Johan Fourie's blog

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The slow demise of the farm worker

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The future of the Western Cape farm worker?

The farm strikes and social unrest in the Western Cape over the last week has created considerable emotional distress on both sides. Farm workers complain about their R70-a-day wages, while farm owners are aggrieved about the loss of output (remember, we are close to harvest season), threat to their security and destruction of capital (hundreds of vineyards and several buildings have been burned down). And then there are the other interest groups, the trade unions, the political parties (the DA governs the Western Cape, the only province not to be governed by the ruling ANC), and the media with their own vested interests and polarised audiences.

As always, emotive politics dominate the debate. COSATU, headed by the charismatic Tony Ehrenreich, calls for mass action against the “exploitation” of farm workers. The national Minister of Agriculture, Forestry and Fisheries, Tina Joemat-Pettersson, has said that through the strikes, the workers have shown that they will not be “oppressed”, that they won’t be “treated like slaves”, that they deserve “basic human rights” and that “we cannot have a province where there is still Apartheid” (these quotes are all from her spokesperson’s twitter account).  The Eastern Cape branch of the ANC has even called for a wine boycott, even though De Doorns produces table grapes, not wine.

The South African wine (and grape) industry has a notoriously bad history of labour relations, principally because it was built on slavery. Abolished in 1838, de facto slavery – in-kind payments, often with liquor (known as the dop system) – continued on many farms until the end of the twentieth century. A relatively recent book – Grape, by Jeanne Viall, Wilmot James and Jakes Gerwel – summarises this history very well (I reviewed it here). The practice does not continue today, of course, and is illegal: farm workers are now paid a minimum wage of R70 per day, although in-kind payments, like free accommodation, food and transport, are still often provided in addition to the minimum wages. (Helen Zille, premier of the Western Cape, has invited anyone that have proof of the dop system persisting to contact her personally and she will prosecute.)

References to “slavery” and “Apartheid” therefore does little to address the two core economic issues that are hidden behind the political posturing: 1) that R70 per person per day is, in fact, a higher than median wage given South Africa’s income distribution, and 2) that improving farming technology is increasingly allowing farm owners to substitute capital (harvest machines) for labour.

According to Treasury, 55.1% of South Africans earned below R1720 per household (in 2006 prices). If we assume that two members of the household work (and that there are no pensioners that earn a grant), then R70 a day would equal a minimum of R2800 a month. Farm workers in De Doorns are therefore NOT in the poorest 60% of South Africa’s population. Which is the reason for another tension: the massive migration of workers from the Eastern Cape and other rural areas where most of the poorest live without income opportunities, to towns in the Western Cape. The 8000 permanent workers in De Doorns are supplemented annually by 8000 temporary workers that are either from other provinces or from neighbouring countries. In economic jargon, the supply of labour is outstripping the demand, which forces prices down.

Secondly, better technology allows farm owners to produce more output with fewer inputs. Labour used to be the most crucial input, but it isn’t any more, as anyone attending a recent farm fair would know. Incredible harvesting machines (see picture) now allow farm owners to substitute the work of hundreds of labourers. And as an anonymous De Doorns farm owner recently noted, these “machines don’t complain, work all day, don’t ask for wage increases and don’t burn down your place.” Instead of employing 200 farm labourers, a harvesting machine and 20 farm labourers (now earning a much higher salary because they are much more productive) is a much more lucrative option for farm owners.

So what will happen? The farm workers, supported by the trade unions and the Minister, will request national government to increase the minimum wage to R150 a day.  Anyone with Economics 101 should be able to predict the consequences: a minimum wage creates a price floor, which creates unemployment. Thus, I suspect that if 16000 workers work this year, several thousand less will be required next year. And these numbers will continue to decline over time. Even if they still “only” receive R150 per person per day, those lucky enough to have a job will be in the top 30% highest income earners in South Africa. But what prevents them – or those that organise them – to demand for even higher wages? This risk will further encourage farm owners to switch labour for capital.

