under development

The most important, single issue facing government today is improving conditions for greater labour absorption.

The South African Bill of Rights says, “Every citizen has the right to choose their trade, occupation or profession freely.” But local laws and institutions do not fully support that right, and one consequence is our staggering unemployment rate.

The results of the Quarterly Labour Force Survey (QLFS), recently published by Statistics South Africa, revealed some alarming labour market trends. According to the strict definition, the unemployment rate increased from 24.3 percent (4.165 million) in the last quarter of 2009 to 25.2 percent (4.310 million) in the first three months of 2010 – a loss of 145 000 jobs. When the first quarter of 2010 is compared to that of 2009, if we include discouraged work seekers who have given up searching for work because they believe there is none available, the unemployment rate increases from 28.4 percent (5.4 million) to 32.4 percent (6.1 million) unemployed people.

This paints a very bleak picture indeed.

To make matters worse, these employment figures are at odds with the growth in real gross domestic product (GDP) – 4.6 percent in the first quarter of 2010 compared to 1.6 per cent in the first quarter of 2009. And, according to the Quarterly Employment Survey (QES), gross labour earnings paid to employees in the formal non-agricultural sector in the first quarter of 2010, was 11.7 percent more than in the first quarter of 2009. Therefore, on average, for those with jobs in South Africa, things got a whole lot better despite almost a million losing theirs in 2009.

A further worrying concern is that, of the unemployed, 63.5 percent have been out of a job for longer than a year, and the majority are young with limited education and other skills. If the low end of the labour market were allowed to function unhindered, young and unskilled people would not have such a desperate struggle to get onto the first rung of the employment ladder. Without doubt, the already employed will protest that any weakening of job-security legislation or erosion of minimum wages will lead to increased poverty. Studies have shown that unemployment is a significant driver of poverty, so how can we close our eyes to it.

Often ignored is that worker productivity is the main determinant of what employers are willing to pay, and a legislated increase in the price of labour does not increase worker productivity. According to fundamental economic logic, if a minimum wage of R2 000 per month can improve conditions for workers, then one of R20 000 per month should improve conditions even more. But, obviously, a minimum of R20 000 would render more people unemployable. People who do not get jobs as a result of such legislation are unseen victims while those who can clearly be seen to lose jobs are only too visible.

Claire Bisseker states in an article (Financial Mail, 25 June 2010) that, “There are 387 manufacturers that have refused despite an exhaustive legal process by the clothing industry national bargaining council, to honour minimum wages and conditions of employment.” She reveals that a total of 43 percent of clothing manufacturers in the country are not complying with minimum wage legislation. The clothing industry national bargaining council is currently sitting on execution orders against the first 70 firms that have failed to meet their regulatory obligations, which, if carried out, could result in about 4 000 workers losing their jobs. I know that if I were one of these 4 000 individuals facing unemployment, I would certainly be against the carrying out of the execution orders.

Bisseker sums up the situation succinctly, “The standoff in the clothing industry forces a choice to be made between upholding decent working standards and making thousands of people redundant in the middle of winter”. So, at the heart of the matter is the African National Congress’ policy of ‘the creation of decent work’. The small firms that ‘refuse to honour minimum wages and conditions of employment’ do not do so out of pure cussedness or because they are mean but because they cannot afford to pay the higher costs. But, who gets to decide what is ‘decent work’? Despite all statistics, if you were the one unemployed, so that, as far as you are concerned, the rate of unemployment is 100 percent, surely you would want to have the right to decide for yourself what constitutes ‘decent work’.

Employees do not happily work under trying conditions for extremely low wages because they prefer such jobs to better paying and more attractive ones. They take such jobs because, at the time, it is their only chance to earn the money they need to support their families. Their choice is often between a poorly paid, unpleasant job, and starvation for their families and themselves.

