Wage Strikes: A Fair Division of the Pie

By Charlene Houston · 4 Aug 2011

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It is winter in South Africa and this means it is also bargaining time for union leaders and employers. Strikes and deadlocks at bargaining councils have been dominating news headlines in recent weeks. 

Agreements between employers and workers have been reached in the metal and steel industry, petroleum sector and most recently with the 200,000 gold miners that also went on strike. 

Not all strikes and negotiations have ended. At the time of writing, union representatives of platinum miners were still in talks with employers, while negotiations between Eskom and the union representing its workers remain protracted. The debate about how low wages need to go in the clothing industry continues.

In contemplating the reasons for the various strikes one cannot but notice some of the unobtrusive ways that capitalists maintain control of wealth and the instruments they use to protect wealth.  

Maintenance of an economic system that ensures a pool of unemployed people serves as a control mechanism to keep workers in check as they could easily be replaced by those hungry for a job, under any condition. 

Studies show that the bare minimum working conditions, as legally required, seem to have become the norm, with few companies even considering raising the standard. The pressure to maintain profit seems to drive cost saving in this regard.

Often the structuring (or lack thereof) of wage deals under tremendous pressure ends up defeating the aims of workers.  A deal often sounds as if it is a good compromise until the finer details come to light much later. 

A case in point is Pick n Pay Stores LTD. Last year, workers made the sacrifice and went on a protracted strike in order to force the hand of management that made a commitment to improve on minimum wages over a three-year period, but subsequently also announced their intention to retrench over 3 000 workers in August 2011. In this case management can argue that they’re still honouring the wage increase deal when they give increases to those who survive the chop, as increases are due in August as per the agreement, but many others face joblessness and the harsh circumstances that come with it.

Walmart’s presence (i.e. international competition) in South Africa is the latest in a range of reasons companies like Pick n Pay present as to why they can’t give in to workers’ wage demands or why layoffs are necessary. The high minimum wage, inflation, the recession, the cost of transport and unrealistic worker rights are some of the other reasons often heard.

The protection of profit margins is an acceptable defence in our society.  Everyone seems to accept the unspoken principal that the profit must not be touched.  However, just how much profit is sufficient is not up for discussion or negotiation.

To paraphrase Austrian philosopher, Rudolph Steiner, the accumulation of capital should be a sign that the economic system is serving the needs of humanity in holistic ways (addressing material and spiritual needs).

Strike action is always at great personal and financial cost to workers as strikes occur on a no-work no-pay basis.  Yet to the public, inconvenienced by the strike, the industry’s excuses may sound reasonable and union leaders may seem stubborn, holding out for a bigger increase than companies say they can afford.

A closer look at the actual figures in a company or an industry reveals a different story.   

The Labour Research Service (LRS) is a non-profit organisation servicing the labour movement mainly through the production of research that empowers workers and their leaders. One of the aspects of their research is directors’ fees and company performance in approximately 70 listed companies within 12 sectors of the South African economy. 

Let’s examine Pick n Pay, as it is one of the companies that LRS has done some research on. According to LRS, Pick n Pay is the second largest retailer of food, clothing and general merchandise in South Africa and one of the largest in Africa with 869 stores. The Group currently employs over 49 000 people and generates an annual turnover of 52 billion Rand.

Despite the recession from which the country is slowly recovering, Pick n Pay’s financial report for the 2011 year-end reflected more revenue from sales than it was able to achieve between 2008 and 2011. LRS reports that dividends paid to Pick n Pay directors have increased each year throughout these trying economic times, except for the 2011 year end.  

It is projected that Pick n Pay will grow to 935 stores by the end of 2011 and 1 039 by 2012.  These numbers tell the story of growth in the company. However, staff numbers are not commensurate with this expansion. Employment figures peaked in 2008 with 54 700 people and has declined since and will drop significantly if proposed retrenchments are implemented this month.

This constant decline in employment figures during the growth in sales between 2008 and 2011 surely has to be a factor in explaining the increasing dividend payouts to directors. Less staff would mean that existing staff members have to work harder and longer or that casual workers, more vulnerable to exploitation, are used to fill gaps. 

This strategy has an impact on society in general as it contributes to maintaining poverty by failing to provide adequately for workers’ needs. It represents a shocking indictment on Pick n Pay and other companies that employ similar methods while the country faces an urgent crisis of unemployment. 

Worse still, the wage gap between those at the top and those at the bottom exposes a gaping inequality. The salary of Pick n Pay CEO, Nick Badminton, is currently estimated at R3 544 500 for 2011, excluding perks and the directors earn R2 107 800 on average for 2011. The average worker at Pick n Pay earns R45 600 per annum. It would take such a worker 78 years to earn what the CEO will make this year.  

As a society we ought to be asking the question: is this fair?

The Ackerman family, which retains a controlling interest in Pick n Pay, pride themselves on their corporate social investment (CSI) work. However, the notion of CSI only works because of the inequity that business practices such as those described above generate in society.

Fifty one percent of South Africa’s learners cannot afford school fees while 61.6% depend on the nutrition programme at schools and 43% receive social grants.  Seventy percent of the population depend on the public health system, as they are not part of medical aid schemes.  

If people earned sufficient incomes to attend to their needs and the education of their children there would be no need for handouts. The handouts allow dynasties such as the Ackermans to maintain a positive image despite the treatment of workers in their core business.

So CSI, aid, profit making, poverty and inequality (and a few other conditions not discussed here, such as war and financial crises) are components of the same system, pieces of one puzzle that achieves perfection (completion) when all the pieces are present. 

The message to individuals is that one has to join the “rat race” or the “gravy train” in order to improve one’s conditions. This results in what UK philosophy academic, Vivienne Brown, calls “individual profit-seeking behaviour.” 

These are the weapons of mass destruction that we have to rid our society of, if we mean business in the fight against poverty.

Our solutions to the economic morass we find taking hold of society have to evolve from a new paradigm that considers economic activity as part of a whole system which has other components such as human material and spiritual needs. Once these needs take supremacy over profits and wages, production will come to have new meaning.

Houston is an activist, storyteller and public history scholar based in Cape Town.

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