More sadly, those that won’t be able to find a job next year, won’t be able to find any work anywhere else in South Africa for below R150 per day, because it will be illegal for farm owners to appoint them at a lower wage, even if they would be willing to work for one. I suspect this will only cause greater tensions between existing farm workers and migrant arrivals. Perhaps this is what Joan Robinson referred to when she said: “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

Instead, we should be realistic about the job prospects in the agricultural sector. Job creation can only happen if output expands: redistribution (between capital and labour) will only result in substitution (of labour with capital). For rural salaries to keep track with urban salaries, rural productivity will have to improve and this usually happens slower in the agricultural sector than in manufacturing and services (which are mostly urban industries). Urbanisation will fasten. The best any politician can do is to ensure that the kids of these workers have access to excellent schools, so that they can profit from their own productivity.

Increasing the minimum wage is a short-term solution. In the medium run, a higher minimum wage will only destroy jobs. If Minister Joemat-Pettersson and Mr Ehrenreich really want to benefit farm workers, they should rather worry about another legacy of Apartheid – the poor performance of rural schools, especially in those provinces where many of the migrants come from – and less about government policies to change the minimum wage. Unfortunately, the latter is much easier to do, and popular to sell.

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Written by Johan Fourie

November 14, 2012 at 12:28

34 Responses

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  1. […] Liberal economists are correct to point out that wage increases in the agricultural sector, now very much in the offing as the state’s response to the farm workers’ strike, will even more reduce rural employment in the long term and the likelihood that workers in rural areas will have a chance to find employment. However, it is cynical that those who benefitted from slavery and apartheid wish an uncomfortable truth about the past away and admonish us that the laws of neoliberal economics are such that today’s workers should be happy that they can be exploited, as there are always those who cannot even work, and are even poorer and more desperate to take up any work, how little the pay. The same comments were made about the Marikana miners. If the solution to reducing rural poverty, in South Africa and across the globe is only sought by increasing production, as neoliberal economists allege, then little can be done to sustain a decent living for all. Rather, a paradigmatic shift is called for and the current administration’s infatuation with the developmental state or with China as a model to emulate do not show signs of new thinking. In contrast, as the proponents of  an economy that is based on human needs argue, the “project of economics needs to be rescued from the economists” — the nefarious influence of neoliberalism on economics has to be replaced. Even within the Cape farm region, initiatives involving farm workers and the equitable distribution of work, profits, land and other resources, offer an alternative to current, neoliberal practices. […]

  2. […] is exactly what I predicted two years ago when, after the labour unrest in November 2012 on Western Cape wine farms, the government […]

  3. […] that connects our farmers to this growing market, and farmers’ willingness to invest in new technologies, this will […]

  4. […] know you want to know which one of the 100 is my favourite post. Statistically it seems obvious: The Slow Demise of the Farm Worker received a whopping 6,468 views, 34% of all the posts on my blog (if the figures don’t make […]

  5. […] but this is still just an hypothesis.) Such lessons may have important implications for the current episode of labour unrest and mechanisation on […]

  6. Johan I an economist like you. (ex RAU). I have also been a member of the Pan Afrincanist Congress of Azania and have had a successful carreer accumulating Millions in the software business. I currently won and run the TurboCASH Accounting Project.

    I am very familiar with neo classical analysis and the inevitable outcome of the arguments. I have modified my analysis to approach issues in South African econiomics to accomodate the Africanist view. On the question of the wine farmers, you will see that we come to simialr outcomes.

    http://azania.ning.com/profiles/blogs/pac-calls-to-use-youth-for-boland-grape-picking?

    What I would like to encourage forward thinkers like yourself, is rather than make comments about the erroneous thinking of people like COSATU, use you obvious ontellect to construct African solutions to the obvious problems.,

    Philip Copeman

    February 4, 2013 at 12:50

  7. Johan, A blind man can see what the ANC and Cosatu are up to. I think it is high time that the farmers start picketing outside the homes of corrupt ANC and Cosatu members. This constant corruption by MP’s etc has gone way beyond the realm of normalicy to the point of blatancy. The true bushman, hottentot ,Khoi gene lies in the afrikaner, cape coloured , busmen and part of the asians. I imagine it would be a great idea for all to have DNA tests done to prove this theory once and for all and shut the ANC up. Enough of hearing about being chased into the sea and that we are mere settler’s.. This is blatant intimidation on their part and time for South Africans to get their act together. Gold has dwindled from 1000 tonnes to a mere 200 tonnes, we are no longer the bright star of africa.

