Why double digit pay rises are justified

Terry Bell.

Terry Bell

12 June 2013

The annual wage bargaining season — erroneously labelled the “strike season” — is upon us. Workers around the country, through their unions and in bargaining councils and bilateral negotiations with employers, are determining wages and conditions for the coming year or more.

Employers in several sectors will be pressing for multi-year agreements that tie their employees to set pay rises and improvements for two or even three years, something most unions will resist. The unions will do so because they are only too aware of how rapidly economic conditions can change; that their wage rises over recent years, especially for the lower paid, have lagged well behind increases in the cost of living.

But this does not mean a pending strike wave: most negotiations — as happens every year — will be concluded without any industrial disruption. However, should high profile disputes, especially in critical sectors such as mining and engineering, turn into walkouts, this will dominate the headlines.

And if violence erupts, as it has done — again in a minority of cases — this will also become the focus for the media. At one level this is a bit like the old trope of dog bites man not being news while man bites dog makes the headlines.

However, the media is not entirely to blame since disputes in sectors such as mining or engineering are more critical to the country’s image and to the economy generally than, perhaps, the retail sector. Levels of violence, of wanton vandalism and of the looting of the goods of roadside hawkers also deserves exposure.

And the levels of murderous anarchy in parts of the platinum belt are also an aberration that deserves special attention. But all such events cry out for holistic analysis that is all too often missing. Instead there are series of media snapshots without adequate or, in many cases, any context.

As a result, a series of perceptions gain credence, critical among them being the idea that unions and union members are violent, greedy and are harming the economy by demanding inflationary pay increases. At the same time, there are arguments advanced that the mega millions in remuneration to many company directors and chief executives is “market related” and not a measure of greed.

It is also widely argued that the increases to company bosses that are well above inflation rates are “necessary”. Not so for the demands of workers, especially if they exceed even slightly, double digits. Yet the wage deals struck by most workers over the past five or six years, let alone over a longer period, reveal that these workers have effectively become poorer; that their disposable income has bought less and less as each year went by.

Obviously there are some workers who have improved their economic positions in real terms, but they are a minority.

So what is the reality for most working people? Take, for example, a shop assistant who is someone not at the lowest level of the employment ladder and who has a permanent job. The basic wage of a shop assistant in a major urban area in 2008 was R2 683.20.

In that year, this column assessed the cost of a shopping basket that included maize meal and samp, sugar, margarine, tinned fish, chicken and milk. The 11 items on this shopping list came to R83.37.

Today, that same shopping basket would cost R122.15 or nearly 47 percent — more than 7 percent per annum — more. But wage agreements over the same period came out at little less than 42 percent, which amounts to an effective 5 percent pay cut before taking account of the increased cost of transport, paraffin and other essentials for the poorer households.

Horrendous at it sounds, bread and sugar water remain, for many families, something of a staple when money is tight. Yet the price of bread in the past six years has risen by some 80 percent, sugar by about 85 percent. The cheapest block of margarine that cost R5.35 in 2008 now sells at R13.89, a 139 percent increase.

The mealie meal staple has, however, shown only a marginal price rise, from R4.45 to R5.65 (26 percent) in six years. The products of two embattled local agricultural sectors, poultry and milk production, have shown only minimal increases, with milk costing barely 6 percent more and whole chicken, at R27.95, roughly 16 percent more.

But costs in these sectors have risen in the six years, especially in terms of feed, fuel, power and transport, to well beyond the rise in retail — and therefore, farm gate — prices. So these sectors, mainly poultry, which is faced with having to compete with cut-price imports from Brazil, are in a parlous state. This could mean further job losses with the result that more families would have no income to buy anything, let alone cheaper chicken.

While it is difficult, if not impossible, to assess how much income is necessary to adequately feed an average family (however that is assessed) there seems to be consensus that a monthly income of R4 500 is the minimum required. Yet the majority of working people have yet to achieve that minimum.

Take perhaps one of the most difficult and responsible of manual jobs outside of mining, that of a heavy duty truck driver. Drivers of 16-tonne plus vehicles, carry goods for retail outlets throughout the country. Unlike their road freight counterparts, they at least work regular hours. At the start of this year, the basic rate for a driver of one of these juggernauts in a major metropolitan area, was R3 825.61.

Over the past six years, pay rises for these drivers have just kept pace with official inflation. Little wonder then that, at a time when fuel prices and taxi and rail rates are about to soar — again — that working people are demanding to have their heads kept above the waters of dire poverty. And that, in most cases, means pay rises in double digits.