Let’s be clear here. Cosatu might oppose unemployment, but that is an abstraction and Cosatu’s opposition is largely symbolic and ineffectual.
It is the interests and strivings of the unemployed themselves that Cosatu actively works to counter.
It’s obvious really. Cosatu is a federation of trade unions. A trade union is the representative of employed people, as employed people. As such the collective interests of employed people (the sellers of labour) is to get the best deal – in terms of wages and working conditions – from the employer (the buyer of labour).
As in any market, if the seller can control the supply of the good he or she can command the price and the terms of the deal.
But how to control the supply of labour in a situation of high unemployment? By locking the unemployed out of the labour market! Cosatu strives – and has generally succeeded – to deny the unemployed and the potential work giver access to each other.
Opposition to labour brokers, calls for increases in the minimum wage and a range of compulsory regulated collective bargaining processes have one thing in common: they lock in the interests of those already inside the system. They work together to make it either costly or illegal for the potential work giver to look beyond the pool of Cosatu members (i.e. the formally employed) for work seekers ( i.e. the formally unemployed).
The interest of the unemployed is to find work. The various protections and minimum wage and bargaining agreements and elaborate benefit schemes for those already in the system are of no interest to the unemployed who benefit nothing from these goods. In fact these “goods” impose a huge cost pressure on the work giver such that he or she will do everything possible to keep employment to a minimum.
Cosatu’s 10th annual congress closed this last week to much self-congratulation, much of it deserved. Trade unions have undoubtedly saved capitalism from itself. The logic of the individual capitalist is to pay as little as possible (in wages and working conditions). It is only by the banding together of workers and the advancing of their collective interests (against the individual employer, through strikes and boycotts, and within the state and legislature itself) that working conditions have evolved into the human rights compliant work culture of modern capitalism.
But we forget at our peril that Cosatu represents a special interest group not coterminous with the national interest or the interests of all citizens. In important ways some of Cosatu’s interests are inherently opposed to the national interest.
Attempting to represent the national interest is the job of the ruling party. Ruling parties can be captured by special interest groups, groups whose interests are at odds with the nation as a whole. Cosatu sometimes crows like it has successfully captured the ruling party. I argue here and here why I believe Cosatu has bitten off more than it can chew and already its crowing, to my ears anyway, is a hollow echo.
Nic Borain 
I see you argument and it is textbook – that is to say it does itself sound like an abstraction. I would more readily buy it if unemployment were not around 30% to 40%. Surely getting a few more of those employed would make COSATU a proverbially fatter cow?
I think it is precisely because there is high structural unemployment in South Africa, that Cosatu’s further privileging of formal sector labour in deeply hostile to the interests of the unemployed.
The argument goes like this:
1 – there is about 24% percent unemployment in the country (that is people ACTIVELY looking for work);
2 – Cosatu is obligated to protect and further the interests of the already employed i.e. its members;
3 – Cosatu has won extensive protections and benefits for its members through, amonst other pieces of legislation, the Labour Relations Act, the Basic Conditions of Employment Act, the Employment (and other) security, under more onerous working conditions for less money – if the employer was allowed to employ the job seeker under these working conditions;
6 – but the raft of labour legislation mentioned above makes it illegal for the potential employer to employ the unemployed in anything but the first world labour conditions defined by the labour legislative and regulatory regime in South Africa.
7 – So the potential employer will automate labour/production processes, or move them to countries with a less onerous regime and generally cut employment to a minimum.
This this is not an abstraction – the unemployed are hurt by the direct action of Cosatu. Of course Cosatu would love 100% employment – this would give them a complete monopoly of the labour market. But in a situation of high structural unemployment the next best strategy for Cosatu is to lock down the labour market, make it impossible/costly/illegal for the unemployed to access the potential employer and vice versa.
Cosatu’s oppostion to labour brokers is a case in point. Labour brokers shoulder some of the costs and obligations of employment i.e. its an outsourcing operation. Undoubtedly the potential workers on the labour brokers books enjoy less protections and advantages than your average member of Cosatu in the formal sector. But they are on those books because they are desperate to work. The potential employer uses the labour broker because he or she finds it difficult, costly, impractical to employ a member of Cosatu’s labour aristocracy. Who exactly will suffer when and if Cosatu achieves its latest objective: the outlawing (as opposed to the regulating) of the labour brokers?
My previous answer to you, Mark, got a bit graunched …. here is a slightly reconstructed version:
I think it is precisely because there is high structural unemployment in South Africa, that Cosatu’s further privileging of formal sector labour in deeply hostile to the interests of the unemployed.
The argument goes like this:
1 – there is about 24% percent unemployment in the country (that is people ACTIVELY looking for work);
2 – Cosatu is obligated to protect and further the interests of the already employed i.e. its members;
3 – Cosatu has won extensive protections and benefits for its members through, amongst other pieces of legislation, the Labour Relations Act, the Basic Conditions of Employment Act, the Employment Equity Act (and other);
4 – The unemployed would undoubtedly work, if given the option, with less protections, under more onerous working conditions for less money – if the employer was allowed to employ the job seeker under these working conditions;
5 – but the raft of labour legislation mentioned above makes it illegal for the potential employer to employ the unemployed in anything but the first world labour conditions defined by the labour legislative and regulatory regime in South Africa.
6 – So the potential employer will automate labour/production processes, or move them to countries with a less onerous regime and generally cut employment to a minimum.
This is not an abstraction – the unemployed are hurt by the direct action of Cosatu. Of course Cosatu would love 100% employment – this would give them a complete monopoly of the labour market. But in a situation of high structural unemployment the next best strategy for Cosatu is to lock down the labour market, make it impossible/costly/illegal for the unemployed to access the potential employer and vice versa.