    K. Plund

    December 2, 2012 at 19:05

    • Johan the article is very well-written and objective.
      I believe that the farmers who have suffered loss or damages as a result of what i deem “irresponsible politicking” should consider bringing damage suits against AT LEAST Ehrenreich, COSATU, the ANC and the Trade Union BAWUSA.
      This is not about “living wages” or any of the polticical “hot-button” matters; it is an obvious and simple attempt at destabilising the DA Government in the Western Cape.

      Daniel

      January 19, 2013 at 12:35

  8. […] as explained by Johan Fourie, economics lecturer at Stellenbosch University, in his blog post The slow demise of the farm worker. Fourie points out that increasing the minimum wage will in the medium term simply destroy jobs. […]

  9. […] Liberal economists are correct to point out that wage increases in the agricultural sector, now very much in the offing as the state’s response to the farm workers’ strike, will even more reduce rural employment in the long term and the likelihood that workers in rural areas will have a chance to find employment. However, it is cynical that those who benefitted from slavery and apartheid wish an uncomfortable truth about the past away and admonish us that the laws of neoliberal economics are such that today’s workers should be happy that they can be exploited, as there are always those who cannot even work, and are even poorer and more desperate to take up any work, how little the pay. The same comments were made about the Marikana miners. If the solution to reducing rural poverty, in South Africa and across the globe is only sought by increasing production, as neoliberal economists allege, then little can be done to sustain a decent living for all. Rather, a paradigmatic shift is called for and the current administration’s infatuation with the developmental state or with China as a model to emulate do not show signs of new thinking. In contrast, as the proponents of  an economy that is based on human needs argue, the “project of economics needs to be rescued from the economists” — the nefarious influence of neoliberalism on economics has to be replaced. Even within the Cape farm region, initiatives involving farm workers and the equitable distribution of work, profits, land and other resources, offer an alternative to current, neoliberal practices. […]

  10. Excellent analysis on what’s happening in SA agriculture – well balanced, not scaremongering, simply pointing out the pitfalls of the current ‘slash and burn’ strategy. You’re quoted in a recent post on the Excelsior Wine Blog http://excelsiorwineblog.wordpress.com/

    excelsiorblog

    November 20, 2012 at 15:17

  11. […] Johan Fourie Blog – The slow demise of the farm worker […]

  12. […] post on the Cape Winelands labour unrest generated huge interest from a wide spectrum of readers (a big thank you to everyone who retweeted […]

  13. It is a very good arguement that you make Johan. I can’t think of anyone who wants to work for R70 per day. But on the other hand, it is employment and better than the minimum living of unemployment.
    If the wine industries in countries like Australia and the USA are looked at, it is clear that technology and machinery replaced much of the human component. It is not about this being right or wrong, but in the end it is about economics to be competitive. It is not about the encouragement of capatilism, but about how the world is changing and politicians, farmers, farm workers and the rest of us having to adjust to that. R70 per day is not enough, but R70 plus a proper education and opportunities for one’s family and children might be a step in the right direction.

    scaramouche

    November 16, 2012 at 14:12

  14. Great article Johan.

    As a boy from the Boland my heart bleeds for the community, the farmers, the workers and the industry. That being said the point you make about technological advancement and the use of capital over labour is a massive reality in the 21st century. I grew up int he Boland and Western Cape but now I live in Australia and I have observed the progression of this reality over here. Now I don’t want to talk about the merits of Australia vs South Africa or about my reasons for leaving. That is not important at all. But allow me to paint a picture of what is happening over here. Bear with me please.

    The minimum wage here is approxiamately $16 per hour therefore R300 000 per annum. Which is one of the highest in the world. This makes the labour costs of companies competing in the world market incredibly high. In other words, This has occured through unionisation, political tampering with the minimum wage & socialist governance. Sound familiar? Australia can’t compete with SA in regards to labour intensive practices like farming or manufacturing, because it’s much more cost effective in SA. Even more so in Asia. The mining sector over here is probably one of the most lucrative industries in the world. A labourer (without anything more than a matric certificate could earn R700 000 – R1 000 000 per annum! Even to the average Australian who earns R630 000 per annum this is ridiculous. While this rise in labour cost has occured the companies (farmers included) are utilising increasingly more technology to substitute labour because they just can’t afford to employ people who need to take sick leave, complain, are unproductive etc. BHP & Rio Tinto (the two largest mining companies in Australia) are mechanising their fleets of trucks on their iron ore & coal mines. They operate the trucks in control centres 1000’s of kilometres away in an office in the city by a hand full of people. So they have reduced their exposure to volatile labour by completely removing the need for labour at all!

