Introduction
The liberation from apartheid generated great expectations of change in the workplace and the labour market (Pons-Vignon and Anseeuw 2009). This was due to the key role of trade unions in overthrowing the system of minority rule, both as a political force and through successful undermining of the racist order which had been established in workplaces (Von Holdt 2003). Apartheid geography had ensured the racial separation of dwellings; encounters (often brutal) between people considered to belong to different racial groups took place mostly in what Marx calls ‘the hidden abode of production’. The forcible commodification of Southern African peasants into wage labourers (Bernstein 1994) entailed extreme violence; it was followed by the imposition of a migrant labour system and of colour bars across workplaces. In the absence of alternative sources of income, wage employment came to occupy a central place in the reproduction of most South Africans. Yet, alongside a record-breaking unemployment rate (standing close to 35%), more and more research points to the restoration of employer power post-1994, through the widespread use of outsourcing, entailing an explosion in casual employment (Buhlungu and Bezuidenhout 2008; Pons-Vignon forthcoming; Webster and Von Holdt 2005). The economically liberating stable employment most South Africans aspire to has therefore not materialised, but remains the overarching objective of progressive forces in which unions continue to play a leading role (Barchiesi 2011).
Yet, reading the media or the reports produced by the International Monetary Fund (IMF), one could believe that the South African government has yielded to the dreaded sirens of populism, at least in the labour market. Rigid rules have allegedly been established, killing flexibility by over-protecting workers who are poorly skilled and over-unionised; a deadly mix which lies at the root of high unemployment and poverty (Klein 2012). Such arguments follow the South African (neo)liberal tradition, according to which the key to unlocking growth and reducing poverty would be to reform the labour market (making it ‘flexible’) and equip poor people with useful skills. Similar arguments were used in the early 1990s to dismiss the report of the Macro-Economic Research Group (MERG 1993) and debunked by Sender (1994). The new claims associated with this neoliberal perspective on the labour market suffer from serious empirical limitations, whether in attempts to point to ‘high’ wages as the cause of unemployment (Forslund 2013), or to claim that South Africa's labour market is rigid (Bhorat and Cheadle 2007). This position is however reflected in parts of the government, notably in the National Treasury, which champions a ‘youth subsidy’ ensuring a transfer of taxpayer money to employers to facilitate the creation of casual jobs, and in the ANC- and government-endorsed National Development Plan.
The flawed characterisation of the South African labour market as ‘rigid’ has diverted attention away from a more grounded assessment of its performance. This briefing thus offers a critical review of post-apartheid labour market restructuring, showing that it has failed not for lack of flexibility, but rather because it has not protected poor workers. The changes which have taken place in the labour market have indeed reproduced, rather than challenged, the unequal relationship between capital and labour.
The dismal performance of the post-apartheid labour market
The new democratic regime carried expectations for millions of South Africans to find good jobs, with some security as well as wages and benefits allowing them to live decently. Most of them have been disappointed, as unemployment has risen to dramatic levels, while many jobs have become increasingly casual. Because jobs are the main source of direct and indirect income for most South Africans, these adverse developments have made their social reproduction extremely difficult. The result has been a deepening of inequality – not what most expected in 1994.
Unemployment in South Africa is among the highest in the world; it represents the most significant expression of the country's deep and lingering socio-economic crisis. According to the Quarterly Labour Force Survey (QLFS) for January to March 2013 (StatsSa, 2013), the official unemployment rate stands at 25.2%; this figure climbs to 33.7% if discouraged jobseekers are included. While the government's ‘official’ rate (excluding discouraged job-seekers) downplays significantly the extent of the unemployment crisis (as can be seen in Figure 1, the difference between the two rates has hovered between 5 and 10 percentage points since 2001), the ‘expanded’ rate constitutes a better reflection of the situation of the labour market. Indeed, the reason for excluding discouraged jobseekers from the unemployed is that they are allegedly less motivated (therefore less likely) to find work. While this may be true in certain countries, recent research shows that, in South Africa, ‘there is little to distinguish the searchers from the non-searchers in terms of their commitment to finding work.’ As a result, ‘the non-searching unemployed form a legitimate part of the labour force and… their exclusion from the official rate should be reconsidered’ (Posel, Casale, and Vermaak 2013). What is particularly striking is the number of people who have never been in employment: they represented 59% of the (narrowly measured) unemployed in 2008 (Leibbrandt et al. 2010, 10).
Narrow and expanded unemployment rates, South Africa, 2001–2013.