Cosatu’s opposition to labour brokers is a case in point. Labour brokers shoulder some of the costs and obligations of employment i.e. its an outsourcing operation. Undoubtedly the potential workers on the labour brokers books enjoy less protections and advantages than your average member of Cosatu in the formal sector. But they are on those books because they are desperate to work. The potential employer uses the labour broker because he or she finds it difficult, costly, impractical to employ a member of Cosatu’s labour aristocracy. Who exactly will suffer when and if Cosatu achieves its latest objective: the outlawing (as opposed to the regulating) of the labour brokers
I can accept your points one and three, but I have some difficulty with the rest.
Are you suggesting that the net effects of COSATU’s actions result in the difficulties for the unemployed that you describe, perhaps; if you are suggesting that this is a conscious strategy, then I have some disbelief based on very pragmatic thoughts.
COSATU needs also to protect itself as an organisation against the types of practices that may raise the ire of the unemployed. Down on the street the desperate unemployed will know precisely what their impediments are, and they won’t take it lying down. Would COSATU deliberately espouse actions that would raise that ire?
Your piece suggests that any efforts to create and stimulate job creation will become derailed by a threatened COSATU. How does this play out in light of Government’s commitment to create jobs, in the face of a particularly hostile population who are now becoming ever more restive? How does your view play out in the un-unionised small business sector where most jobs are being created anyway, and where mechansisation etc may well be more expensive than manual processes in a service economy.
Finally, on the issue of labour brokers, I am informed that the problem is not that they offer this particular service, but that the practice is exploitative and generates another problem: illegal aliens. There should be no issue with regards where a labourer comes from, but when that labourer arrives sans papers and the knowledge of the state, a host of problems, many social, are created.
This last point I believe, exposes the problem with your hypothesis: it is far to general and applied on too specific areas to constantly hold water.
It is great nevertheless to read views that are stimulating. Thanks.
Nic, I agree with you that Cosatu’s actions make the problem of South African unemployment more severe.
However, wouldn’t you agree that first world employment standards, although more expensive, are nevertheless desireable and needed in South Africa? Is it not better to try to create employment in an environment of progressive labour legislation than to have a large unprotected labour force?
As an aside, it is important to emphasise that your argument is not that Cosatu is the cause of unemployment in South Africa, but that Cosatu exacerbates unemployment in South Africa.
Galen, (I edited this comment after first posting it a few minutes ago … I dunno what the etiquette for doing that is)
You are correct on both points … and I would go further: Cosatu acts appropriately by fighting tooth-and-nail to get the best deal for its members. The reason I am harping on about Cosatu and the unemployed is Cosatu’s insistence on speaking as if it was the representative of the interests of the unemployed – and the poor and dispossessed more generally. In this sense Cosatu wants to portray itself as the eternal good guys, when in fact Cosatu has a narrow sectional interest: …. the more successful it is in advancing the interests of its members, the more potential employers will hesitate to employ new labour. They will make do, and they will employ labour saving technology and they will internationalise their labour processes (because Cosatu’s successes ARE elaborate regulations that structure the domestic labour market.) Obviously the answer to unemployment can never be to remove all protections from workers – and undoubtedly there are lots of employers out there who would love precisely that situation. So first world standards would be good, and must always be something we aspire towards – but never in a situation where you have structural unemployment sitting at around 25%. We have crossed a practical line somewhere. Formal sector employees are protected to a degree that is directly harmful to total employment numbers – which is always the case, but in our case this issue is fatal. Cosatu has inappropriately won victories through political leverage i.e. the real balance “on the factory floor” is not reflected in the labour regime – which is inappropriately protective of organised formal sector workers. Thus the labour market is distorted. Btw – Labour brokers are an attempt by the market to correct itself. If you close the labour brokers down the inappropriate balance works itself out in another way — either the work givers ship part of their processes up north or to China or to India …. and the unemployed and the consumers suffer. In the long run Cosatu suffers too, but for now their short term interests are secured.
The subject matter of this posting of yours seems to have resurrected recently in Ann Bernstein’s new book, an op-ed by Greg Mills and a discussion document titled The Monrovia Principles. Strangely, all parties are connected to The Brenthurst Foundation! I was wondering what your take was on their central premise that only a deregulated or free market that is allowed to price labour and I suppose theoretically make our products and services more competitive is able to generate sufficient economic growth to create jobs and therefore tackle poverty. Also, what is you take on this view from the perspective of our history of inequality through institutionalised discrimination and exploitation.
Or look at my question another way: what do you think of Ann Bernstein’s “The Case for Business in Developing Economies?”
Hey Mark, thanks for this. I haven’t read the particular stuff but I am a bit of a fence sitter on this. The general principle is I DO NOT think markets are adequate to the tasks of redress … of working against the dangerous levels of poverty, unemployment, inequality and the racial overlay of all three …. left to its own devices (i.e. when unregulated) “business”, “capital markets”, “capitalism” will rip the ring out … take everything it can get and leave ruins behind, every time a coconut!
BUT I think our experience of the state’s ability with regards to setting this right, and particularly THIS state’s ability, is abysmal. Also the global debt crisis and the fraud behind the actions of companies like Goldman Sachs should show us the flaw in the case for “Business” in “Developing Economies”. If markets were ever perfectly free and fair that would be one thing, but, unfortunately, that is never the case and the big players always dominate and write the rules in their favour; bully governments and hoodwink regulators.
So, as usual it is all about balance. Markets (and business) have the creativity and energy, but they have the voraciousness which needs to be tightly regulated by a strong authority. When “the authority” is neck deep in business in its own right (Thebe, Chancellor House) we have a recipe for disaster.