WAGE DEMAND: Farmworkers march at De Doorns on Tuesday, ahead of a meeting where the Congress of South African Trade Unions addressed the workers. Picture: THE HERALD
WAGE DEMAND: Farmworkers march at De Doorns on Tuesday, ahead of a meeting where the Congress of South African Trade Unions addressed the workers. Picture: THE HERALD

IN HOPING to solve the Western Cape farm revolt with a stroke of a pen, the government has dug itself into a hole from which it will be difficult to climb out.

Last week, against the advice of farmers and with hardly a thought for the economic implications, Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson struck a deal with the Congress of South African Trade Unions (Cosatu) and other trade unions that the minimum wage for agriculture would be raised as soon as the legal processes could be completed.

The process started on Friday with the publication of two notices by Labour Minister Mildred Oliphant: the first cancelling the existing sectoral determination and another announcing that the Employment Conditions Commission, which advises her on wage levels, will this week begin a review of wages in the sector.

But, as morally reprehensible as a wage of R70 a day might be, there is a disturbing amount of evidence that a higher wage determination will have a deleterious effect on employment in many sectors of agriculture and on the lives of rural people.

The first piece of evidence is from farmers themselves. Organised agriculture and individual farmers, like any employer, can be expected to argue the case against affordability.

Their submissions both to the commission and in the series of public hearings it must hold, will form an important part of the decision-making process.

So, of course, will submissions by trade unions, workers and other social organisations.

Agri-WesKaap CE Carl Opperman says he has no doubt that higher wages will lead to "a total restructuring of the labour market in agriculture".

"Any surplus labour that farmers have accommodated for social purposes to help people will be out. That is between 20% and 30% of the total labour force, both permanent and seasonal."

One way out of this situation for the commission and for the labour minister will be to consider a regional determination, which takes account of conditions in different areas and the profitability of products. At present there is a single determination for the entire sector.

There have been some hints that government thinking is moving in the direction of differentiation.

In meetings with organised agriculture last week, Ms Joemat-Pettersson unsuccessfully tried to argue the case for differentiation. But according to farmers, differentiation in regions was tried before and caused havoc and instability in labour relations.

Cosatu Western Cape general secretary Tony Ehrenreich and the coalition of independent unions involved in the dispute have also advocated a regional approach to wages.

Table grapes — the commodity produced in the De Doorns area where the dispute began — are among the most profitable of all agricultural commodities, although the extent of that profit is fiercely debated.

Mr Opperman says profitability in the valley depends on economies of scale. "Big producers are okay, but the smaller ones are marginal. According to the books that have been opened up to me, a third of farmers in the Hex River Valley will be in trouble with the bank if wages increase even by R10," he says.

Jan Theron, co-ordinator of the Labour and Enterprise Policy Research Group at the University of Cape Town (UCT), agrees table grapes stand out as a more profitable product. But, he says, wine farming and wheat in the Western Cape are both "marginal" industries that are "really feeling the pinch".

Mr Theron says that regional differentiation in wages would best be introduced through establishing genuine localised bargaining between farmers and their labour. Real collective bargaining, instead of lobbying the government or the commission, would be a more rational way of setting wages. In such a situation, real tradeoffs — such as between labour costs and mechanisation — could be properly weighed up.

For instance, while the table grape industry cannot easily mechanise because human labour is needed to trim, shape and pick bunches, the wine industry could easily do so.

Higher wages for wine farmers is likely to put paid to the mechanisation debate, Mr Opperman says.

"We have been staying away from mechanisation because we know the country needs jobs. But a wine farmer who uses 200 people for the harvest could mechanise and then won’t even need five people. If wages go up there will be a massive cost benefit that will occur in favour of moving to machines," he says.

In further evidence that employment in agriculture is very sensitive to wage increases, a study by UCT professor Haroon Bhorat and the Development Policy Research Unit in July found that the introduction of the minimum wage in 2003 led to a "significant" drop in employment.

Prof Bhorat looked at employment patterns both before and after the minimum wage was introduced.

While wages rose by about 17% as a result of the new law, employment fell significantly.

The probability of a rural dweller being employed as a farm worker in the period following the law being introduced dropped 13%, says the research.

Against this backdrop, the commission and the labour minister face a difficult choice.

Farm workers, like all poor people, have seen their real incomes eroded in recent years.

The commission, in its last report, reflected that the consumer price index measure does not fairly reflect the pressure on incomes spent largely on food and hence decided on a 9.3% increase, despite only 6% inflation.

But other sources say food inflation for poor people has been astronomical. The University of SA’s Bureau of Market Research says that last year the price of maize meal rose between 41% and 64%, depending on the quality. Other basics such as oil and sugar rose 10%.

Adding fuel to the fire are the desperate conditions in informal settlements where the vast majority of farm workers live.

This puts the protests — which have drawn in a far wider community than just the farm workers — in a different light. While the temptation will be for the government to pressure the commission into significantly raising the wage level, the medium-to long-term outcome of this for rural dwellers could be frightening.