Are Workers Overpaid in South Africa?

By Nicolas Pons-Vignon · 21 Jan 2015

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Picture: Construction workers in South Africa courtesy Trevor Samson/World Bank/flickr
Picture: Construction workers in South Africa courtesy Trevor Samson/World Bank/flickr

Suggesting that workers, meaning those in low-level occupations, are overpaid, has become commonplace in South Africa. It is one facet of a broader line of argument, according to which, workers, especially black workers have been excessively well treated in the post-apartheid dispensation. The other facet of this argument is that this is not just a problem of attitude - one of entitlement justifying laziness, for instance - but also a cause of poverty, since overpaid workers keep others out of employment.

There are many problems with such a line; however, its popularity warrants careful attention. How can we understand the claim, indeed the obsession, made by people whose life is firmly anchored in the comfortable realm of the South African middle and upper classes, driving in private cars, living in comfortable homes, with medical aid and pension funds, that those who serve them in restaurants, clean their gardens, or manufacture their cars, are getting such an excessively good deal?

One possibility, which must be considered for the sake of argument, is that these are well-informed readers of economic statistics, who are also familiar with the concrete conditions of life faced by workers. They may therefore be making an appeal for a shift in labour market policy in the interests of the majority. This is unconvincing.

The experiences of workers have been extremely varied since the early 1990s. While the standard employment relationship has enjoyed greater protection than in the past - though academic research shows that this protection is not greater than in other countries - and a number of workers in permanent employment have enjoyed rising income thanks to collective bargaining, many other workers have experienced rapid casualization. Labour lawyer Jan Theron argues that the latter are remarkably unprotected, whether by the state or unions.

Overall, therefore, the incredibly unequal apartheid wage structure has not been significantly altered. Those who have ‘benefitted’ have experienced rising incomes and greater security, but the suggestion that they are overpaid seems odd. If anything, most workers, i.e. most black workers, were grossly underpaid during apartheid. The fact that wages have improved hardly seems to be anything but a positive development.

Whether positive or negative, this development is certainly insufficient to claim that workers have been the ‘winners’ of the post-apartheid dispensation. First, the wage share of national income has steadily declined, especially in the private business sector, suggesting that profits make up a growing part of the pie – a trend which is not unique to South Africa, but worrying given the inequality challenge the country faces.

Second, within-wage inequality has increased dramatically with managers and professionals accounting for an overwhelming majority of the increased wage bill. Yet there is little suggestion that such categories are overpaid, at least in South Africa. Elsewhere, in the wake of the global crisis, criticism has been leveraged at the incredibly high bonuses earned by managers, especially in finance. This led to reforms in the US and Europe where attempts are being made to curtail cash bonuses for executives.

Whilst conducting research on the forestry sector, I interviewed the Mpumalanga manager of a large paper company. I was struck by his assertion, “In the morning, I feel proud when I look at myself in the mirror, because I give work to so many people.” Forestry and development specialist, Jeanette Clarke argues that the vast majority of workers employed in forestry, some 82%, are employed by contractors. They toil in incredibly harsh conditions for very low pay and with little, if any, security.

This means that injured workers have to keep working or lose their jobs or find themselves in a situation where benefits such as pension and access to healthcare are remote dreams -- dreams of the days when unions briefly secured these for them in the 1980s. Many workers not captured by official statistics are employed under even more precarious conditions on a daily basis by informal sub-contractors.

Would the manager interviewed ever tolerate such working and living conditions for his own family members? Of course not. Yet he is convinced that current conditions are enough for workers and their families. In fact, when faced with suggestions that wages be increased, he dismisses these, except in cases where evidence has been gathered, which demonstrates that workers are unable to cope with the physical demands of their work due to malnourishment as a consequence of low wages. This is reminiscent of France’s earliest labour legislation in the 1830s, which limited child labour in arduous occupations such as mining. These laws were passed after a report on the health of soldiers indicated that they were increasingly frail, as a result of harsh child labour.

Some of us are thus considered undeserving of what others think is absolutely essential for themselves. What exactly is happening when those who are richer treat the demands of workers with disdain? The answer to this question is that the very humanity of those making the demands is being denied.

A quick look at employment relations in Germany, whose productive (and very protected) workers are often cited as examples should suffice to illustrate the point. German employers consider it absolutely normal that they have to provide a valid reason for laying off a worker. Here in South Africa, this basic requirement of labour law is resented with remarkable force and seems to be at the heart of the drive to draw on labour brokers who can dispose of workers at will. Would the forestry manager not feel it absolutely unfair if he were given the sack without warning or explanation?

What is at stake here is a fundamentally different understanding of human needs, depending on who is involved. Are we dealing with a human or, as J.M. Coetzee may have put it, a barbarian? The wage level thus depends on who earns it. For the manager and for most middle-class people, the income from one’s labour should be sufficient to support a family and plan for the future. What is shocking to these people is that the “barbarians”, starting with the mineworkers, are now also demanding a ‘living wage’.

The level of such a living wage closely depends on the cost of living and personal aspirations. As a comedian once put it, the aspirations of the poor are not far removed from the realities of the rich. Yet the fact that workers dare to demand substantially higher wages appears to hurt the sensitivities of many of those who earn and live well. This is because they consider that a worker’s wage should only be sufficient to cover his or her basic needs. Never mind that basic needs are not even fully covered in many cases, such as in the forestry sector, where disgruntled (or sick) workers can be promptly replaced with others.

This points to an important dimension of the question of wages in South Africa - that high levels of unemployment create a labour market where positions can be filled at almost any wage level. This doesn’t mean that those who are paid such low wages are content with them. Workers have no choice. There is little alternative to wage employment for people’s survival in South Africa. To make matters worse, jobs are scarce.

Moreover, in spite of social grants and some poorly managed basic services in urban areas, it is expensive to be poor in South Africa. Transport costs routinely account for a third or more of spending by workers. This is largely related to the cost of getting to work and back in a country where employment and dwelling are typically very distant, and public transport still poorly developed. Consequently looking for work is a costly, hazardous affair. Academic researchers argue that the cost of transport creates such obstacles for jobseekers that the real unemployment figure is the one that includes discouraged jobseekers (around 35%).

The great level of flexibility (or insecurity, depending on one’s perspective) of the labour market and declining wage incomes for many of the employed have hit poor households hard. Documenting how Sowetans experience class identity, sociologist Claire Ceruti shows that households are bound by a feeling of vulnerability vis-à-vis the labour market. This is a reminder, which is conveniently ignored by those who pitch workers against the poor. Those who are employed typically support all household members, including the unemployed. But their status can easily change given that available employment is frequently casual. This contradicts the idea that the employed and the unemployed are enemies, as people switch between both states on a regular basis.

Could it be that the idea that workers are overpaid in South Africa reflects a feeling of class superiority, and that this notion is what informs reluctance to spend more on the wages of those considered inferior?

Dr. Pons-Vignon is a senior researcher in the School of Economic & Business Sciences at the University of the Witwatersrand, Johannesburg.

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