A significant and laudable factor that emerges from Bissiker’s article is that it was the South Africa Clothing and Allied Workers’ Union (SACTWU) that asked for the writs of execution to be delayed to “explore further avenues”. The spokesperson for the Apparel Manufacturers of South Africa (AMSA) was more uncompromising. According to Ms Bissiker he said that, “they don’t want to shut companies down either but neither can the status quo be allowed to continue, simply to save jobs”.  Do AMSA and SACTWU truly believe that the workers will be better off unemployed than in jobs that, in their view, are not “decent”? Will they support the families of the unemployed workers who lose their jobs because of these actions? Self-interest is usually buried in such strange logic.

Other manufacturers will benefit if the 387 firms can be knocked out of the competition, but the self-interest of the labour union seems more obscure. Is it in the interests of SACTWU members for their union to be a party to making first 4,000 and later even more workers unemployed? Labour unions are supposed to look after the interests of their members, a task they perform with vigour. It is not their responsibility to solve the country’s socio-economic problems. That is the task of government.

The most important, single issue facing government today is improving conditions for greater labour absorption. For government to achieve its stated objective of reducing unemployment and stimulating growth, it has to urgently address labour market policies and laws that exacerbate unemployment, such as those that abridge the constitutional and human rights of garment manufacturing workers, and threaten to imminently make thousands of them unemployed.

- Jasson Urbach is an economist at the Free Market Foundation. This article first appeared in the Tshikululu Social Investments’ (TSI) Thought Leadership. It is republished here with the permission of TSI.

South Africa’s poor have headed government’s call to do it for themselves in the spirit of vukuzenzele. To millions of people affected by poverty and unemployment, the most obvious option to ‘do it for yourself’ is to start small business initiatives such as selling fruits and vegetables, clothes, fast food at a street corner, and operating ‘spaza’ shops.

For them, starting their own businesses is the only way to ensure that they participate meaningfully in the informal economy, provide for their families and create jobs to the unemployable. However, government is seen as not doing much to help informal traders to help themselves.

In the City of Johannesburg (CoJ), the city’s Trading Policy defines informal trading as the ‘sale of goods by individuals and or groups in locations designated for informal trading’. However, Johannesburg-based informal traders continue to clash with the Johannesburg Metro Police Department (JMPD) and the Metropolitan Trading Company (MTC). The JPMD and MTC accuse informal traders of trading illegally instead of going through the latter to be allocated a space to sell from. MTC is a CoJ-owned entity, tasked with the responsibility of regulating trade and transport facilities within the city.

The JPMD and MTC blame the so-called ‘illegal’ informal traders for trading in locations were trading is prohibited within the city. Unlike those who operate at locations designated for informal trading by the city, informal traders who sell illegally within the city often suffer as JMPD officials confiscate their goods.

Many informal traders feel that the CoJ should step up its efforts to ensure that all informal traders enjoy their constitutional right to practice trade of their choice. They argue that failure to do so will leave them with no means to generate income to sustain their families.

Other informal traders are of the view that the CoJ should invest resources into growing the informal trading sector rather than focusing only on income-generation projects. To them, growing the informal trading sector can help poor people to sustain their business initiatives and make the sector more sustainable.

Only a few informal traders have been provided with locations designated for informal trading. However, many informal traders fear that relocating them to areas that are not accessible to most of their customers will limit their ability to make profit.

Just like informal traders who operate legally within the city, illegal traders’ biggest wish is to be moved to designated locations that are close to taxi ranks where most of their potential customers can reach them. However, it is important that the CoJ, through the MTC and JMPD, consult with informal traders and organisations that represent their interests, when taking decisions that affect informal traders.

In the same vein, Orange Farm-based informal traders criticise the MTC for attempting to relocate them from where they are currently selling from. They claim that the MTC argues that the reason for the relocation is that their current location falls under a property sold to developers by the city.

“We are generating a lot of money and they want to move us. They want to move us to a place that only has 30 stalls. What about the other informal traders,” explains Nomvula Mkhwanazi, one of the 70 traders who feel that moving them will marginalise their businesses.

