Bargaining: Ammunition to argue for your wage increase!

This year wage agreements in all Numsa’s sectors expire. Read these pages to arm yourself for negotiations in 2007.
When workers think about the wage increases that they want they are influenced by what they experience in their daily lives.

The bulk of Numsa members are affected by unemployment on a daily basis – in their own households occupants are unemployed; their neighbours, their relatives and friends are unemployed. More than 60% of the unemployed have never ever had a job in their lives – this means that they cannot claim UIF and they rely on workers like Numsa members to bail them out. The statistics and information that you find on the next few pages is an edited version of a Naledi bargaining report completed in February 2007. These pages give you some more background on the general economic situation.

What Samwu says:

What indicators if any do you use to help you motivate your wage increase demand to employers?

What Cosatu says:Wage bargaining should be seen as part of the fight for a more equitable society, that challenges the logic of capitalism.

Solidarity action and trade union unity is crucial to the success of the Living Wage Campaign and the CEC resolved that we should do better to mobilise the wider movement in support of workers in the front line of struggle for a living wage.From Cosatu CEC statement March 1 2007

While we do use CPIX, minimum living level indicators like the MLL and SLL, inflation, settlement levels, wage comparisons, directors pay, central government transfers to local government etc. a lot of our motivation focuses on what we call the struggle for a Living Wage.

The approach takes the form of a combination of philosophical, ideological and economic arguments in support of the notion of a living wage. Issues we cover (including presenting facts and figures) include:

Unemployment levels;
Inequality levels – Gini Co-efficient
South Africa as a middle-income country of enormously stark contrasts;
The key features of the extreme inequality that exists in SA – illiteracy rates; infant/child mortality rates; HIV/AIDS devastation; how women and children carry the biggest burdens; food insecurity; the housing crisis; family fragmentation etc.

Obviously the strength of our organisation at the time of negotiations – that is the level of mobilisation and willingness to embark on industrial action – impacts on the tone and outcome of the negotiations.

Roger Ronnie, Bargaining Coordinator, South African Municipal Workers Union

Employment
Each year more than 800 000 new workers enter the labour market (some straight from school, some from tertiary institutions).
Total employment between March 2003 and March 2006 increased from 11,304 million to 12 million (ie 230 000 per year). Jobs were created in wholesale and retail and construction and finance sectors.
So there was a shortfall of more than 500 000 jobs a year that were needed but not created.
Overall 71% of workers have permanent jobs compared to 29% that are casual (includes short term contracts, casual workers) Mining has the highest percentage of those who have permanent jobs (90%) followed by community at around 85%. Construction has the highest percentage of casual workers (60%) followed by agriculture, private households and retail.

Figure 1: Permanent and non-permanent employment, March 2006

Source: Calculated from the labour force survey, www.statssa.gov.za.

Unemployment
the official definition says there were 4.4 million individuals unemployed (26.4%) in March 2001 compared to 4.2 million (25.6%) in March 2006. Official unemployment dropped by just under 1% or 138 000.BUT
using the expanded definition of unemployment (includes those people who have given up looking for jobs), 7.1 million individuals were unemployed in 2001 compared to around 8 million in 2006, an increase of about 849 000 unemployed individuals.
75% of the unemployed are under the age of 35
the unemployment rate for Africans is the highest at 25%, and higher for African women
the majority of the unemployed (63%) have never worked before. This is 2.7 million individuals, mostly young people (74% of total) who have no work experience.

Official and Expanded Unemployment: March 2001-March 2006 (000s)

Source: calculated from the Labour Force Survey, March 2001, www.statssa.gov.za

Workers’ Share of National Income

The chart below sketches workers’ share of national income relative to the share of profits. Between 1998 and 2002 workers’ share of national income dropped from 50% to under 45%, compared to the increase in profit from just under 27% to around 32%

Figure 2: Workers’ Share of national Income: 1998-2005

Source: calculated from the South African Reserve Bank Bulletin, December 2006

Inflation and wage increases
Numsa’s wage settlements have been above the CPI-X inflation rateBUT
the CPI-X measures an average household. It says that an ‘average’ household spends 25% of its income on food and 15% on transport.