    Now I do understand that the scenarios (Aus & SA) are very different but the reality and trend is that mechanisation and substitution of capital over labour are becoming increasingly necessary all over the world. I don’t know what the grand solution is but I believe the core of the solution is based on a solid educational system. So hopefully the national government get its act together so that hopefully in 20 years time we are not facing riots of people complaining that they can’t find any jobs that pay R150 a day because there aren’t any going around. One can wish though.

    That’s my 2c. Klaar!

    Homegrown

    November 16, 2012 at 10:40

  15. A sad state that we are in. Wish the guys at the top will start to see the bigger picture and less of themselves.

    Anne-Marie

    November 16, 2012 at 10:02

  16. We have just had an increase in minimum wage of over 100% in Zambia. Maybe studying the effects as they unfold will give you an idea of what may happen there.

    NDB

    November 16, 2012 at 09:47

  17. Ek het dit nou nog nie self gesien nie, maar ek verneem dat al bestaan die dopstelsel nie meer nie, is daar ‘n reël wat boere toelaat om vir ‘n sekere hoeveelheid tyd per week alkohol op die plaas te verkoop.

    Ingrid

    November 15, 2012 at 18:19

  18. […] verhoog, gaan ons bloot net iewers ‘n stuk tegnologie kry om die werk goedkoper te doen. Wat beteken dat daar volgende jaar minder mense aangestel gaan word om druiwe te pluk. En dieselfde geld vir die myne. Iewers is daar ‘n masjien wat die werk goedkoper gaan doen. […]

  19. Very good article and well said.

    Unfortunately, even though the dop system is no longer in use, a lot of farm workers are still alcoholics. I know of one farm in particular where the workers spend their entire wage on cheap wine every Friday and stay drunk until Monday morning. Their accommodation and food is subsidized, and the farm owner would like to increase their wage, but when he does then they simply buy more wine and don’t come to work for days because they’re still drunk.

    When the farmer brought in Dop Stop to help them, they refused, saying that the neighboring farm workers were mocking them.

    It’s a sad position for these people because they are still slaves to their own addictions.

    It’s all good and well to say that people should earn a better wage, but that’s not really the problem here.

    Mark

    November 15, 2012 at 07:50

  20. A good analysis of the current situation, Johan, but what you do not account for, however, is that similar to the mining sector, agriculture requires a paradigm shift. The old economics that you extrapolate on simply won’t work. We simply have to consider the real value of labour, even if it involves short-term job losses. THis should force us to open other alternatives, instead of just wailing about the negative effects of a minimum wage. Farmers, very soon, will start paying the real value for electricity and water, which will fundementally challenge their current models of productivity as well as profit margins, not to mention the feasibility of mechanisation. There are many different ways these factors could play out, but scaremongering in order to maintain an unsustainable system is not progressive thinking.

    Windreaver

    November 14, 2012 at 19:16

  21. uitstekend gestel johan, wat wel kommer wekkend is, is die feit dat hulle deur politici gevoer word om die stakings so geweldadig moontlik te maak. as hulle net van die begin af die stakings rustig gevat het sonder om skade aan te rig, mense seer te maak, geboue af te brand dan sou die prentjie seker heel anders uitgedraai het. dan sou die boere seker meer tegemoedkomend gewees het om die lone op te skuif. nou brand hulle skure af, wingerde, beseer onskuldige mense…. en hulle verwag vergoeding ….. as daar wel boere is wat hulle werkers verkeerd behandel, dan kan ek verstaan hoekom , maar nie almal kan oor dieselfde kam geskeer word nie. As hulle wel hoër lone ontvang, van waar af moet die geld kom as hulle dan hulle inkomste vernietig. nou intimideer hulle werkers wat wil werk, brand hulle enigste besittings af en dreig hulle. maak my afrikaner hard so seer om te sien hoe mense hulle self in die voet kan skiet en dan nog ander mense seermaak daardeur. Die ding was haarfyn beplan…

