The Employment Conundrum Facing Businesses

The Employment Conundrum Facing Businesses

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Trade Unions in South Africa have always played a dominant role in the South African economy and our labour landscape. Although legislation did not make industrial action easy in the eighties, it was the only political and economic power that workers had to fight apartheid, poverty and everything associated with the lack of opportunity to advance themselves.

Protracted strikes often ended up in the dismissal of employees because Industrial Action was not protected. Then in 1994 came political freedom and the promise of a better life for all. The right to strike and to lock out employees became a right under Sec 23 of our Constitution and new Labour Relations Act.

One would think that those employed would be happy being employed, but the reality is that often one salary has to provide for an extended family of up to six people, so it is very easy for wages to be regarded as not insufficient, especially when you see the salaries that are earned by Executives in the form of basic salaries, bonus payments and share options.

One can only wonder how desperate you need to be to go on strike for five months without any income because you so desperately want to increase the salary that you receive.

I believe that unemployment is the one and only real danger to South Africa’s future, so why is it so difficult to employ more people?

Employ more and pay less versus employ less and pay more

I often wonder, if an entrepreneur started a small business and had a budget of R100 000 to spend on wages for workers and s/he had to source those prospective employees from amongst unemployed people, how would they respond?

If a salary of R12 500 was offered, the entrepreneur would only be able to afford eight new employees. However, if a salary of R7 140 was offered, then 14 people could be employed. What would the prospective employees choose, between having 14 people employed at a lower salary, or eight people at a higher salary?

 

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If the workers select a smaller salary but a higher number of people employed, productivity would be higher, output would be greater and the small business would have a much better opportunity to grow and compete. If six people lived off one employed person, a total of 84 people would benefit from this work opportunity as opposed to only 48 at R12 500 per month.

Of course this could be regarded as exploitation and misuse of open market forces to the detriment of poor people. However, if we are really honest with ourselves, is this not the answer to our unemployment problems?

Accepting defeat in one area to benefit another

Perhaps it is time for business and labour leaders to accept that unemployment is the biggest challenge we currently face and that the only way to correct this, is to accept defeat in some areas so as to gain benefits in other areas:

  1. Government should do the unpopular thing and allow businesses to employ more people at ‘uncomfortable’ salaries.
  2. Businesses should not be ashamed to employ people at these salary levels, because they would be able to provide jobs to a lot more people than what they currently do. Of course we should not let this continue indefinitely, because this will lead to exploitation, but our most dangerous threat currently remains unemployment.

I cannot think of anything more humiliating than being unemployed and staying unemployed. What hope do you have for your future and that of the family you take care of? Hope is such an important factor that drives us all.

Once we have had the benefit of sustainable economic growth and much reduced unemployment, more stringent labour regulations should follow, but first the dog should wag its tail and not the tail wag the dog.

Eugene Ebersohn
Eugene Ebersohn completed his studies at the University of Pretoria and as a Senior Union Official, has 21 years’ experience in the South African Employee Relations environment. Eugene is based in Johannesburg.