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.