1995. This persistent decline in labour’s share makes nonsense of Sharp’s claim that mechanisation and falling labour intensity are driven by the cost of labour. If we are to de-compose “employees” by income deciles the situation is likely to be even worse. We also know from the Presidency’s Development Indicators Report (2009) that, broadly, income distribution has worsened in South Africa since 1995.
Sharp then presents some gibberish and false “political calculus” that proves nothing. He claims COSATU has 1.2 million members and that trade union membership has declined from 3.5 million to 3.3 million. The facts are revealed in COSATU’s Organisational Report to the 5th Central Committee in 2011 and in StatSA’s Quarterly Labour Force Surveys.
The Organisational Report shows that our affiliate fees increased by 10% in real terms, and by 86% in nominal terms, between 2007 and 2010. As of April 2010 COSATU membership stood at 2 018 717; it was growing even before 2006 and during the current economic crisis. This number is 68% above Sharp’s “most credible” figures.
StatsSA began recording official trade union membership in its March 2006 Labour Force Survey, reporting a figure of 2 928 000. In the 2012 Quarterly Labour Force Survey for the first quarter, trade union membership is officially reported to be 3 327 000. Contrary to Sharp’s propaganda, there has been a 399 000 trade union membership increase. Where does Mr Sharp get his information?
This deliberate mis-reporting of statistics by Sharp reaches boiling point when he attempts to put rand values to membership. He claims that since 2006 trade unions suffered a “loss of 129 424 members representing membership dues of R95 773 760 a year”. Yes, a year. This is once again plain rubbish. It implies that trade union membership declined by 25 885 a year, which we know is false. Further, based on this false figure and by his own numbers, Sharp implies that each worker who was lost to the trade union movement, especially COSATU, contributed an average of R3 700 a year in union dues, which is R308 a month. This is just ridiculous.
The “political calculus” is gibberish because the political parties straddle union and non-union members, the employed and the unemployed, old and young. Sharp tries to draw political conclusions on the basis of some ratio between COSATU membership and ANCYL membership, apparently reflecting the employed versus the unemployed youth. He completely overlooks the fact that the two formations are under one broad political formation led by the ANC; they therefore share some basic political principles and are united by the Freedom Charter.
These clear facts are non-facts to ‘guru’ Sharp; his ratio has already dictated that the employed will trump the unemployed and by 2020, the ratio says the unemployed will trump the employed, even when the ANCYL (and the YCL and SASCO), an important component of the pre-eminent ratio, pronounces against the Youth Wage Subsidy.
In the midst of this gibberish, Sharp then lurches on to the usual scapegoat when it comes to education: SADTU. He decries “the rising cost and deteriorating quality of government education” and then theorises: teachers’ unions influence over government schools makes black kids unemployable, and trade unions keep black youth who by some miracle become employable out of work”.
Then the ominous words follow: “crush the power of the trade union movement”! Unfortunately for Sharp, the reality is that the trade unions, together with the Ministers of Basic and Higher Education are forging ahead in an attempt to fix the education system.
In her Budget Vote Speech delivered in 17 May 2012, Minister Motshekga ended her presentation by saying: “Don’t point a finger, but raise a finger up for education”.
Both the Basic and Higher Education Ministers are clear that “the basis of any good education system is the quality of its teachers... Our system is as good as its teachers”. These ministers outline the key interventions that need to be made to raise the quality of teachers, because they understand the problems are deep and structural - provision of basic infrastructure, teacher development, reduction of class sizes, provision of adequate learning materials, etc. However, Sharp is still in a finger-pointing mode, and is clueless about the efforts currently underway to address the challenges in the education system.
Clueless as he is about what is going on in the education system and nonsensical as are his assertions about the economy and how it works, Sharp is looking forward to a youth wage subsidy as the magic solution to the problem of youth unemployment, which COSATU has shown time and again not to be a solution at all but merely a hand-out to employers, with no guarantee of any increase in employment nor any obligation to train the workers for whom they are getting the subsidy.
Mr Sharp says that the current levels of poverty, poverty wages and inequality are not enough and we must adopt an economic model that exists only in his planet, to worsen poverty and inequalities, as we embark on an unprecedented race to the bottom. He is articulating in the crudest language, the views of the most backward employers, particularly labour brokers, like his own Adcorp.
This is nothing but an attack on the living standards of the SA working class. It is actually a declaration of war and battle lines are drawn! The youth wage subsidy story is just an entry point to this war. This war is now being fought in the streets and in newspapers; it is being fought in research institutes and government departments, in lecture halls and on dinner tables.