As the Labour Research Service (LRS) has argued, it is more appropriate and realistic to shift our focus towards inflation on other basic commodities such as food, transport and medical care, rather than concentrate on the CPIX alone. When calculated in annual terms, the cost of food between January 2006 and January 2007 rose by almost 9% (see below) and significant cost increases were recorded on specific items as shown below.

Table 1: Annual inflation increases in the cost of food

Item

Percentage annual increase between Jan 2006 and Jan 2007

Food (Average increase) 8,6%

Meat

+17,3%

Fish and other sea food

+11,7%

Sugar

+8,3%

Grain products (mealie meal, bread etc)

+ 7,6%

Fats and oils

+ 10,1%

Milk, cheese and eggs

+ 4,2%

vegetables

+4,1%

coffee, tea and cocoa

+2,6%

StatsSA January 2007 CPI

The Financial Mail in its March 16 2007 edition predicts that food CPI could hit almost 23% this year! Between January 2006 and January 2007, the cost of non-food items increased by:

transport (4,5%),
fuel and power (8,3%),
education (7%), and
medical care and health (5,6%).

The average wage settlement of just above the annual rate of inflation does little to off-set the real increase in the cost of basic necessities.

How Numsa members spend their income!Numsa’s snapshot survey off 100 members done in the last half of last year shows that:

members spend much more than 25% of their income on food. Many spend almost all of it on food!
members spend anything between 15% and 25% on transport

Maize prices rocket! Over the past six months white maize has increased by 75% (staple food of most Numsa members)

yellow maize (used as a feedstock for meat producers, poultry and dairy) has risen by 70%
wheat by 20%
Executive Pay – The Yawning Wage GapWhile wage increases and benefits for workers have remained marginal and linked to the CPI-X rate, remuneration for directors and company chief executive officers have continued to rise by astounding amounts – way above the CPIX level!

The LRS has pointed out that remuneration for executive directors increased on average by 12% between 2004 and 2005 excluding gains for share options. In the table below, we compare average executive pay with remuneration for workers in four select sectors.

Table 3: Comparative remuneration for executive officers and workers in the private sector (2005)

Sector

Average pay for an Executive Director

(R)

Average pay for a non-Executive Director

(R)

Average pay for a CEO

(R)

Average minimum wage for workers

(R)

Construction

2,9m

214,000

3,8m

15,600

Food and beverage

3,9m

262,000

6,2m

27,900

Mining

7,8m

712,000

11,6m

27,600

Retail

6,9m

206,000

17,9

19,000

Sources Compiled from the LRS: Bargaining Monitor, Sep 2006, p14-15.

In a 2006 study: Remuneration of Chief Executive Officers: An overview of JSE listed companies, Solidarity found that:

As at the end of 2005, the average Chief Executive Officer (CEO) of a company listed on the Johannesburg Stock Exchange (JSE) earned between R3 and R4 million per year or between 35 and 53 times the total remuneration of the average worker;
The average basic salary of a CEO ranges between R1,5m and R1,7m per month;
Basic salaries of CEOs increased by an average of 18,5% between 2004 and 2005; and,
No direct relationship could be established between the company profits and the salaries, bonuses and total emoluments of CEOs.

The table below shows the executive packages of CEOs in some Numsa-organised companies.

Table 2: Salaries for Chief Executive Officers in 50 JSE listed companies

Company

Package (Rand)

Gains on share options

Total package

Barloworld

6,9m

4,2m

11m

BHP Billiton

30,9m

0

30,9m

Mittal Steel

3,5m

0,9m

4,5m

Nampak

5,0m

0,03m

5,0m

Source: Crotty and Bonorchis: Executive Pay in South Africa: Who gets what and why? (Figures have been rounded)

This trend of awarding high increases to executives continued in 2005/6 with studies showing that executive pay rose by as much as 34% in this period. This in a period when the CPI-X for January 2005 to January 2006 was as low as 4,3% and where Numsa’s lowest paid members received increases through national agreements of CPI-X plus 2%.

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