Source: StatsSA (2008; 2013): authors' calculations for expanded rate.Note: The methodology of the labour force surveys changed in 2008, with the introduction of the Quarterly Labour Force Survey. For the period 2001–2007, we draw on the ‘Historical revision March series’ published in 2008 to facilitate comparison with the new series. For 2008–2013, we use the Quarter 1 figure for each year in order to ensure consistency with the previous period.
In spite of the depth of the unemployment problem in South Africa, many economists have sought to explain it as an abnormality rather than engage with the dynamics that (re)produce it. This started in the early 2000s with Bhorat emphasising ‘the simultaneous existence of a skilled labour shortage and unskilled labour surplus’ (2004, 976) to argue that skills development would be the key to reducing unemployment. Yet, this argument was profoundly flawed for, as pointed out by Makgetla and Van Meelis (2003), ‘Even if more jobs were created for skilled than for unskilled people, it does not follow that increasing skill levels would in turn generate more jobs.’ In the following years, drawing on dual labour market theories (which posit that there are two distinct labour markets, a formal and an informal one), some economists have argued that ‘insider’ formal workers were forcing many ‘outsiders’ to either remain unemployed or work informally (Kingdon and Knight 2007). Yet, informal employment in South Africa is very low, especially by comparison with other African or middle-income countries, and much of its growth has been related to the informalisation of work, rather that to new opportunities in the informal economy. It is furthermore important to discard the notion that unemployment is high because informal wage employment is not captured by labour statistics: if anything, informal sector (especially self-) employment is exaggerated by the QLFS (Pons-Vignon forthcoming).
The roots of unemployment in South Africa are structural; they cannot be reduced to a mere ‘frictional’ dimension related to a neoclassical understanding of the labour market as the place where supply and demand for labour meet. According to Pollin et al. (2006), the three immediate reasons accounting for the very high unemployment rates in South Africa are historically high unemployment; sluggish growth; and declining labour intensity of growth. Growth has overall been low in South Africa since the late 1960s, with the exception of the period 2003–2007. Yet, Mohamed (2010) argues that far from being associated with long-term investment in the real economy, growth was then linked to increased debt-driven consumption and speculation in financial and real estate markets. Thus, much of the increase in services employment was related to outsourcing of low-pay services from manufacturing, in particular cleaning and security (Tregenna 2008). While the official unemployment rate had slowly declined during the 2000s, unemployment went up again after the economy recorded a million job losses in 2009, in the wake of the global crisis. Finally, the continued dominance of sectors associated with the minerals–energy complex means that the most dynamic sectors are capital- rather than labour-intensive, with limited capacity to increase employment significantly even when they grow (Ashman, Fine, and Newman 2011).
Largely ignoring these structural features, debates about unemployment in South Africa have been dominated by calls for more labour market flexibility as the intractable unemployment crisis means that the national focus is primarily on job creation, often couched in ‘any job is better than no job’ terms. The focus on an imaginary ‘rigid’ labour market (and elusive ‘overpaid’ unskilled workers) is therefore a diversion from a serious engagement with unemployment (Bhorat and Cheadle 2007; Forslund 2013). It is all the more so that the South African labour market is in fact extremely flexible; employers can do pretty much whatever they please in practice.
The quality of jobs in South Africa has indeed declined dramatically over the past 20 years. The implication is that working poverty, which was a structural feature of segregation and apartheid (Wolpe 1980), has all but disappeared. Non-standard forms of employment are increasingly common throughout the South African labour market, in line with the global restructuring of work which has led, through a great diversification of employment arrangements, to widespread precariousness. This is not, unlike what is often assumed, restricted to the ‘margins’ of the labour market, but increasingly a feature of its core (on East Asia, see Chang 2009). In South Africa, restructuring started ahead of the transition to democracy and has since become a wide-ranging phenomenon. In mining in 2008, one out of three workers was thus employed by a contractor or a sub-contractor (Bezuidenhout 2008), a figure which has probably increased in the wake of the 2012 violence across platinum and other mines. The forms taken by work restructuring have been varied and include the growth of third party employers, such as labour brokers and contractors, alongside a sharp rise in casual contracts. These have included the use of arrangements such as home working (Godfrey, Clarke, and Theron 2005), or gangs of workers employed by the day to perform certain tasks. With a few exceptions, for instance in transport (Barrett 2003) or metals and engineering, trade unions have not been able to counter employer strategies and prevent casualisation.
