Defend Truth


Minimum Wage: The historical battle between pragmatists and anarchists

Yonela Diko is currently the Spokesperson of the African National Congress (ANC) in the Western Cape. Prior to assuming his role in the ANC, he worked in various companies in the private sector. Between 2007-2009 he worked for one of the Leading Retirement Fund Companies, NBC Holdings as an Employee Benefits Consultant. After that he joined the Corporate Strategy and Industrial Development (CSID), an Economic Research Unit housed under the School of Economics at Wits University. He did his BCom degree at the University of Cape Town majoring in Economics.

As South Africans we must at all times disabuse ourselves of the false impression that there are options out there, legitimate, logical and mutually beneficial, that the ANC government, for reasons that may vary from not caring to not being bold enough, chooses not to to take or champion.

The ANC is the most rational organisation in the world but, like all rationality, it is always contested by anarchists from all extremes. The contest of rationality by extremes is as old as human development.

The current conversation about the minimum wage is yet another schism that pits pragmatism against anarchists. Every so often, throughout history, such battles are to be expected.

In the late 19th century, the working class were in constant struggle to gain the eight-hour workday. Working conditions were severe and it was quite common to work 10 to 16 hour days in unsafe conditions. Death and injury were commonplace at many workplaces.

As early as the 1860s, working people agitated to shorten the workday without a cut in pay, but it wasn’t until the late 1880s that organised labour was able to garner enough strength to declare the eight-hour workday. This proclamation was without the consent of employers, yet demanded by many of the working class.

At first, most radicals and anarchists regarded this demand as too reformist, failing to strike “at the root of the evil”. A year before the Haymarket Massacre, Samuel Fielden pointed out in the anarchist newspaper, The Alarm, that “whether a man works eight hours a day or 10 hours a day, he is still a slave”. Despite the misgivings of many of the anarchists, an estimated quarter million workers in the Chicago area became directly involved in the crusade to implement the eight-hour workday, including the Trades and Labour Assembly, the Socialistic Labour Party and local Knights of Labour.

This has been the case throughout history, with some workers demanding their fair share of the pie and others demanding to collapse the whole system. Rationality has always prevailed. This goes for many victories workers have won over the years – annual leave, sick leave, retirement funds and pensions, even lunch hours. Workers have fought and won many challenges but they have always appreciated that the relationship with capital is one of convergence and divergence. We have always needed one another.

Today, South Africa is debating its newly adopted minimum wage and once again radicalists and anarchists are screaming ridiculous things from the wilderness hoping to win souls.

If you compare South Africa’s new minimum wage to that of the other BRICS members, at R20 per hour, South Africa becomes the second highest minimum wage country of the BRICS group. The fact that these are the very same countries we are competing with for foreign direct investment puts us at a competitive disadvantage. India’s minimum wage peaks at R2,712 per month, with other areas paying as little as R672 per month. Russia’s minimum wage is R1,968 per month with Brazil the closest to us, at R3,480 per month. Mexico is R938 per month. China’s minimum wage peaks at R3,852 and it’s been gradually rising over the years hence. According to Tecma University, China’s manufacturing is rapidly moving to Mexico, which explains the slowing down of the Chinese economy of the last few years.

China is however the best example of how to lift your wages over time. China coined the term “cheap labour eliminates cheap labour”. The current debate by Numsa and Saftu is that we need to open company books and see how the profit pie is sliced between workers and management and shareholders.

Here are the facts. Inequality or a pay gap between CEOs and workers is a global phenomenon and not an RSA issue. That is why it was tackled at Davos. Yes, you can lock your country in and open books on how much workers get vs CEOs, how much workers get vs shareholders, and then rebalance. But then it means you will never get new investments because you offer no competitive wage. So young people will have to wait for old people to die before they get jobs. But if you follow the world route, make your workers globally competitive or attractive, get new manufacturing investments, grow the economy, grow new jobs, new spending, an economic chain reaction, then the tide lifts everyone; suddenly your whole country is an economic miracle, workers are naturally paid more (cause there is more economic activity) and salaries are rising.

Beyond the wage debate, the real debate is about ideology. There is an underlying sentiment of challenging the ANC on its socialist ideology, and whether we can take on capital in a misplaced capitalist vs socialist ideological battle. As a multiclass organisation, the ANC is prone to be more pragmatic that dogmatic, assessing the material realities at all times rather than being locked into ideology. No one therefore can whip the ANC into ideological dogma against the prevailing reality.

As a member of the ANC, I share Stephen Hicks’ (PhD) sentiments that Marxist socialism (Happy 200th year to the great Karl Marx) has faced a set of theoretical problems. Yes the initial hopes of Marxist socialists centred on capitalism’s internal economic contradictions. The contradictions, it was argued, would manifest themselves in increasing class conflict.

As the competition for resources heated up, the capitalists’ exploitation of the worker would increase. As the exploitation increased, the worker would come to realise its alienation and oppression. At some point, the exploited worker would decide that it was not going to take it any more and a revolution would ensue.

Yet that’s not how it worked out. The class of manual labourers which initially formed the bulk of workers both declined as a percentage of the population and become relatively better off. And the middle class grew substantially both as a percentage of the population and in wealth, as had the upper class.

The worker has therefore been evolving and growing and gaining more power and resources in the process, albeit still not enough to contest the owners of capital. However, today’s worker, to a large extent, is no longer the pariah of society who can be abused at will thanks to both the cumulative power of the worker and the government of the day. That percentage of manual labour, as a percentage of the population, has been dwindling over time throughout the world.

We must therefore ask ourselves whether the world that unions fight for still exists or will exist long enough and whether they should not change strategy on the battles they choose to fight in today’s world of the Fourth Industrial Revolution. In future, employer and employee may well not meet at all but deliver the needed outputs.

South Africa’s R3,500 minimum wage is competitive enough to still attract foreign investment, which is ultimately good for the worker. DM


Please peer review 3 community comments before your comment can be posted