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CONTENTS
A
post-GEAR consensus? The second half of 1998 has seen a rapid intensification of global economic problems. This ‘crisis' is, in a sense, the culmination of more deep-seated structural problems and trends. It is a logical outcome of the contradictions of global capitalism. These include: *
the combination of over-production in developing countries and the
lack of purchasing power (‘under-consumption') in developing
countries; and While our increasing integration (particularly on the financial front) with the rest of the world has not left us untouched, these global problems have had less direct negative effects on South Africa than on many other developing countries. Current global economic developments force us to interrogate both the failings of neo-liberal thinking and the limitations of the latest economic fashions amongst sections of the mainstream economic establishment. As the recent Alliance Summit agreed, "the present crisis is also a paradigm crisis for the simplistic ‘one-size fits all' strictures of the so-called ‘Washington consensus'." Worldwide, and amongst a broad spectrum of leading economists, there is an acknowledgement that there is a need for fresh thinking, new leadership and greater flexibility in economic policy-making. Time
for change If such a consensus is not to be an empty shell, however, it would need to acknowledge the need for fundamental policy changes in certain areas. There is always a trade-off between the cost of changing policy during the course of its implementation and the cost of sticking with destructive practices. Evidence suggests that, for some time now, the latter costs have far outweighed the former. Cornerstones The extent to which these principles lead to substantive policy shifts remains to be seen. Whether or not such shifts are made will largely determine the extent to which the economy moves onto a more developmental path. Agreements and processes arising out of the Jobs Summit will also be important in opening up economic policies to greater debate and amendment. The Jobs Summit Declaration agreed on the need for macro-economic policy to promote: *
the elimination of poverty, reduction in inequality and a redistribution
of resources Areas
to watch *
a shift in the funding of the Government Employees Pension Fund,
such that a greater proportion of it is funded on a ‘Pay As
You Go' basis While
significant distances remain, emerging consensus on the objectives
of macro-economic policy has hopefully paved the way for fruitful
debates and concrete agreements in the coming year. Fiona Tregenna is an economist at NALEDI.
Interest rates folly COSATU HAS been calling for interest rates to be lowered for some time now. Current economic conditions - both domestic and international - reinforce this call.
This chart compares South Africa's real (after inflation is taken into account) interest rates with those of a range of developed and developing countries. South Africa has the sixth highest interest rates out of 38 developed and developing countries. Until a few weeks ago, we were even higher on the list! Recent changes in international financial conditions have shifted the rates of several Latin American countries above ours. Consequences While GEAR itself and the Reserve Bank recognise some of these problems, both argue that the time is not yet right to reduce interest rates. They also argue that the Reserve Bank can't just set rates as it pleases. While it is true that the Bank cannot directly set an interest rate, it does have very strong influence over what the rates are. This stems from its control over the amount of Rands available at any one time. Timing There are also conceptual problems in the cause-and-effect assumptions underpinning GEAR's approach. It does not seem to appreciate that lowering interest rates could contribute to some of the very preconditions for the rates to be lowered (for example, long term capital inflows into productive investment and higher growth). We have recently seen a marginal cut in the repo rate. Certain commercial banks then reduced their lending rates slightly. This is positive, but it will not really have an impact on the quality of people's lives unless it is followed by more substantial reductions. Ongoing volatility in the international financial markets underlines the folly of high interest rates, as well as the need for greater regulation of financial markets and control of capital flows.
There has been a marked increase in strike activity in 1998. Forty thousand chemical workers and 50 000 motor workers embarked on national strike action for the first time ever. The strikes, which lasted four and five weeks respectively, were in support of wage demands. The chemical workers won increases of between 8,5% and 10%, while motor workers increased the minimum wage in their sector by over 25%. Lessons Worker solidarity has become more and more important during the current period. Employers are trying to make workers pay for the global crisis of overproduction. The unions achieved a great deal, but wider and stronger solidarity may have increased these gains. While the LRA inhibits some solidarity action, programme and organisational will can go a long way towards building other aspects. Extending
action The union maintained unity between the different bargains through careful co-ordination, tabling common core demands, moving simultaneously on the demands and taking joint worker mandates. Workers in each industrial area were brought together. Companies not on strike were targeted thorough marches and occupations. While this helped counter attempts to bring in scabs, the fact that the CWIU and the South African Chemical Workers' Union (SACWU) took separate strike action weakened the strength of chemical workers overall. Solidarity Sympathy
strikes Sympathy strikes are a powerful weapon. They are, however, limited by the new LRA. Protection against dismissal for sympathy strikers is only guaranteed if the union can show that their action would influence the outcome of the primary strike. Restraints Codordination Strength
or weakness? Rob Rees is a researcher at NALEDI in the area of union organisation.
