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HIGH UNEMPLOYMENT AND LOW EARNINGS TO EMPLOYEES

The South African Federation of Trade Unions (SAFTU) notes the Quarterly Employment Statistics (QES) for the first quarter of 2021. The QES continues to prove capitalism’s incapability to give people jobs, and uplift workers’ livelihoods through modest wages and salaries.

Problems of QES methodology

Despite the fact that not all sectors submit the required information on employment and earnings of employees, quarterly employment statistics are inherently limited in scope. It provides very conservative statistics about employment and earnings because it excludes the informal sector and the agricultural sector. In essence, it only analyses and generalises its conclusions based on registered companies, thus leaving a huge part of employment and earnings unaccounted for.

In addition to this loophole, QES does not analyse the total earnings of the managerial elite separately from that of ordinary workers. This omission hides one of the most important aspect of conducting surveys – to draw comparison. It fails to draw a comparative analysis of the total earnings of ordinary employees versus the total earnings of their managers and directors in the formal sector.

In a country that has the most unequal society – unequal distribution of income and wealth – it is important for a comparative analysis to always be drawn between ordinary workers and managers in companies and sectors. This would assist the citizens of this country to trace the source of inequalities given the pay gaps between owners, shareholders, managers and ordinary workers.

Further, clustering the wages of workers and salaries of the managerial elite in these sectors proves problematic because it sums up massive earnings of managers and the meagre wages of the workers. In the current narrative, the average rounds up to moderate earnings than reflecting the meagre earnings the worker gets. This gives wrong impression that ordinary workers in the sector earn a decent living wage.

The method, Standard Industrial Classification, of lumping sub-sectors into one category also proves problematic. It hides away the real developments in various sub sectors. For instance, the real reflections of gains and profits in corporate retail may be blurred by losses in hospitality, tourism and small retail under the umbrella, trade. This may disadvantage the ordinary trade union organizer or shopsteward when negotiating against retrenchments and wage increases, in which case they may utilize StatsSA data that shows a gloomy picture for “trade” to understate their earnings and hamstring trade union organizers’ endeavors to negotiate a good deal for their members.

 

QES analysed

Notwithstanding these methodological problems, the data collected reveal and confirms a number of factors that SAFTU emphasised previously: the decline of the economy, jobs bloodbath, and attacks on the real wages of workers.

This crisis was in motion even before Covid-19. The pandemic only exacerbated, and thus gave employers an easy way out for scaling down their workforce and to chop workers’ wages in real terms. In Covid-19, employers found a justifiable cover to mask the attacks on jobs and wages. The decreases in employment and a decline in earnings reveal this fact glaringly.

The second quarter of 2020 – March to June – experienced a very sharp decrease in jobs. This is surprisingly the period in which StatsSA claimed there was a decrease in unemployment down to 23%. On the contrary and disproving their own fallacies, the QES and the Quarterly Labour Force Survey (QLFS) shows that the economy experienced a sharp loss of jobs.

The QES shows some miniscule recovery of employment in mining and manufacturing on quarter-to-quarter basis, with 5 000 jobs in mining and construction, 2 000 jobs. Despite this minor rebound, construction is far from recovering more than 97 000 full time jobs of the total jobs it lost last year. Transport did not add any extra jobs quarteron-quarter basis, but still reflect massive loss year-on-year.

Business services lost 17 000 part-time jobs, and 161 000 full time jobs year-on-year between December 2019 and December 2020. In the first quarter of 2021, it reflected a loss of 15 000.

The banking sector had already begun with retrenchments of workers prior to Covid19 as they attempted to restructure. The essence of their cost effective measures mainly borders on cutting labour costs through retrenchments other than other factors.

In trade, hospitality and tourism were hit hard by Covid-19 lockdowns, not just in SA, but across the globe. Closing down of borders, travel and vacations displaced the consumer base of the tourism sector. Many small businesses had to go out of business and with them, jobs they provided.

