Monday, October 18, 2010


With another strike threatening at Pick ‘n Pay, I can hear a near unanimous and emphatic “No!” in response to the question. Many ordinary South Africans, including employers, and without doubt organised labour, would point to the power wielded by labour in the ongoing strikes, the chaos and damage it causes, the chanting and toyi-toying masses, the news headlines, and the frustration that is felt in virtually every home in South Africa.

What organised labour in South Africa sees as its strength: its high profile role in society, its influential and much publicised leadership, pressure on the competition authorities and its participation in government through Cosatu’s involvement in the tri-partite alliance is seen by others as a weakness in terms of losing touch with rank and file membership, the unemployed and the economic realities of our time. But this is not why I posed the question. I also do not pose it on the basis of the threat of job losses to Union membership. I ask it simply against the background of the appropriateness of any collective in society that is structured fully and exclusively on the narrow interest of any group – albeit an important group – especially if that society is besieged by internal and external forces that can be countered only by a combined commitment by all interest groups.

It invites another Titanic analogy – only in this case instead of shuffling deck chairs, the passengers are fighting about who is entitled to sit on them while the ship is sinking.

A fruit orchard might look healthy from a distance, but closer inspection shows aphids that can threaten the whole crop. I have always used this approach to inform my intuition on potential developments. Extrapolations into statistics, accompanied by interpretations and ivory tower forecasts are useful and make for important sounding headlines. But they lose an important human and behavioural texture that touches the heart as well as the intellect. In turn it increases one’s understanding and empathy.

Such an aphid here in the Overberg has been the ploughing up of hundreds of hectares of blackberry bushes in the world’s biggest black- and youngberry producing region, because of a slump in world demand. Hundreds of picking and packing jobs are gone. Another aphid has been the willingness of KZN garment workers to accept less than minimum wages from Chinese employers threatening to close their factories. Yet another is Standard Bank’s warning that retrenchments are on the cards in the light of a decline in revenue and employees representing the “biggest expense”. There are thousands more aphids in your and other orchards. They all tell a story of events and developments largely out of our control – the world economy in a slump, overproduction and overcapacity here and abroad, declining demand and trade and currency wars.

We can try any insecticide, but none will work as well as our capacity to adjust, to be prudent and to be flexible. It’s all well and good for organised labour to insist on adjustments in national economic, fiscal and monetary policies, but to studiously avoid the contribution it can make by re-examining the behaviour of labour itself is not only disingenuous but is harmful to the workforce generally in the long run. Apart from inflating expectations at regular and arguably destructive collective bargaining times, there is, as I have argued before, a far greater responsibility: changing focus from reward to contribution. And let me emphasise most strongly that none of this detracts from the legitimate grievances that labour has and that I have always acknowledged. The question is simply whether it is at all productive for Joe Worker to “klap” Carol Consumer because he claims to have been “klapped” by Jack Boss. I know these are entrenched paradigms, enshrined in labour “rights” and that challenging them borders on sacrilege.

The question is also whether organised labour by focussing nearly exclusively on reward and only in small measure on contribution, is not playing up to labour’s weaknesses and not its strengths. Legitimate power always resides with contributors; with givers and not takers. True, those with power can abuse it to gain control on others, but then power loses its legitimacy and sooner or later it catches up with the abusers.

clip_image002The threatening Pick ’n Pay strike is a case in point. 2010 figures show that labour gets 65% of wealth created and investors less then 12%. My past analysis contradicts the view that top management gets an inordinate share. It used to be that the 5% at the top got about 10% of the total employee share. Of course, individual comparisons cause the ferment.

We have already seen in the Contribution Account that labour in South Africa is on average the biggest measured contributor to the creation of wealth – bigger than capital or the state. On this basis we could argue that labour should have a far greater say in the destiny of companies than it has. There are many reasons for its failure to be more involved but I believe a key one is that most employees (not all mind) do not see their workplace as a means of adding value to other’s lives, but rather as a place for self enrichment.

This view is entrenched further by the definition of labour as a commodity or cost: as Standard Bank did in reminding its staff that they are the biggest “expense.” Do not be surprised if in the hallowed office of the HR Director you find a wall slogan proclaiming that “people are our greatest asset”. “Asset” and “cost” are a contradiction in terms, even in accounting.

So the commodity/cost view of employees is firmly entrenched no matter how much team building babble tries to say the opposite.

There is another reason for this. The two categories in creating wealth – that of income and of outside costs – can both be volatile which means that wealth creation itself, which is simply income less outside costs, becomes subject to many forces both from within and outside the process. This rather unpredictable cake has to be shared with the three contributors, labour, capital and state. Both capital (profits) and state (taxes) are flexible and can accommodate any change in the size of wealth created. The only one that is not is labour, the biggest and most important contributor. To use another Titanic analogy: this is like nailing down a deck chair to create security on the sinking ship. Of course it is impossible. While individual salaries and wages remain inflexible, the size of the workforce becomes flexible. It is a simple trade off between pay and employment. More money is being paid to fewer people, exacerbating a very dangerous and revolutionary class divide between employed and unemployed.

Flexible pay is not new and I will deal with the various schemes in detail at a later stage, including the mother of them all: fortune sharing. Most current gain sharing schemes have done little to create real flexibility. They have produced a bullet proof jacket made of a single layer of silk. Indeed, in many cases they have added to labour “costs” and have been absorbed into the list of entitlements that have to be met, often when the company can least afford it. I believe it is because their rationale has been wrong: incentive as opposed to involvement.

The concept of comprehensive flexible pay that accommodates fortunes and misfortunes seems outrageous to both organised labour and business. Yes, for both it means sacrificing a key area of control. But is that not the point? Can they really be in control of things that can be so severely affected by events that they do not control? In all of my interaction with many employees at various levels, I have found overwhelming preference for security of work over security of pay. It makes sense at a national level: job retention is a far stronger, more secure, cheaper, and preferable method of combating unemployment than job creation is. This does not necessarily imply a blanket abandonment of sound social concepts such as minimum pay, simply that there can be far greater flexibility even within these prescriptions.

It comes back to the same principle: we are always in control of what we can give. We are seldom in control of what we can get. My favourite axiom that our true value lies in our capacity to make a contribution to others deserves repeating.

For most, this empowering capacity is to be found at their place of work. It is simply inconceivable that organised labour and business do not see this as a priority over all else.

This article can also be seen on MONEYWEB

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