NMW: Someone must speak up for the unemployed
One of the paradoxes of democracy is that the political system can easily become dominated by interest groups. Around the world, the influence of well-resourced, well-organised lobbies is felt way beyond the actual strength of their popular support. Sometimes these are a force for good, but often their influence is insidious. They tend to speak for “communities” that don’t exist, or are much smaller than they like to make out.
In South Africa too, policy making in government has historically been dominated by the cozy relationship between big government, big business and big unions. This was true during apartheid, and it is still true now.
What this means is that government policy decisions often stifle competition in the market (to the benefit of big, established business), and protect the interests of those who already have unionised jobs (to the benefit of big unions). What about the interests of entrepreneurs, and most importantly, what about the interests of those nine and a half million South Africans who have no work?
No one in government speaks for them. No one seems to care. The big unions fight for what will win them kudos from their ever-diminishing membership base, and governmentdoes what wins them positive headlines.
The DA believes that we have a higher duty of care to the country. We will not build a successful nation, united and prosperous, when we have nearly ten million people without the dignity and opportunity that work brings.
That is how we approached the decision of whether to support the government’s proposal of a national minimum wage.
And so on Wednesday, the National Minimum Wage Bill was narrowly passed into law in the National Assembly without the DA’s support. The DA voted against it because we believe, and the government’s own research confirms, it will push hundreds of thousands of low-wage workers into unemployment and have at best a negligible but more likely a negative effect on poverty and inequality.
In the context of nine and a half million unemployed South Africans, a proposal to increase unemployment, and to make it even more difficult for people to find work, is simply unconscionable.
Any government truly concerned with poverty and inequality, would be singularly obsessed with the inequality between those who have a job and some income, and those who have absolutely no income. This schism is by far the greatest inequality in our society, and it is the inequality the DA focuses on solving.
That is why everything we do where we are in government is focused on job-creating economic growth, and making it easier to start and grow a business.
There are no short cuts to be had in the fight against poverty and unemployment. Poverty and inequality will only come down when we do the hard work of fixing our broken basic education system and bringing in the economic reforms that will drive rapid growth: a more flexible labour market (especially for small business), policy certainty, affordable electricity, state investment in critical infrastructure, and significantly less red tape for business.
The NMW is reckless populism. And the ANC government knows this as well as the DA does. In March 2018, the World Bank in collaboration with the National Planning Commission, the Department of Planning, Monitoring and Evaluation and StatsSA published a report titled Overcoming poverty and inequality in South Africa, in which they admit that “the impact that the NMW has on the broader inequality of the population becomes negligible.”
The National Treasury also published a report, entitled A National Minimum Wage for SA,which conservatively projected that the imposition of the NMW would lead to the loss of 750 000 low-wage, low-skill jobs in the economy.
This is equivalent to the destruction of all the jobs in the mining industry and the vehicle manufacturing industry combined, and more. It is a catastrophe. No government focused on the crisis of unemployment would do such a thing. This means that government’s true motivations behind the NMW can only be to use it as populist vote-winner dressed up as a hand up for the poor. It is cynical politics at its worst.
The NMW, which is proposed at R20 per hour, does not provide the exemptions and flexibilities which would protect low-wage workers from losing their jobs. We proposed some workable ideas for flexibilities, but these were rejected by the ANC.
Young people and the long-term unemployed will be dealt a particularly hard blow by this law. A NMW is one thing in a growing economy with a functional education system and near full employment, quite another in a stagnant economy with a broken education system and almost 40% of the labour force unemployed.
In SA, it will do nothing for the jobless 9.5 million, other than decrease their chances of ever finding work and increase the price of goods consumed disproportionately by the poor.
None of this is to pass judgement on whether R3500 is a living wage. For many it is not. For others it is. But to set policy on need rather than economic reality is to make the classic mistake of confusing intentions with outcomes.
The NMW is a blunt instrument, blind to myriad realities of our economy. Waiters earn up to R10 000 per month or more in cash tips. Should restauranteurs be forced to pay them the same basic R3500 per month as kitchen staff? Should the owner of a small hairdressing salon in the townships be forced to pay a young, unskilled person fresh out of our dysfunctional schooling system R3500 per month when it means she herself will then only be left with R2500?
The DA supports a more nuanced approach in which each sector has its own minimum wage, set through negotiations between role-players in that sector. Small businesses not party to the negotiations would be exempted.
This approach accommodates the significant differences between the various sectors of our economy and provides protection to workers in established businesses while not keeping others locked out, be they jobseekers or new entrepreneurs.
The NMW is the latest in a series of recent policy changes geared at taking power from people and centralizing it in the state. It follows: EWC (land expropriation without compensation) which will go hand in hand with more state ownership of land; NHI (national health insurance) which centralizes the healthcare system; and the BELA (basic education laws amendment) bill which shifts power from school government bodies to the state.
The DA is for policies that include more and more people in the economy; policies that foster rapid growth of the economy; policies that put the poorest in society front and centre; policies that keep power as dispersed as possible; and policies that enable SA to compete globally. The NMW does the opposite on every count. There are so many things we can do to build a fairer, more prosperous SA. The NMW is not one of them.