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Farm Wages, Is there a solution?

11 February 2013, 15:04

A wage of R105/day is clearly not a living wage, but increasing wages by 59% is a sure way of reducing the wage from R69/day to Rnil/day.  Government’s knee jerk reaction and Cosatu’s utterances that retrenchments are spiteful misses the point.

South Africa is a dry country with average rainfall being below countries such as Zimbabwe, Zambia, DRC and Malawi.  The number of farmers has reduced significantly but the yield per hectare have increased due largely to genetic modification.  Although the hectares planted over the last 20 years have reduced, the yields have improved to the extent that we have some food security.  The labour situation is unfortunately that of largely unskilled and unemployable labour with supply far exceeding demand.

Given the excess supply of labour, setting minimum wages, where people may be prepared to work for less is counter-intuitive.  This will lead to job losses and the spiral of poverty will be perpetuated.  The ANC government reduced all farm subsidies in the 1990’s and farmers were left to fend for themselves, whilst almost all of our trading partners have some kind of protection via subsidies for their farmers.  This move, of removing protection for farmers, was a good move in that it forced farmers to be competitive without subsidisation but you cannot compete without the playing fields being level.

In a most serious short-sighted move, the ANC government, saw it fit to continue with the MIDP (Motor Industry Development Program), by requiring all the automakers producing in South Africa, to assemble cars in South Africa, with limited development of the local manufacturing.  Local suppliers of automakers only supply seats, plastic mouldings, metals moulding and the expensive components are all sourced overseas.  We are probably the only country in the world where you would find all the automakers being present.  To shock you, BMW, makes around 30% of its worldwide profits in South Africa, whilst South Africa only consumes less than 1% of its products.  The government subsidies are very attractive and are kept a very close secret.  It is estimated that these subsidies exceed R35 billion per annum, whilst the direct jobs number less than 50 000 (i.e. people involved in assembly operations).

Farmers employ more than 200 000 people and if were to assume that government would subsidise the farmers by R40/day for 250 days, this works out to R1.6 billion per year.  Minister, do the maths and introduce wage subsidies for farmers, otherwise 100 000 people are going to loose their jobs in the agricultural sector.  You can call the farmers spiteful or whatever, no business can survive if it is hit with a 59% in its second largest expense.

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