The Presidential stimulus package was not enough as a way of mitigating the impact of Covid-19 in the tourism and hospitality sector, forcing government to partially open the sector. Despite this concession, most businesses in the tourism and hospitality sector had already suffered a blow and thus closed.

The massive retrenchment of workers led to the reduction of consumption in the retail business sector. Naturally, retrenchments displace the consumer base of retail stores. The Social Relief of Distress grant and Temporary Employee Relief Scheme (TERS) were in anticipation of this consumer displacement. It therefore means, R350 SRD grand was in reality not meant to alleviate poverty, but to lubricate incomes for the corporate retail.

The loss of jobs in these sectors corresponds to the economic contraction which was exacerbated by the Covid-19 lockdown last year. Despite the job losses which reduces the costs of labour in any enterprise, bosses did not waste the opportunity to suppress the wages of workers or chop them in real terms.

Wages, profits and inflation

Sibanye Stillwater made more profit in 2020, the year of Covid, than it did in 2019. Anglo American made profits of $4.3 billion. Yet the total earnings of the workers in the mining sector amount to a negligible increase compared to the earnings of managers, directors, owners and shareholders in the sector.

Whilst Sibanye recorded a 63% increase in profits, workers in the sector recorded a mere 3.9% increase in wages. Mark Cutifani, CEO of Anglo-American, had total earnings of over R71 million in 2020 excluding bonus and other paymets, yet the ordinary mineworker at Anglo-American mines in South Africa still earns below R8 000 per month. On that average, it would take 740 years for the ordinary mineworker to earn the basic remuneration of what his/her CEO earned in 2020 alone.

Headline inflation is at 4.2% and the mining sector employees wages and salaries increased by 5.2% year-on-year 2020/2021 first quarter. For a moment, this difference should not deceive us into accepting the growth of salaries and wages uncritically. Firstly, managers and ordinary mineworkers’ wages are lumped together and thus give an inaccurate proportion of increase in wages for ordinary mine workers.

Lastly, ordinary mineworkers spend their money on food and grocery. Food inflation according to StatsSA is 6.3%. Consequently, it means even if we were to accept the 5.2% wages and salary increases as a true representation of the increase for ordinary mineworkers, these increases are a decline in real terms.

The rest of the sectors statistics in QES have had straight declines in wages, and wage increases that are below the headline inflation. Construction and transport employees experienced severe decline in gross earnings. Transport experienced a 9.6% decline in wages and salaries, and construction 15.1%.

Such declines, justifies why our affiliate, the Democratic Municipal and Allied Workers Union (DEMAWUSA), is currently demanding up to 18% wage increase in its wage dispute with Metrobus Company. In real terms, their amount to just 8.4% before factoring inflation, and 2.1% after factoring in food basket inflation. This, renders all criticism against DEMAWUSA that their 18% wage increment is unrealistic, very absolete.

The unfortunate problem of StatSA’s QES methodology is that, by not showing what the combined earnings of managers, directors and shareholders are versus those of ordinary workers, it disadvantages trade union representatives to make meaningful comparisons and measures before wage negotiations.

Even though there seemed to be a consistent rise in the creation of new jobs in this quarter, it did not even come close to what it was in the 1st quarter of 2020 and 4th quarter of 2019. This confirms the predictions SAFTU made that a “slight ‘V’-shaped recovery” may be achieved, however, it “will soon become a skorokoro-style ‘VW’ recovery.

If anything for the future, the working people should not be encouraged by the illusion of the “VW recovery”, because the crisis of capitalism is chronic and will continue to retrench workers and suppress their wages whilst maximising their profits. Treasury, reserve bank and the captains of industries always try to keep the levels of employment within their frame of the “natural rate of unemployment”, and suppress wages as a way of maximising profits and their obsession to keep inflation down.

In line with SAFTU’s NEC resolutions, workers must endeavour to build a working class power, campaign for nationalisation of the commanding heights of the economy and fight for a socially planned economy. On the basis of that organised economy, we can create sufficient employment and offer people basic income grants.