Labour casualisation has entailed a marked deterioration in levels of pay and security. In terms of pay, this is visible in the consistently low wages received by workers covered by Sectoral determinations (see Section 2), two-thirds of whom were classified as ‘poor’ in 2007 – with an increase in the number of poor workers in certain sectors since the adoption of a determination (DPRU 2010). In terms of employment security, out of a workforce of 13 million in 2008, 5.8 million workers were not covered by unemployment insurance, 2.7 million did not have written contracts, and 4.1 million did not have paid leave entitlements (Marais 2011).
The problems associated with the labour market have contributed to a sharp crisis of reproduction experienced by many poor people in South Africa. Combined with the casualisation and unemployment crises that they experience in the labour market is an increasing commodification of essential services, from transport to health care (Barchiesi 2011). The upshot is that workers require more cash – at the same time as the incomes of many are declining. The ensuing reproduction squeeze often precipitates workers into the arms of very costly providers of consumption, or ‘micro’, credit (Bateman 2012). South African wage levels must therefore be understood in the context of a very expensive cost of reproduction due to commodified and often poorly managed services. Another consequence of labour casualisation has been to undermine the ability of workers to support dependants. In poor households, it is common that ‘workers’ wages are the main safety net … [hence] even the limited income available to low paid workers is eroded through support for the unemployed’ (Coleman forthcoming).
With such poor records in employment creation and growth, it is not surprising that the unequal distribution of wealth has not altered. The country is the most unequal in the world, ahead of Brazil, with a Gini coefficient rising from about 0.56 in 1995 to about 0.63 in 2009. If workers, and in particular poor workers, have lost since 1994, who has won? Functional inequality between capital and labour has been increasing steadily, with the wage share of GDP falling from 50.1% in 1995 to 44.5% in 2010 (Forslund 2013). Like other countries, South Africa has experienced a rapid rise in the income of the super-rich, promoted by an unflinching commitment to ‘orthodox’ macro policies (Segatti and Pons-Vignon, this issue). This is closely related to the rise of the financial sector and of its ability to absorb resources at the expense of other sectors (Ashman and Fine 2013).
To make sense of such unexpected outcomes, it is crucial to adopt a class analysis. The process of work restructuring has been an instrument of ‘authoritarian restoration’ of employer power over workers (Von Holdt 2003). But how could such a strategy be successful, and workers be so undermined, in the context of an allegedly progressive, or rigid for some, labour market legal framework, based on workers–employer cooperation, and of a historically strong labour movement?
The emperor is naked: unpacking the myth of ‘progressive’ labour law in South Africa
The new government, supported by a strong labour movement, carried out what was presented as a radical restructuring of the workplace aimed at ensuring racial equity, improving working conditions and democratising decision-making at company level. It built on the reforms that had followed industrial (and political) action by the black trade union movement since the early 1970s. It could be said with hindsight that the Labour Relations Act (LRA) of 1995 walked in the footsteps of the 1981 LRA, in the sense that it established institutions in which unions could participate, thus asserting the legitimacy of majority black unions while continuing ‘the ongoing effort to divert union power away from the shop floor’ (Lichtenstein 2013, 14). The crucial decision made in the new labour law regime was to leave most of the regulation of labour and pay (including minimum wage) conditions to Bargaining Councils (BCs, formerly industrial councils), and to leave it to the unions and employers to set these up. In sectors where unions were too weak to bargain, Sectoral determinations would be adopted by the Minister of Labour, on the recommendation of the Employment Conditions Commission (ECC), in order to regulate conditions of pay and work.1
The restructuring of the labour market has reflected the restructuring of the South African economy. The new industrial relations system has entrenched the power of capital, first through the inability of collective bargaining (and unions by extension) to protect many workers, secondly through the very limited impact of direct state intervention in the labour market and the weakening of trade unions.
Collective bargaining
Until the end of apartheid in 1994 (and since long before its start), the South African labour market had been characterised by institutionalised racism. The migrant, badly paid and tightly controlled black workforce was a central feature of the mining economy (Moodie 1994). White workers benefited from institutional racism, for instance through job reservations or the rule that they should be always be in a hierarchically superior position. From the 1970s onwards, black trade unions grew stronger and focused on eliminating the most humiliating practices of daily racism in the workplace, such as the blurring between racial and technical lines of hierarchy.2 Their success later provided an essential foundation for the mounting economic and social contestation which would lead to the fall of the apartheid regime. The largest confederation that emerged from this movement, the Congress of South African Trade Unions (COSATU), has become a member of the Tripartite Alliance which has ruled South Africa since 1994. Since tense (to use a euphemism) labour relations were a key feature of apartheid, a progressive workplace regime was a crucial expectation associated with the democratic transition.
