COSATU and the poor

Does COSATU really care about the poor? If you read between the lines in Francis Teal’s latest CSAE blog post, the answer is a definitive no. He argues that labour unions – in the spirit of the International Labour Organisation – claims to fight for “decent jobs” for poor people. It sounds noble, but it has the effect that only “the lucky (well-educated) few who get these good jobs” benefit at the cost of the rest. These capital-intensive “decent jobs” could have benefited millions more. He cites South Africa as prime example: while the country “has by far the largest number of decent jobs in sub-Saharan Africa, it also has one of the highest unemployment rates in the world.”

Instead, consider Ghana. Poverty levels have fallen dramatically, mostly as a consequence of what Teal labels “bad jobs”, i.e. jobs that “paid poorly, had no security, weren’t unionised (unlike those in South Africa) and provided a very volatile income stream”. However, they reduced poverty because they could be rolled out to many more individuals who still found them an improvement on what was previously available to them.

Ironically, COSATU knows this. In a speech early in 2011, Vavi noted “the creation of decent jobs must be central to any strategy to get rid of poverty. To the individual, employment not only brings an income but self-respect, self-confidence and personal dignity. To society, lower unemployment brings more people into the market economy as they spend their wages on goods and services, which in turn creates more new jobs to meet the growing demand.” Vavi also knows the answer to this dilemma: “The main reason why we have failed to create such jobs, and on the contrary have been losing jobs, is that we have remained trapped in an economic structure which we inherited from the days of colonialism and apartheid.”

Correct. Ignoring the political benefits of trade unions, their rise during the 1970s imposed a high wage structure on the economy that is responsible for the high unemployment rate. (Of course, the high wage levels can be justified if human capital improves, increasing productivity. But given South Africa’s sorry state of education, this has not happened.) COSATU is a trade union and it is their obligation to fight for the rights of their members, which they say now total 2 million. It is, never was and never should be their duty to care about the unemployed. If it was, they could not respect the wishes of their members.

The truth is that South Africa’s stringent labour laws and high wage structure is the cause of our high unemployment. High unemployment is the cause of poverty. If you want to reduce poverty, as Francis Teal explains, ignore COSATU’s call for “decent jobs” (and high wages). Any job will do.