Minimum wage debate rages on

AVERY important public debate in the media has followed the agreement on a national minimum wage (NMW) of R20 an hour. It raises major issues for all South Africans but particularly the workers and their families, both employed and unemployed.

On one side are the defenders of the agreement – Imraan Valodia, chairperson of the NMW advisory panel, writer Eusebius McKaiser and Bheki Ntshalintshali, general secretary of Cosatu. On the opposite side are what I would call the free market fanatics – Ann Bernstein, head of the Centre for Development and Enterprise and Jasson Urbach, director of the Free Market Foundation.

Their argument is that not only is R20 an hour much too high, and will lead to thousands of retrenchments and cripple economic growth, but that any incomes policy amounts to dangerous interference in the market forces which alone can generate and sustain growth, jobs and wages.

Bernstein and Urbach are unfortunately right when they say that, under capitalism, labour is a commodity and wages are the price employers have to pay the worker for the use of this commodity, but they are entirely wrong to see this as a justification for such a system. On the contrary their beloved capitalist system lies at the heart of the crisis of poverty pay, mass unemployment and inequality.

Valodia rejects Bernstein’s false view that that the price of labour, like any other commodity, is ruled by laws of supply and demand: “Unlike a seller in a tomato market who is easily able to go to another buyer if the price offered is too low, a relatively skilled unemployed worker has very little option (except perhaps to starve) but to take employment that is offered, however low the wage”.

McKaiser adds that: “Right-wing economists pit the jobless against the exploited workers. They insist that the only way for a farm labourer’s unemployed cousin to get employed is not to impose any minimum wage on the farmer. That is sheer madness… Gross income inequality would go unchallenged if labour markets were to be fetishised as inherently fair. They are not inherently fair. Fairness is not built into market dynamics. Markets are simply a device for supply and demand to find each other.”

My sympathies are far closer to these critics of the free market fanatics, but my problem is that two of them – Valodia and Ntahalintshali – support the R20 minimum wage, even though the latter, writing in The Star on February 16, 2016, concedes that it is only “a partial victory for the workers”, also signifies only “the first step towards the attainment of a living wage” and that “while the figure of R20 an hour falls short of the federation’s proposed figure of R4 500 a month and does not address the minimum living standards of an average household, it offers workers a decent starting salary base.”

He thus admits that he is ready to sign an agreement which for the foreseeable future will condemn millions of workers and their unemployed family members to an income which he himself admits “falls short“of what his own members agreed was an acceptable level and therefore amounts to a poverty wage.

Also this R3 500 will be phased in over two years. By the time it is implemented next year its value will be below today’s R20 due to the impact of inflation that affects workers the most which is food and transport costs.

The proposed national minimum wage of R3 500 a month is an insult to the victims of slave wages, poverty, unemployment and inequality and the new federation steering committee has insisted that they will not accept a figure that is far removed from the minimum living levels which today stand at R5 544.56.

The Cosatu general secretary is scandalously accepting the capitalists’ arguments that the country cannot afford living wages and that the free market, albeit in a more regulated form, still must determine the price of labour in order to protect profits. Cosatu wants to eat its cake and then still have it too. They know R3 500 is slave wages and falls way below their mandate and they cannot win workers to accept it. So they instead attempt to pull the wool over the eyes of workers by refusing to sign the final communiqué.

But the point that everyone in this debate is missing is that the capitalist system is based on the exploitation of workers’ labour, which creates wealth and generates employers’ profits in the first place. At every stage in economic processes value is added by the worker who sells his or her labour, but receives only a faction of that value in wages. The surplus value goes to the employer as profit.

So the demand for a living minimum wage, like the R12 500 demanded by Amcu and now Numsa is not a plea for charity but for workers to get back a bigger share of the wealth their labour creates. We are not commodities but human beings who are entitled to the wealth we create through our labour.

And, far from reducing economic growth, higher wages lead to higher demand for goods and services, which then leads to more jobs to meet that demand.

What is particularly outrageous about calls for workers to accept poverty wages is that in South Africa workers get back an even smaller share of the wealth they create than in other parts of the world. Chief executives earn more than 500 times the per-capita gross domestic product. In the US, the figure is 300. If further proof was needed of why we need the new workers’ federation, which is to be launched in March, it is this battle for a basic living, minimum wage.

Markets simply a device for supply and demand to find each other

Zwelinzima Vavi is convenor of the steering committee for the new workers’ federation