Union density The size of a union's membership is usually used as an indication of strength. Very little attempt has been made to measure union density. Density measures the number of workers which a union has organised in relation to the total workforce in a particular sector. It allows unions to see where they are successful, and where they have to do more work. The figures which are provided here give a very general picture. They are preliminary statistics, which are based on the official employment figures for December 1997 and union membership as at December 1997. The latter figures were obtained from the unions. They refer mostly to signed up membership. Membership Density What explains the discrepancy between membership and density? Where there are large workplaces concentrated in two or three provinces, density is high. Where there are small or medium size workplaces scattered across the country, density tends to be low. For example, there are about 400 000 mineworkers. The large mines employ large workforces. This makes organising relatively easy. A union like CAWU has to organise a large number of small to medium-sized companies scattered all over the country. Union density in this sector is low. NEHAWU organises a diverse workforce, which consists of blue and white-collar workers and professionals. It is faced with a core of about 800 000 civil servants, whereas SADTU's target is a homogeneous workforce of about 350 000. FAWU has a target of about 200 000 workers, who are concentrated in large, regional companies. SACCAWU has the potential to be one of the largest unions (with a workforce of around 780 000). However, its sectors employ a high proportion of casual and part-time workers. Potential Conrad Jardine is a researcher in the area of union organisation at NALEDI.
Maternity benefits THROUGH ITS constitution, the South African government has committed itself to the elimination of discrimination based on gender and pregnancy. This commitment needs to be matched by policies and provisions that make it a reality. Providing
maternity benefits is an important way of both recognising childbirth
and parenting as a societal responsibility and ensuring that women
are not discriminated against because they bear In South Africa, we are far from reaching these objectives. Huge inequalities exist between men and women and women of different race groups. Lower wage earners are more affected by the rate and duration of maternity leave and pay and will gain significantly from good benefits. Policy Cash benefits give substance to the right to maternity leave. They are an important part of a package of parental rights, including services such as childcare.
Presently, the UIF pays 45% of wages. This is below international standards, and is far from adequate, especially for low wage earners. Recommendations *
maternity benefits at full pay Unions must also campaign to improve parental rights through collective bargaining. Liesl Orr is the co-ordinator of the Women and Work project at NALEDI.
Solidarity for engagement The Brazilian and South African labour movements are developing a close relationship. This encouraging trend took a further step forward in September, when NALEDI participated in an international seminar held in Florianopolis, Brazil. The seminar was hosted by Brazilian labour researchers. It focussed on ways in which the international labour movement can influence globalisation. In particular, what are the options facing the labour movements of the southern hemisphere? Globalisation is not new. It is an ongoing and longstanding feature of capitalist development. It is the result of a conscious effort by the transnational corporations (TNCs), multilateral institutions and governments of advanced countries to move beyond national markets. The fact that globalisation is a ‘driven' process means that it can be influenced. Regional
blocs Options Building
structures Solidarity Links Regulation A
new agenda If
the unions are to take forward this agenda, there are two requirements:
NALEDI research report Reflecting
on research NALEDI decided to organise a formal methods research course for its researchers. The course, which ran over six months, was also attended by union-based researchers. A
discussion paper, entitled Getting it done, and getting it right,
was developed during the course. The paper and the research methods framework is work in progress that will develop through practice and discussion in the labour movement. Regional
trade It is important that trade amongst SADC countries leads to industrial development and the diversification of production. Each SADC country has different labour standards, wage costs and levels of social security. Capital, which is highly mobile, will move to countries with the lowest labour costs. A growing number of South Africa manufacturers are relocating to other countries in the region. In conjunction with the Human Sciences Research Council (HSRC), NALEDI has been conducting research into capital flows from South Africa into neighbouring countries. The research focuses on the clothing and textile industries. The study finds that relocation to neighbouring countries has been triggered by tariff liberalisation. Capital is also taking advantage of the preferential trade agreements between South Africa and Malawi, and South Africa and Mozambique. There are significant differences in wages and benefits across the region, and union strength and membership. There is a need for effective, independent unions, which have extensive rights to organise workers. Trustee
training Trustee Boards are responsible for the day-to-day management of the pension fund, the benefits payable and how the fund invests its assets. In the past, pension funds have been viewed as the property of the employer. The changes to the law pose great challenges to the union movement. NALEDI's report on Pension funds: Trustee training provides information on the nature and extent of provident and pension funds in which union members are involved and trends in current trustee training. Migrant
labour The NALEDI report on the impact of Mozambican migrants on the construction sector finds that employers are using migrants to drive wages and benefits down. It concludes that the construction unions must organise all workers in this sector.
NALEDI undertakes labour and economic research. Its main focus is policy research which will build the capacity of the labour movement to engage effectively with the challenges of our new society.NALEDI is an initiative of COSATU, but is controlled by an independent board. NALEDI's main focus areas are labour markets, economic, trade and industrial policy, union organisation and women and work. Our activities include the production of research reports and policy memos, facilitating workshops and training and library facilities and resources.
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