A brew of incentives, worker protection, unionisation
Unemployment is a powerful form of exclusion in most societies. In South Africa, the rate of joblessness has become a national obsession – and rightly so. But inequality inside the world of the employed is also a matter that cannot be ignored, Prof Haroon Bhorat of the University of Cape Town demonstrated.
He explored how various interventions in terms of labour market regulation and incentives, along with the unionisation of various types of workers, could impact on achieving a more equitable country. His presentation was a scenario builder’s delight, peppered with trade-offs and possible combinations of interventions.
Prof Bhorat showed how the increasing unionisation of public sector workers had gone hand-in-hand with better pay for these workers. “In the South African labour market, public sector unionised workers earn the highest wages,” he said. Neither non-unionised public servants nor private sector employees had fared as well.
He highlighted that a wide spectrum of workers had experienced a real drop in earnings between 1997 and 2015. While the lowest 15% of earners (more or less) had experienced a real increase in earnings and the top 25% (more or less) had seen even better increases due to the demand for their skills, there was a vast “missing middle” that had suffered a real decline in earnings.
The recovery of pay levels for the “missing middle” would require both increased employment incentives for workers and stronger unionisation of semi-skilled workers, Prof Bhorat said. He highlighted the fact that the 4th Industrial Revolution was impacting mainly on semi-skilled workers who perform highly repetitive and standardised tasks.
The real growth in income among the lowest-paid workers was largely due to sectoral wage determinations, he pointed out. In some situations, the gains made in terms of better pay were undermined by job losses in the affected industries. The overall impact of wage regulation on equity was not always predictable, Prof Bhorat said.
The challenge to South Africa was to adopt and support growth policies designed to create a large number of relatively low-wage jobs within an environment increasingly defined by the 4th Industrial Revolution.
Prof Bhorat rated the Employment Tax Incentive (ETI) Scheme – which allows employers rebates for young workers – as a cost-effective way of stimulating job creation. Figures presented showed the ETI, which was initiated in 2014, supported more than 686 000 jobs.