Inside Labour: The ticking time bomb and the badge of poverty

2014-06-26 10:00

The platinum strike has correctly been categorised as a national crisis, but it is only one aspect of a much more severe crisis that confronts the country.

This was highlighted last Tuesday by President Jacob Zuma in his state of the nation address in which he stressed the state of the economy.

The economy is indeed in dire straits. But then, so too is the global economy, which politicians have consistently assured us is about to turn yet another corner. But every corner that may have been turned since 2008 merely leads to further crises. At least this year’s speech seems to have acknowledged this.

At the same time, corporate profits have continued to increase while more small businesses have gone to the wall as increasing numbers find themselves unemployed. And, in the unemployment league, we are among the world leaders.

But as the government continues to trumpet, there are many more South Africans who today receive government hand-outs in the form of social grants. This is true. But such grants are, in fact, a badge of poverty.

Take the pension, for example. Between the ages of 60 and 70 a poor person qualifies for R1?350 a month. Beyond 70, this increases to R1 370, hardly an above-poverty income.

But most social grants are shared, sometimes by up to 10 dependants. Many of these dependants will be part of the growing ranks of unemployed youth, raised, and still cared for, often by grandmothers. However, the ranks of the poor do not comprise only the unemployed and grant beneficiaries. There are still legions of the working poor.

According to most labour movement estimates, a wage of between R3?000 and R4?000 a month is the bare minimum “living wage”. But according to the same estimates, more than half of South Africans fortunate to have a job are still paid less than this.

In most urban areas, the current monthly minimum wage for domestic workers is R1?877.70. Most such urban workers live far from their jobs and transport costs are estimated at R400 a month.

The minimum wage for domestic workers in rural areas of R1?618.37 probably makes them marginally better off as transport costs are lower. However, food and other retail costs in such areas can be higher.

Farm workers are among the lowest of the low paid. But their minimum pay rate soared last year after a series of sometimes violent protests in the Western Cape. Five years ago, monthly pay for a farm worker was R1?231.70. Today it is R2?274.82.

There are other categories of low-paid workers, such as in the forestry sector and various contract services. What all have in common are the basic needs: food, clothing and shelter, of which food requires the greatest share of income.

Most lower-paid employees spend up to 50% of their income on food. I have monitored the prices of a “basket” of basic groceries since 2007. By 2009, the goods in the basket cost R118.14.

This week the same quantity cost R195.19, a 65% increase. So unless the wages of lower-paid workers increased by more than this, they are today worse off.

Price increases in other areas like fuel have a knock-on effect on all forms of transport and the costs of delivery. The official statistician also notes that food prices are outstripping the rate of inflation, the measure commonly used to assess pay rises.

More highly paid employees may, therefore, also be feeling the pinch. This seems borne out by the retail sales statistics, which show a substantial decline. South Africa already has a frightening level of household debt.

Such economic and social realities make up what Cosatu general secretary Zwelinzima Vavi calls a “ticking time bomb”. The plans and promises in the state of the nation address are unlikely to defuse this.

Perhaps a “people’s assembly” proposed by the National Union of Metalworkers — it may incorporate a form of “economic Codesa” — will provide some solutions. But some had better be found — and soon.

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