Such a progressive regime has, however, not materialised out of the potential contained in the new legislation. The assumption of many that unions would remain as strong in the post-apartheid period as at the height of the struggle in the 1980s and 90s was not realised. Following the logic of the northern European model of industrial relations, it was expected that social ‘partners’ would collaborate at the national, sectoral and company levels to agree on policies and pay levels. However, class struggle has been more visible than class collaboration in post-apartheid South Africa.
The LRA effectively left most of the regulation of labour relations in the hands of unions and employers. BCs were retained as the primary forum for collective bargaining. The Act also provided a mechanism whereby unions (or employers’ associations) which were not sufficiently representative to form a BC could seek to establish a statutory council, with limited powers to bargain. There was also provision for a plant-level structure, the workplace forum, influenced by the German work councils.
The number of councils has declined: after a peak of 99 in 1996, there were 47 bargaining councils in 2009. This can be attributed to councils collapsing in some industries or mergers of regional councils into national councils in others. Councils can have their collective agreement extended to all employers and employees within the scope of the council and not just the members of the party organisations. Companies can apply to the BC for an exemption from some or all provisions in the agreement(s) – about 80% of applications for exemptions are granted, confirming that the system does not lack ‘flexibility’ (Bhorat and Cheadle 2007).
In practice, the new architecture has not produced the intended dense web of negotiated conditions. BCs have not extended their scope to any significant extent in the post-1994 period, and in some sectors have declined. The tendency overall has been away from centralised bargaining (which is typically associated with the best outcomes for workers) to more local, fragmented bargaining. Coleman (forthcoming) argues that:
While centralised bargaining is critical for the labour movement … , it is not in its current voluntaristic form, able to drive the transformation demanded by the South African situation. Indeed the fragility of collective bargaining institutions can be used by employers to attack wage levels.
This is particularly visible in many BC agreements about wage increases: the very low wages inherited from apartheid have in many cases been perpetuated. The implication of such decentralised bargaining is that wages vary greatly across sectors, reflecting the strength (or weakness) of unions: in 2005, the minimum wage for unskilled electrical workers was R185 per week, while it was R647 for the same category of workers in metals and engineering (Budlender 2009).
Other institutions supposed to promote collective bargaining have had even less success. Workplace forums were supposed to be consulted about restructuring and reorganisation of production, training, pay schemes and disciplinary procedures. However, only a handful has been established because employers were reluctant to move towards co-determination, while unions ‘feared that [workplace forums] could serve to co-opt workers and reduce their willingness to oppose employer proposals’ (Budlender 2009, 10). Likewise, very few statutory councils have been established – meaning that workers not covered by a BC have to hope for a Sectoral determination to be protected.
The main driving force behind this hollowing out of the collective bargaining framework has been the organisational restructuring which many companies have resorted to. The increase in contracting-out of core and non-core activities in many sectors has resulted in the growing casualisation of jobs discussed above. The resulting precariousness in which many workers find themselves has negatively affected their ability to join unions and engage employers in the many fora established by the LRA. Crucially, it has allowed employers to replace ‘extra-economic’ coercion with economic coercion (Pons-Vignon forthcoming); this is a stark reminder that relations between labour and capital are more often characterised by conflict than by collaboration.
One of the more surprising outcomes of the failure of collective bargaining to protect workers in post-apartheid South Africa has been its inefficiency in promoting employment equity. Given that most low-skilled workers remain black, the increase in within-wage earners' inequality has been associated with increasing racial inequality. There have been exceptions, not least in the public service which, according to Budlender (2009), somewhat corresponds to the intent of the post-apartheid labour law. Improved representation (trade unions were hardly tolerated before 1994 in the state) and hiring and promotion of black professionals (Von Holdt 2010) have allowed state employment to play a classic role of class formation. Elsewhere in the labour market, Black Economic Empowerment has been useful to ensure that well-paid black executives were appointed in companies, but has done little to change the situation of the majority of workers (Budlender 2009).
Ineffective direct state intervention in the labour market
While collective bargaining is the cornerstone of the South African system of labour law, there are residual provisions for direct state intervention, in particular in relation to ‘vulnerable’ workers. Sectoral determinations however offer very limited protection to workers, while the enforcement capacity of the Department of Labour is weak. Not only is protection minimal, but it is often elusive.
