Protectionism is a much-loathed policy in international business nowadays. The relaxation of trade rules to promote trade between countries, amid a lack of regulatory structures to police technology-based enterprises across the globe, has allowed huge firms from America, like Apple and Uber, to prosper worldwide; and do so, through questionable and unethical business practice at times. Revelations of poorly remunerated workers slaving away to make luxurious Apple products in Chinese and Taiwanese sweatshops, have done nothing to curb the popularity of the aforementioned high-end goods in South Africa, or actually, anywhere else in the world, despite a plethora of coordinated campaigns by human rights activists like Debbie Chan of China to raise awareness of the unfair treatment of workers in Apple-affiliated businesses. Chan has been very vocal about the poor conditions of employment for Chinese workers at Foxconn factories in Shenzhen. Foxconn is one of the world’s largest contract electronics manufacturers and a major maker of the products Apple sells in South Africa and across the globe.
The ubiquitous one-way flow of technology-based goods and services from America to developing nations like South Africa has unfortunately become the hallmark of world trade. Yet President Donald Trump won a four-year mandate in the USA partly on the back of promises he made to put America first and renegotiate the terms of the North American Free Trade Agreement (NAFTA), a trade pact he described as “the worst trade deal ever” before the November presidential poll last year. A wave of vastly unpopular shutdowns of large-scale businesses in America and company relocations to Mexico have led to a remarkable rise in xenophobia in certain sections of American society and calls for greater protectionist policies from right-leaning organisations. South African companies have not been exempted from losing business to foreign-based corporations. Blue-collar workers are losing jobs to European Union (EU) and US-based companies in an ever-changing industrial landscape. Chicken producers, for example, have accused the European Union of dumping cheap meat on the South African market. The South African Poultry Association (SAPA) claims 5 000 jobs have already been lost to cheap EU imports and a further 20 000 jobs are at risk if the government does not step into protect local chicken producers.
Rainbow Chicken, one of the biggest chicken manufacturers in South Africa – now known as RCL Foods, retrenched 1 350 workers last month. SAPA believes the entire chicken industry is at huge risk of becoming totally redundant. With around 110,000 employees working in the chicken industry and a further 20,000 in the maize and soya industries, the consequences of countrywide closures could be plain disastrous for potentially hundreds of thousands of people who are dependent on the incomes of workers employed in the chicken industry. Global competitors that have the benefit of government-sponsored subsidies and dubious advantages are bad news for local businesses. Because unfair competition – an unfavourable by-product of globalisation – is being witnessed across the board; and it has now pushed one of the oldest and highly conspicuous businesses on South Africa's roads, the metered taxi industry, to the threshold of destruction.
Metered taxi operators last Friday held a public protest against Uber in and around the vicinity of OR Tambo International Airport in Johannesburg, in what can only be described as a desperate move to bring greater attention to their four-year Uber dilemma and get the assistance of government authorities. Perhaps the protesters chose to stage a demonstration at OR Tambo International Airport for three reasons. One: OR Tambo hosts thousands of well-to-do local and foreign tourists every day; potential customers who probably believe taking an Uber ride is trendy and cheaper than using a metered taxi. Two: OR Tambo is the place where the Guatrain – a favourite mode of transport for the moneyed middle and upper classes, begins its picturesque journey to Pretoria. Many frequent flyers often opt to take the Guatrain from the airport instead of a metered taxi these days. And thirdly: Oliver Tambo, the late president of the ANC, is the man who spent his lifetime fighting for the economic rights of lowly-paid South Africans like metered-taxi drivers. You cannot picture a revolutionary like Tambo abandoning the long-established trustworthiness of a metered cab for the consumerist cosiness of riding in a low-cost Uber ride.
The protracted struggle for economic opportunities unfolding between the haves and have-nots in the metered taxi industry is somewhat of a timely reminder that some businesses, especially small businesses, in South Africa, do not operate on fairground most of the time. Big investors like Google and Toyota fund Uber; and it has received billions of dollars in financing from the Public Investment Fund of Saudi Arabia. So Uber is certainly not the sort of commercial giant a one-man outfit from Katlehong in Johannesburg can compete with for long without going bust in a big way. But small businesses are big business if data from the leading economy in the world is to be analysed. According to Entrepreneur Magazine, there are roughly 25 – 27 million small businesses in America, which account for 60 – 80% of all jobs in that economy.
Small businesses, like metered taxis, can do much to provide economic opportunities for unskilled workers and unemployed graduates in South Africa, if aspiring entrepreneurs get sufficient technical, financial and regulatory support. And not everyone has bought into the idea of partnering with Uber just yet. Although the prospect of operating an Uber taxi sounds lucrative and fairly easy to run, Uber taxis are incredibly cheap for customers to use, so the jury is still out on whether these taxis offer excellent returns for partner-drivers. Travas Kalanick, CEO of Uber, had to issue a public apology after he was captured on video swearing at a company driver in New York. Fawzi Kamel had criticised the fare structure Uber employs and argued it was bleeding his small business dry.
The hands-off arrangement Uber utilises works well for its operations, but is seemingly not very rewarding for the drivers who bear all of the maintenance costs for their vehicles. What is more: save for a driver rating system clients can use to express their satisfaction or unhappiness with a driver, Uber offers no safety mechanisms for its valued commuters. It claims to be a tech company that only brings customers and drivers together. So in the unfortunate event of an accident: Uber holds no liability whatsoever for injuries sustained by the people who use the ride-sharing app. In addition – Uber drivers, who are not technically employed by the Internet-based transport company, do not receive work-related benefits, medical aid assistance or enjoy security of employment like most workers do. Uber also has a befuddling and controversial tax structure that has been widely condemned by EU leaders, like Theresa May, for the company pays very little in corporate tax wherever it operates.
In light of new age businesses, like Uber, cropping up, the UK has plans to enact new legislation that will get global technology companies like Google and Uber to pay their fair shares in taxes. Apple was last year slapped with an £11 billion tax bill by the EU after it got illegal tax breaks from Ireland. May also made mention of the need to protect employees who have agreements, flexi-contracts or partnerships with companies like Uber. Last year, she said: "Flexibility and innovation are a vital part of what makes our economy strong, but it is essential that these virtues are combined with the right support and protections for workers".
So should there have been new labour and commercial rules in place before Uber was allowed to open its doors to travellers and workers in South Africa? Absolutely. The regulations governing the metered taxi industry took a fair amount of time to catch up with the online-based Uber. Should Uber be obliged to work in partnership with local metered taxi operators? Definitely. It has, for lack of a better term – got a free ride into the local market. And is it outlandish to suggest that metered taxi drivers, like chicken or clothing manufacturers, deserve protection from the predacious habits of foreign businesses? Hardly. Some manner of protectionism is required no doubt for the drivers whose businesses face total collapse in the next year or so. The metered taxi drivers are not fully equipped to compete against Uber and may suffer long periods of joblessness and bankruptcy if measures are not enacted to protect their businesses this year. Like the food manufacturers who are complaining about the EU dumping cheap chicken on the local market – metered taxi drivers are bemoaning the cheap transport Uber has unleashed on South African roads. So the metered taxi industry needs a helping hand to steer it to safety and profitability. South African businesses must come first.