Business, Politics

The SA economy’s Cosatu migraine

By Alex Eliseev 11 October 2011

I’m so depressed. Really. Like Marvin the Paranoid Android from The Hitchhikers’ Guide to the Galaxy. Here we are, a country the size of South Africa, and we are having stupid fights with people who want to come and spend money here. Walmart is coming, Cosatu is hiding its head in the sands of ideology. By STEPHEN (won’t he just cheer up please) GROOTES.

Cosatu is aided, and abetted, by its own Cabinet implants. And the real issue? From Cosatu’s point of view, they’re absolutely right. Once Walmart cometh, life for workers will get worse. There will be an economic impact on all of us. It won’t be good for a lot of us. But that’s not Walmart’s fault. Somehow, it’s ours.

To listen to Cosatu general secretary Zwelinzima Vavi, you’d be right to say he’s not just a blinkered unionist. For example he says that Cosatu, as a federation, would love more investment, but that that investment “must be mutually beneficial…it must have the potential to create jobs…particularly at our economic base”. Fine. Makes sense. He also points out that perhaps this wouldn’t be happening if the big retail chains had listened to the workers years ago. No. Because the workers wanted those chains to have a policy of stocking 75% of their shelves with “Made in SA” goods. Which, of course, is just madness. Anyone know of a South African tablet? (And I don’t mean a Panado here.) Or how about a good sound system, or a flat-screen TV that is made here? I don’t, and I like that sort of thing.

Vavi’s point is that Walmart cannot be told by our government to ensure most of its products are “Made in SA” because our government doesn’t keep our local retailers to the same promise. It may make for a nice sound bite, but it’s still nonsense.

The fact is, we’re caught in a black hole. With no Marvin to guide us out. Last Friday’s Business Day had an excellent explanation of our problem from California Berkley professor, Gillian Hart. While focusing on the textile factories around Newcastle in KwaZulu-Natal, she points out that factory owners were right to complain in the 1990’s that their workers were being paid 90% more than their Chinese equivalents. But then when you looked at what the Newcastle workers could buy with their money, they were actually 30-40% poorer. This is the gravity well that threatens the troubled ship, South Africa Inc.

So how then do we fix the problem that our workers and our cost of living are simply higher than in the countries that are now the workhops/sweatshops of the world? When put directly to Vavi, he says the fundamental solution lies in the Industrial Action Plan Two (Ipap 2). It “lies on whether we can drive research and development, and human resources development. It lies in whether we can ensure South Africa can become efficient and improve productivity, which we embrace”.

Okay, that’s his answer. It would probably work. If it was implemented properly and rigourously. But it is not being implemented properly or rigourously. There is no incentive to try and increase productivity. And we all know that at least part of the reason is because our workers don’t seem that keen on change. Any tiny change results in industrial action. Vavi will deny this. But ask the Rea Vaya bus-users in Joburg who went without them for weeks on end, or anyone who’s ever tried to use a bus in Tshwane. Any change results in a fight. And quite frankly, sometimes the bosses just don’t have the stomach for it.

Vavi’s quite happy to use the bosses to his own advantage in the Walmart fight. Cosatu makes a great deal of the fact that the CEO of Shoprite/Checkers, Whitey Basson, has said he will have to use more imports if the Walmart deal goes through. But we can hardly take Basson’s word for it. He has everything to gain and nothing to lose from strengthening Cosatu’s case against Walmart. He’s going to do everything he can to help the unions’ fight here. So our response to his comments has to be: well he would say that, wouldn’t he?

More curious though is Cosatu’s attitude to Pick n Pay. Here is a chain that seems to be battling at the moment. It’s up against tough competition and seems to be slightly behind the curve in the latest management techniques. It happens; it’s been ahead for a very long time, and it’s hard to sustain that kind of lead. But it’s now retrenching 3,000 workers; obviously that’s bad news. For Cosatu, it’s proof that the arrival of Walmart will result in job-losses, despite Pick n Pay’s denials on this. And what’s odd here is that a chain like Pick n Pay has everything to gain from blaming these retrenchments on Walmart. But it isn’t, so it must be telling the truth on this one. But it would hardly help Cosatu’s case to take them at face value now would it?

The other convenient truth that Vavi misses is that competition from Walmart will make things cheaper. Everything, including food, will be cheaper. That means people will have more discretionary income to spend on other goods. Which is supposed to create demand for more goods, and thus stimulate the economy further. It was put crisply by the Competition Tribunal when it approved the merger of Massmart and Walmart: “The merging parties contend that the merger will indeed be good for competition by bringing lower prices and additional choice to South African consumers. We accept that this is a likely outcome of the merger based on Walmart’s history in bringing about lower prices. However, the extent of this consumer benefit is by no means clear – Walmart itself has not been able to put a number to this claim, only that it is likely.”

Unions and ministers should pick their fights carefully. Their legal grounds at the Competition Appeal Court appear slim. They’re not going to win. So why fight? All they’re doing is ruining our reputation for investors everywhere. No one with a couple of billion to lose is going to spend it in South Africa anymore. They’re getting the strong impression that our workers are simply not worth it. An impression that’s difficult to argue with. DM



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