Sectoral determinations set minimum conditions of work and pay for sectors where there is no bargaining council, usually reflecting the weakness of unions, as well as documented exploitation; they have concerned sectors such as forestry, agriculture, domestic work and security. While the establishment of minimum wages seems to have helped increase sometimes extremely low nominal wages, case studies suggest that many employers have in response found ways either to casualise labour, or to counter wage increases by shifting to hourly or task payment, or reducing other benefits (Murray and Van Walbeek 2007). Sectoral determinations have thus resulted in increased casualisation because they are not monitored by trade unions, and because of poor enforcement mechanisms (see below).
As Coleman (forthcoming) puts it, ‘the system of Sectoral Determinations … is both partial (only covering some low paid sectors), uncoordinated, with big variations in the minima, and without any coherent rationale in terms of the basic subsistence needs of workers.’ Indeed, the minimum wages set in this way tend to be very low, with an average of about R1700 per month in 2011 (Coleman forthcoming). Given the weakness of workers, the minimum frequently becomes the benchmark, with wages clustering around the regulated minimum wage. In other words, even if it was implemented rigorously, direct state intervention in the labour market would hardly manage to uplift poor workers.
There is moreover a severe lack of enforcement of labour regulation. It is striking that in 2007, four years after the adoption of a Sectoral determination for agriculture, 28% of workers were paid below the minimum wage, and that 36% still did not have written contracts (Bhorat, Kanbur, and Stanwix 2012). This poor compliance on the part of employers is related to the weak enforcement (inspection) capacity of the Department of Labour. As Stanwix argues, in ‘agriculture, the risks [associated with non-compliance] have been low and the penalties light’ (2013, 4). Inspectors are tasked with monitoring and enforcing compliance with the Basic Conditions of Employment Act and Sectoral determinations, as the state does not monitor agreements emerging from collective bargaining (which are supposedly monitored by BCs themselves). While the violence inherent in some sectors probably deters inspections (as in the collective taxi sector), there are many suggestions that the South African labour inspectorate is slow and ineffective.
As a result of the limited scope of Bargaining Councils, as well as the limited coverage of Sectoral determinations, the extent to which minimum conditions are in fact regulated is at best uneven. Combined with poor enforcement capacity, this produces a striking picture of an inefficient legal framework – at odds with the widespread perception. Overall, state intervention in the labour market mirrors the inefficiency of collective bargaining, and of trade unions by extension, in defending workers against employers.
The workplace strength of unions has been seriously dented with the transition to democracy, at the very moment when it was most needed to defend workers in the context of widespread restructuring. Furthermore, unions have lost a lot of their best cadres to government and the private sector (Buhlungu 2010), and, while they retain power in certain sectors and (some) political influence, they have not prevented widespread casualisation.
Conclusion
We have highlighted two trends in the post-apartheid labour market: its failure to address major socio-economic challenges, whether unemployment, poverty or inequality, and the inefficiency of collective bargaining for protecting workers, combined with the weakness of direct state intervention in the labour market. The progressive restructuring of labour relations, starting with the creation of decent work opportunities for the majority of South Africans, has turned out to be a pipe dream. Instead, the labour market has, like the economy and the state, been restructured in a neoliberal way which has entrenched the structural inequality between capital and labour. Under apartheid, state intervention had been mobilised to advance the interests of capital, including by regulating the migrant labour system. The ‘liberalisation’ of the economy, which started in the late 1970s and was continued after 1994, also involved substantial state support. It has made the relationship between capital and labour even more unequal, by allowing capital to leave the country and leverage high unemployment to undermine the workplace strength of labour.
The new labour law regime in South Africa was inspired by northern European ‘corporatism’: the central idea was that it was going to protect workers thanks to strong trade unions negotiating conditions in centralised bargaining councils. This was coherent with demands by COSATU unions, who dreamed of a ‘mixed’ economy based on co-determination – but capital wanted none of it. The pervasive increase in atypical employment has eroded trade union ability to protect workers and take advantage of many of the provisions of the new legal framework.3
In South Africa, labour market restructuring, in a context of economic liberalisation, has benefited capital. The failure of a strong and militant trade union movement to counter these moves, with a few exceptions, is an uneasy reality for many. Macun (forthcoming) suggests that unions' organisational power as well democratic control have been undermined in the post-apartheid era. This lies at the heart of the broader failure, for instance visible in macro-economic policy, of trade unions to advance the interests of labour as a class. Yet, the mobilisations in mining and agriculture signal that many workers, including among the most casual and unorganised, are willing to take up the struggle against capital. The rebuilding of labour's power in South Africa will hinge on the ability of progressive forces to (re)connect with workplace activism.