French economist Thomas Piketty's South African connection

When Thomas Piketty's 700-page work, Capital in the Twenty-First Century appeared on the market early in 2014, the French economist gained fame overnight. Besides the book's topic, inequality, there is a particularly pertinent second reason why local readers would be interested in it: the book's opening scene is the South African labour market.

"On August 16, 2012," writes Piketty in the very first line, "the South African police intervened in a labour conflict between workers at the Marikana platinum mine near Johannesburg and the mine's owners: the stockholders of Lonmin, Inc., based in London." To his readers, Piketty presents the death of the 34 mine workers that day as the result of an economic conflict: workers rebelled against an unacceptably unequal division of income and wealth between them and the mine's owners.

However, upon closer inspection than Piketty affords it, important reasons to doubt the soundness of such a simple explanation for the Marikana strike and deaths come to the fore.

A good place to start is the question of the strikers' actual remuneration. Piketty's case rests on a reported base pay of R5 500 per month per worker. But as pointed out in the October 2012 issue of this publication, the strikers' remuneration was in fact substantially higher than that. The actual guaranteed remuneration package of a Lonmin rock-drill operator - and rock-drill operators played a major part in the strike - was about R10 500 per month (excluding bonuses, overtime, etc.), almost double Piketty's base pay amount. With remuneration of at least R10 500 per month for most, the strikers were, in fact, remunerated substantially better than many other members of the South African labour force.

Moreover, another disruptive strike at the time, at Kumba's Sishen iron ore mine, ostensibly also for higher wages, shows how cautiously one must go about judging a strike by participants' overt demands. The Kumba strike took place only months after 6 000 of that mine's employees each received R560 000 in addition to their salaries as part of an employee share ownership plan. Apparently, strikes can happen even after workers have share greatly in shareholders' gains.

If not an economic conflict, what then led to the Marikana tragedy? As put by us in 2012, a better explanation for the turn events took can be found by considering Marikana within the context of, in particular, the majoritarian character of South African labour policy: "While unrealistic political expectations, social problems and macro-economic phenomena arising from local monetary and fiscal policy, as well as international economic instability, probably contributed to labour unrest, it is the local labour relations system that caused the present explosion of unrest."

By way of example, just a few months before the Marikana strike, another mining company, Impala Platinum, saw employees being shot and killed in a clear case of union rivalry during unprotected strikes. At Impala Platinum, thresholds for union recognition at the employer had been set at 50%+1, which meant that one union and one union only was recognised for negotiations with the employer. Minority unions - and therefore also all the members of those unions - were excluded from meaningful relationships with the employer, driving them toward ever more radical action.

In our view, it was mainly the rigid and majoritarian labour regulations which, over a long period of time, drove up the stakes for unions and employees, setting the volatile scene for Marikana's tragic unfolding.

All in all, it is not self-evident that the past couple of years' violent strike action in South Africa, either at Marikana or elsewhere, is at heart an issue of low wages or inequality. To be sure, this is not to say that wage negotiations are not a very important terrain for union activity, or that there is no such thing as unacceptable forms of inequality such as those brought about by inflation. However, it does mean that what promised to be the most influential book on inequality in decades got off to somewhat of a weak start.

Piet le Roux is Senior Researcher: Solidarity Research Institute

This article first appeared in the South African Labour Market Report, a quarterly publication by trade union Solidarity, in cooperation with market strategists ETM Analytics.

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