Her view is reiterated by the spokesperson for the Orange Farm Hawkers Association (OFHA), Mxolisi Sibeko, who argues that the MTC should stop viewing relocating informal traders as the only means to deal with the problems they face. Sibeko calls for the establishment of a task team that will represent the interests of informal traders. He argues that: “The MTC is doing its job but in a wrong way. It should not take decisions for us without consulting us.”

On the other hand, concerned customers such as Thabiso Mahlangu, believes that relocating informal traders to places that are ‘out of reach’ will make it difficult to continue buying from them.

Zodwa Khumulo, a domestic worker in the central business district (CBD), has been buying lunch from informal traders for the past four years. Khumalo prefers buying lunch from informal traders because the food is affordable and of high quality. Just like Mahlangu, Khumalo is against the relocation because regular customers will no longer receive the services that they are accustomed to.

“It’s unfair for us as customers,” says Khumalo.

Another association representing the informal traders, Concerned Hawkers and Traders Association (CHATA), slams the city’s bylaws for being unconstitutional and for violating the informal trader’s right to trade. CHATA deputy chairperson, Mischka Cassiem, says that a framework should be established in which both government and informal traders can engage and deliberate on issues affecting the informal trading sector. In addition, she is of the view that government should create a platform for the informal sector in Parliament.

“Nobody is looking after informal traders,” she argues.

General problems faced by informal traders

The Ecumenical Service for Socio-Economic Transformation (ESSET) is also blaming the CoJ by-laws for marginalising informal traders. ESSET argues that the city’s by-laws fail to take into account that most informal traders are poor and illiterate. ESSET communication and information coordinator, Thabo Koole, argues that, “Bylaws are imposed and there was never any engagement with hawkers. They are also written in English.”

Informal traders from Greater Kliptown and Sisulu Square Informal Traders Association (KSIA) has also voiced their concerns about how the MTC is treating informal traders. KSIA spokesperson, Sam Takara, accuses the MTC of relocating informal traders to designated locations that are not complete. Takara challenges the MTC to stop the relocation until such areas are complete.

Responding to the concerns raised, MTC chief executive officer, Alfred Sam, has expressed willingness to engage informal traders and other roleplayers on issues and problems affecting them, including the allocation of stalls in demarcated trading areas. According to him, preference will be given to informal traders who meet the requirements set by the MTC when allocating space to informal traders.
On a positive note, informal traders realise the need to be empowered to better run their businesses.

Tau Qwelane, an informal trader who has been selling goods at Johannesburg’s Noord Street since 2001, thanks the MTC and the University of the Witwatersrand, for partnering to provide them [informal traders] with basic business skills. Qwelane argues that, “The MTC has done enough to upgrade my business skills.”

In the same vein, Xolani Nxumalo, deputy director for the CoJ’s department of economic development, says that, “Basic business skills are being taught to informal traders, equipping them with the means to grow their businesses.”

Participants are provided with food packs and transport allowances during the training. However, University of the Witwatersrand’s Johan Swanepoel notes that, “Illiteracy continues to undermine this initiative.”

In conclusion, with the 2010 FIFA World Cup coming to South Africa, the majority of informal traders fear they might be prevented from doing business close to the stadiums as FIFA insists that the venues should have ‘smart surroundings’. As the country’s municipalities gear up for clean-up initiatives in preparation for the event, the fear is that municipalities will target informal traders. This will further violate their right to practice trade of their choice and heed government’s call to act in the spirit of vukuzenzele and lift themselves out of poverty.

- Isaac Mnguni is an International Human Rights Exchange Programme intern at SANGONeT.

The severity of poverty worldwide prompted 189 world leaders in 2000 at the United Nations Millennium Summit to make a promise about the eradication of poverty by the year 2015. These commitments became to be known as the Millennium Development Goals (MDGs). Now with six years to go until the MDGs deadline of 2015 and for South Africa five years (as we have identified 2014 – 20 years into our democracy – as our target), we need to assess whether sufficient progress has been made in reaching the goals. This narrative paints a bleak picture. However it is one that has to be told so that we can ensure that the MDGs are realised. We must ask the difficult questions so that they can be answered.

