No thanks – let’s give the dx220x a whirl
Choosing a new employee is a simple task. You place a job advertisement in an appropriate forum, short-list candidates from the hundreds of resumes received, conduct a couple of interviews and eventually sign an offer of employment. A couple of decades fr
An easy decision
After an initial screening process, you sit down to conduct a final interview with Simon, a 25-year old welder with five years experience. Simon is quite happy to remain a welder for the rest of his life. He’s good at what he does and is prepared to work the union-negotiated thirty hour week. And he’s quite happy with the ‘cost to company’ wage package on offer, knowing his union will see to inflation plus growth at renewal date. He will be as productive as a human employee can be, though allowance must be made for lower productivity during wage negotiations, sick days or when the heart and mind are ‘just not in it’. Try as he might, Simon will occasionally make mistakes that could cost the company millions in lost production or damages, or even claim a life.
For a mere R2 million you can recommend Sony Inc’s dx220x maintenance robot. The dx220x doesn’t require a monthly salary and works 24/7, allowing for a few hours downtime at manufacturer’s recommended service intervals. The dx220x doesn’t go on strike, doesn’t take sick leave and doesn’t make mistakes. And the purchase price can be capitalised and then written off against depreciation over a number of years. The clincher is the robot can fulfil a variety of core maintenance functions and can be ‘retrained’ with a few mouse button clicks. Sound unlikely? This could be the future we face. And it’s going to be accelerated in countries where trade unions have too much influence.
Employers under fire
Trade unions have been singled out as part of South Africa’s employment problem. They are indirectly responsible for higher-than-inflation wage settlements and escalating non-wage employment costs countrywide, as demonstrated by their impressive achievements in the recent Transnet and Eskom wage negotiations. Transnet workers went on strike until their employer capitulated to their wage demands, and bagged a two times inflation (and more) settlement of 11% across the board. Eskom – already chock full of some of the best paid workers in South Africa – was held to ransom by three separate employee unions. They demanded – and succeeded – in a healthy 9% annual increase fleshed out with a R1 500/month per employee housing subsidy.
The problem for South Africa Inc is these increases are secured without any promise of productivity improvement. If anything the result is a more militant labour force, prepared to down tools at the first sign of employer resistance. The impact of stronger trade unions on wages, employment and productivity is difficult to measure. But we’re seeing early signs of an unfortunate correlation: lower productivity and higher wages to surging unemployment.
Red tape costs billions per annum
Sapa recently published comment from Richard Pike, chief executive at employment specialist Adcorp. The Group’s June 2010 employment index confirms that between 2001 and 2010 labour productivity fell by 2% per annum, while real remuneration rose by nearly 3% per annum! “At present, real remuneration is increasing at a rate of 13.8% above the level that can be justified by inflation and labour productivity growth,” observed Pike. Companies are being forced to adopt labour-saving alternatives including automation and mechanisation. “Between 1960 and 2000, every percentage point of economic growth was reliably associated with a 0.62% increase in employment,” noted Pike. This ratio has been decimated in recent years, and for the five years beginning 2002, each percentage point of economic growth has resulted in a trifling 0.11% increase in employment!
Government ‘red tape’ is adding to the employers’ burden too. Apart from burgeoning salary bills companies have to contend with ever increasing non-employee costs. In recent years a raft of new legislation has driven these costs through the roof. Pike singles out the Compensation for Occupational Injuries and Diseases Act, Occupational Health and Safety Act, Labour Relations Act (1995), Basic Conditions of Employment Act, Employment Equity Act, Skills Development Levies Act and Immigration Act, among others. Adcorp estimates the total cost of administering South Africa’s labour laws now stands at R8 400 per employee per year! “It’s surprising, given the consequences, that regulatory impact assessments were not conducted prior to the introduction of these laws,” Pike said.
Appeasing unions versus solving unemployment
South Africa will have to make some tough calls if it hopes to successfully tackle the issue of unemployment. The first among these is whether a country with official unemployment of 26% can afford the employer rights currently extended to its citizens. Organised labour and government might have to make some difficult concessions that will make it easier for employers to hire and fire – thereby reintroducing accountability in the workplace.
Editor’s thoughts: As we scroll through the country’s leading Internet news portals we encounter hundreds of readers who refuse to employ due to union intervention and government red tape. They say they will hire more people when minimum wage conditions are lowered, and job protection legislation softened. Would you prefer a country with less labour rights and higher employment? Add your comment below, or send them to gareth@fanews.co.za
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