Monday, February 25, 2013

An unemployment state of emergency.

Beyond rhetoric, are we really taking unemployment seriously enough?

Imagine if President Zuma in his State of the Nation Address declared a state of emergency around unemployment. At least he would have captured more of the headlines in what was a very newsy past week. Would it have been justified?

Of course such a state can only be valid and effective if the authority imposing it is trusted and not part of the problem. So I will remove my tongue from my cheek. But we are in an employment crisis, the knock-on effects of which invade every fibre of our society, from soup kitchens to prisons to banks. We need a thorough and critical re-examination of everything, including assumed rights that could impact on employment or encourage unemployment.

For one thing, let’s abandon this fixation with the terrible troika of poverty, inequality and unemployment. They are feeding off each other by mixing cause and effect. Uncompromisingly prioritising employment, either in job creation or job retention will go a long way to solving the other two, perhaps even making them less relevant.

Here’s an example: we try to solve poverty through social grants, but what it has tended to do is shift the emphasis from efficient wealth creation to highly inefficient government wealth redistribution, moving us from a welfare state into a dependency state and, as Mike Schussler has warned, exponentially making the social wage addiction unaffordable. There are hundreds of more “unintended” consequences, like reducing self-help willingness and fortitude.

Of course we have to be a compassionate society with a social conscience, but compassion itself must not be debilitating. It must be that of the surgeon, who does not allow emotion to contaminate care. Even compassion must have empowerment and enablement as its primary purpose.

Inequality has as many, if not more anomalies. While the often outrageous levels of executive pay can be challenged (as I have in a number of articles) and certainly contributes to inequality, the main cause of inequality as measured by the Gini co-efficient is unemployment. It adds many zero incomes in measured households which severely dilute the base.

Pay inequalities do not contribute directly to unemployment. They fuel expectations and anger, which in turn fuels wage demands, strikes and violent labour unrest. That, in turn creates employment barriers. Worse still, it reduces customer focus and competiveness, the greatest job destroyer of all.

It is the most vicious of circles. In effect, unemployment is causing unemployment.

Zuma’s intended review of the tax system no doubt implies getting Pravin Gordhan to be more of a Robin Hood. It will make no difference to Gini. The simple answer is to fix the executive pay market so that it can at least to some extent withstand populist hysteria. Of course envy will always be present, but current pay differentiation principles must be made less vulnerable to both informed and emotional attack. Shareholder value criteria are out dated and counterproductive.

We seem to be a nation frozen in guilt and grievance. Let’s strip the terrible troika of its enormous clutter of distractions, emotions and heat: like race, affirmative action, land reform, BEE, Apartheid Legacy, trans-generational privilege, etc., etc. Let’s filter all of these and other issues through an employment sieve. Shouldn’t we, in a time of crisis, temper our lofty ideals of fair play and justice to the gross injustice to those millions who have tried for 5 years or more to feed themselves, find the dignity of work, make a contribution to society and enable the best in themselves? And to the youth, who should not be poisoned by past grievances, but who ask simply for the opportunity to do something meaningful with their lives.

Our current solutions to unemployment rely mostly on grand planning such as growth stimulation and a massive effort on education. They are useless without a commitment to the real essence of employment which is about serving the other, adding value to the world out there, and behaviour based on willingness, self-accountability, low expectations and high aspirations.

Which brings me to labour rights: Suspend them -- at least in some cases! I shudder as I write it, and would not have entertained the thought until recently. I am more aware than most of the propensity for profit-obsessed and greed driven capital to exploit not only workers, but customers and society as well. About this too, I have written often.

But we need to finally put to bed uncertainty about the effects of labour rigidity. We need not do so on a grand national scale, but in pockets which can be ring fenced wherever retrenchments and unemployment threaten and wherever groups of like-minded people freely collaborate in the creation and distribution of wealth as they see fit.

Involvement is always far better than incentive. It accounts for the strength of some of the Asian countries like Taiwan and Japan while even in the United States workers have regularly shown a willingness and ability to successfully take control of companies and their destiny. Involvement can be forged in a number of ways such as worker buy-outs, employee equity, labour co-operatives, and fortune sharing – the last mentioned being the most appropriate for South Africa circumstances. Its most important tools are company awareness, common purpose and common fate and regular sharing of information.

I simply cannot believe that given the means and ability, and faced with the growing tragedy of millions of unemployed comrades, brothers and sisters relying on the employed to feed them, workers in this country will not be willing to look at alternatives beyond taking to the streets, challenging current union structures, and running around in death defying striking mobs.

Individual rights cannot guarantee willingness and self-accountability. Often they impede them.

When one is at war one declares a state of emergency and all desirable frills such as “rights” are suspended. We are at a war of sorts between labour and capital. People are dying, both from the effects of intolerable levels of unemployment and from confrontation in the workplace. So mooting some or other drastic national intervention to stop the rot in its tracks is more than mischievous headlining.

At the very least we need to seriously challenge the assumptions and raison d'ĂȘtre that drive huge vested interests such as organised labour, corporate capital, and political structures.

I have suggested previously that we could introduce a fortune sharing, market driven model (See one of many links) in those ring fenced sites. I firmly believe such a model will create pockets of excellence, stability, greater employee contentment and attract capital simply because of reduced risk.

We have become so obsessed with wealth distribution, which includes profit maximisation and wage demands, or redistribution through government that we have forgotten and are perhaps violating some very simple and basic rules that have been reinforced over the ages. These underpin Adam Smith’s benevolent understanding of markets, not the greedy morphing of it that we have seen in the last number of decades.

The most important principle we have forgotten is that tangible wealth is created by adding value to other people’s lives via legitimate transaction. Everything else, wages, profits, and taxes have that as their source…indeed as their purpose.

Is this is what Adam Smith had in mind when he wrote: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”?

Unemployment’s biggest and intolerable tragedy is that it robs people of the opportunity to do that. It robs them of more than sustenance. It robs them of meaning.

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