The reality is that in South Africans, while there has been progress in realising some of the MDGs there have been numerous challenges. News headlines have often highlighted food price hikes and price fixing. With 40% of the population living in poverty the ability to simply afford food is not within their grasp and hunger is becoming a daily problem for many.

The recent retrenchments - blamed on the world economic crisis - have thrown approximately another million people into crisis this year. This contributes to economic hardship, leaving millions vulnerable. Unemployment increases the challenges of eradicating hunger - without income, there is even less to spend on food. South Africa is a net importer of produce and although food prices are decreasing in developed countries they remain high in developing countries. This manifests itself with the majority of the population unable afford basic food items. This has been the case for many of the residents in Vosloorus on the East Rand of Gauteng, where Studies in Poverty and Inequality Institute (SPII) has been working for the last 18 months.

For many  in Vosloorus the MDGs do not have any meaning. What matters is their lived reality of a daily struggle to have their basic needs met while they try to survive with limited resources. The increase in the numbers of orphans and children who are vulnerable compounds the communities’ challenges. Orphanhood in Vosloorus is not a new AIDS–related issue. There have been several generations of orphans in Vosloorus which, I argue is a reflection of the intergenerational aspect of poverty and vulnerability.

However, the role of the HIV and AIDS pandemic has to be considered in relation to how it changes the structure of households. The death of a bread winner and ill health is sufficient to push vulnerable households into poverty, keep them in poverty traps or push them in to destitution. This has been the case for some of the households in Vosloorus. Within the sample of 40 households, 20% of the respondents have turned to destructive coping strategies such as having multiple sexual partners in order to be able to sustain the household. During our field work in the community one participant stated that in order to have her basic needs met, she had multiple partners, each of whom would fulfil a particular need eg, household or personal needs like the provision for mealie meal, meat, clothing or cellular phone airtime. It was also found that in some cases people were forced to compromise safe sexual practices by giving in to pressure to engage in unprotected sex under the coercive pull of promises of money. This illustrates the sometimes precarious coping strategies that are being adopted to meet basis needs.

Education has been highlighted as a way to equip individuals with the necessary skills to enter the job market. Findings from the survey we conducted indicate that while school attendance was fairly high, there is a persistent drop out rate of 15%. This is generally caused by a lack of funds (not just for fees, but transport, uniform, books and food), or teenage pregnancy. Although the education system appears to be in crisis, pupils have a great desire to attain education. However, the sad reality is that even with education large portions of school leavers will struggle to find work given the pre-existing high unemployment in the country.

The findings from our work in Vosloorus have demonstrated that poor and marginalised people are not always passive participants or mere victims of circumstantial poverty. Rather they are engaged in an ongoing struggle to use available resources to break the cycle of poverty. The principal elements of their daily struggles include taking part in small informal trading initiatives, albeit peripheral.

In the absence of paid work many household rely on social security grants which are used for various micro-enterprises and also to provide basic needs. The funds received from the grants are however eroded exponentially by food inflation. Within a household of five in which no member of the household has formal employment and the sole regular income is a child grant of R240 it is unlikely that basic needs will be met, let alone the costs of transportation to school, groceries and municipal services.

The MDGS have been criticised as being set too low and it has been argued that they have reduced the sense of urgency amongst states needed to address people’s needs. MDGS also are silent about the issue of wealth and the unsustainability of high inequalities in societies. If the scenario evident in Vosloorus is anything to go by, there remain serious obstacles towards South Africa’s ability to meeting the MDGs. What is necessary I believe, is that we need to work together as a society to challenge poverty and inequality if we are to make any tangible and long-lasting difference in the lives of the poor and marginalised.

Let us start doing this now and Stand Up and Take Action.

Idah Makukule a researcher at the Studies in Inequality and Poverty Institute (SPII). She can be contacted at idah@spii.org.za. Find out more about SPII’s work at www.spii.org.za