    blondie

    November 14, 2012 at 16:59

  22. Dankie Johan,
    ek dink jy som die situasie mooi op. Wat kommer wek by my, is die feit dat emosionele woorde soos “slavery” en “oppressed” baie ligtelik gebruik word, wat ewe skielik alle boere in ‘n slegte lig stel. Dit word van dieselfde mense gesê van wie daar verwag word om 1 miljoen nuwe werksgeleenthede te help skep (daar is al verskeie kere verwys deur verskillende regeringslui dat die Landbou soveel nuwe werke kan skep; ek praat onder korreksie, maar sover ek weet het daardie getal gedeeltelik sy oorsprong by Prof. Mohammed Karaan van Stellenbosch). Die harde realiteit is egter dit: boerdery is ‘n besigheid en as arbeid vir ‘n besigheid hoofbrekens besorg, dan word daar na maniere gekyk om arbeid te verminder. Indien die arbeidsituasie nie opgelos word nie, gaan die Landbou nie nuwe geleenthede skep nie, maar eerder duisende tot niet maak. Natuurlik help dit ook nie enige werkers dat landbou-infrastruktuur en produktiewe grond in die huidige betogings vernietig word nie.
    In kort: die goedkoop politieke uitsprake is baie kortsigtig en gaan daartoe bydra dat daar nie noodwendig ‘n ‘slow demise’ vir plaaswerkers gaan wees nie; vir baie van hulle gaan dit eerder ‘n ‘abrupt end’ wees.

    Neill Goosen

    November 14, 2012 at 16:29

  23. Reblogged this on dalenatjie se sketsblad and commented:
    Ek dink hierdie som die situasie taamlik goed op. Sterkte aan die boere wat tans hierdeur geaffekteer word.

    dalenatjie

    November 14, 2012 at 16:09

  24. What isn’t said as well as that the cash they receive is not the full package. Most of them have free housing, free schooling, free transport, free water, free electricity, free food packages. There are farmers that exploit workers, but most of them don’t. What is also relevant is that the workers counterparts in the world, work with less than 50% of the work force, doing the same thing. Whenever there is a strike, productivity is never put on the table. Which will force farmers to automate and more jobs will be lost. The media unfortunately just goes for the sensationalism and what sells a good story, rather than what all the facts are.

    Well written article and great insights.

    Isabella Meyer

    November 14, 2012 at 15:57

  25. Uitstekend geskryf. Hierdie is als net politiekery.

    Boerseun

    November 14, 2012 at 15:46

  26. Uitstekende skrywe, dankie!

    MaanKind

    November 14, 2012 at 15:15

  27. Ek kan saamstem – maar graag wil ek hoor HOE lank gaan “apartheid” nog MISBRUIK word – daar is al een en ‘n half generasies deur die volle skooltermyn van 1994 af ??

    muffia

    November 14, 2012 at 15:14

    • ek vra daai selfde vraag… die generasie van vandag word deur die ouer generasie opgestook oor ou koeie wat al lankal begrawe is… ons moet seker maar net hoop en bid dat dit gou sy einde sal teenkom.. dit kan nie langer so aangaan nie.

      blondie

      November 15, 2012 at 07:43

  28. Baie dankie, Johan Fourie, vir ‘n baie ingeligde blogstuk.!!

    Toortsie

    November 14, 2012 at 14:59

  29. Reblogged this on Kouevuur and commented:
    Ek wou iets skryf oor die stakings van die plaaswerkers, maar beter as hierdie kan ek dit nie stel nie.

    Son

    November 14, 2012 at 14:57

  30. […] The slow demise of the farm worker. […]

    • Hi, please could you explain why you don’t use the latest Census results to ascertain the average SA income? The Census results imply that the average national household income is about R8600pm, which would imply that farm workers are way below average. I’m not an economist so would appreciate an explanation. Thanks.

      Lee

      November 14, 2012 at 16:27

      • There is a difference between “average” and “median”, which is what Johan is referring to. Average is the salaries of everyone put together, divided by the number of people. If you have a few people earning way above that, the average is skewed much higher than what the average man on street earns. The median is ranking everyone’s salaries from high to low and taking the one in the middle.

        Kari Schoonbee (@karischoonbee)

        November 14, 2012 at 17:17


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