Lonmin’s ‘poor’ workers are not as poor as they think
IN SOUTH Africa, the picture is often of poverty — and particularly the low wages of workers while bosses and shareholders earn millions. Even the evening news clips of teachers on strike last year showed teachers stating that they are the poorest of the poor. And more recently, newspaper headlines screamed that people died for R4,500 a month or that the striking miners wanted only R12,500 a month.
Meanwhile, last week Statistics SA published a document called Labour Market Dynamics, which shows that the median worker earns only R3,000 a month. Moreover, only 59% of workers have a pension fund and about 40% have medical aid and, surprisingly, only 77% have access to the Unemployment Insurance Fund. Fewer still would have all three, let alone a bonus or other allowances.
So according to our official statistics, the rock drill operators that embarked on the illegal strike at Marikana, as they net only about R4,500 a month (after deductions and not taking into account benefits, monthly allowances and bonuses), are actually in the richer half of earners when measured by official statistics — and, as we all know, their total package is probably only half their true gross earnings.
Using gross earnings, rock drill operators in South Africa would be in the top 25% of formal sector earnings, according to these statistics. The top 25% of employees, according to Labour Market Dynamics, start with earnings of R7,500 a month and the top 10% start at R15,000, indicating that rock drill operators may be in the top 20% of employee earners on this scale.
Moreover, only four out of 10 adults work in South Africa. Unlike the world average, where about two-thirds of adults work, the country has a very low employment rate. According to the Stats SA bulletin, only 7,3-million adults work full time in the formal sector. These are the adults who earn the most in South Africa and therefore make up less than 23% of the working age adult population of 32,9-million.
On the current information from Stats SA, rock drill operators are therefore earning in the top 25% of formal employees. As formal, full-time employees make up less than 23% of adults, we may be talking about the top 6% of adult income — frightening!
These official figures are somewhat understating salaries, as people confuse gross and net pay and often even discretionary spending. I suspect the R3,000-a-month median to be a red herring and probably, like our rock drill operators, many others also forget pension fund contributions, medical aid, taxes etc.
Using data from the South African Revenue Service, the Treasury, BankservAfrica and various other payment sources, it becomes clear that a median salary for full-time employees in the nonfarm formal sector is about R10,000 a month, although the Labour Dynamics Survey states it as R3,000 a month. So rock drill operators get a salary typical of the formal sector.
But that still puts the rock drill operators’ salaries into the richest 12,5% of adults, as only about 23% of all adults are full-time employees and only about 2% of adults are employers — many of whom earn less than the rock drill operators.
There is no other way to put it: in South Africa, when someone in the formal sector goes on strike, we are probably talking of the "richest" quarter of adults. Simply put, in South Africa, only the "rich" can go on strike — the poor are not employed and many in the middle class are in the informal sector.
There is no doubt rock drill operators do dangerous work and they are worth a lot to the companies who employ them. The problem is that, as with many other formal-sector employees, they are not the poor in the South African context, nor in the emerging country context. In fact, the way things are at present, about 80% of formal sector workers are part of the richest 20% of the population in South Africa. Most of the top 20% of income goes to the formally employed.
So while Lonmin’s rock drill operators might earn a little less than rock drill operators on other mines, this means very little in the bigger picture, as they earn a typical formal salary.
While the shacklands surrounding Marikana look very bad, the fact is that, according to Stats SA’s General Household Survey (2011), half of all rentals there are less than R1,000 a month and shacks tend to be let out for less than R500 a month. Somehow the miners’ R1,850 housing allowance goes beyond paying rent — again, according to official data.
At a recent debt counsellors’ conference, I was told that many people just do not know how to handle money and often get into trouble. Despite the thousands of people in debt counselling, more than 500,000 people still had debt judgments against them last year. In many cases, these debt judgments are claimed at the company level, as are maintenance orders, etc. Along with microloan payments, pension, medical and union fees, very often people have more than 70% of their salaries deducted before they get the money in the bank.
A few years ago, I did some work that showed that a R7,500-R8,000 salary was very much at the halfway mark of formal salaries in South Africa. Today that number is probably about R10,000 a month. What I am relatively sure about is that less than 60% of formal employees get much more than R10,000, which translates into less than 15% of all adults in the country.
This does not lessen the pain of what happened at Marikana, but it is time to say to people that not everyone is as poor as they are portrayed to be. Most employees in the formal sector should have pension and medical aids too. This is normal around the world.
In eight out of the 30 Organisation for Economic Co-operation and Development countries, teachers’ starting salaries are lower than that of the average rock drill operators’ gross salaries in purchasing power parity terms (without bonuses). Greek teachers now earn less than €800 a month after many salary cuts. Never mind emerging markets such as Lesotho, where manufacturing wages are about $127 a month. In India, hi-tech manufacturing workers earn about R6,000 a month — and these jobs are among the highest paying.
What we need above all is leadership — leadership that informs people that they are not as poor as they have been led to believe. Based on the hard facts, the people who sadly died may have thought twice about embarking on an illegal strike if they knew that their salaries are actually very much in the middle in the formal sector and that, taking into account South Africa’s low employment rate, they are actually part of the "rich".
Leadership also means addressing the facts — not just adding to the confusion by repeating the wrong information, talking inaccurately about "poverty" and perpetuating people’s belief that they are just victims.
The unemployed now number more than the full time-formally employed — and twice that of union members. All the unemployed are worse off than the miners, and by perpetuating the "poverty" misinformation just tells the real poor that the "rich" miners are poor. That will lead to more unrest as more people discover how unhappy they are.
The nightmare will repeat itself because expectations are not realistic in the broader context — both from a South African view and an emerging market view.
Having people think that earning about R10,000 a month is "poverty" may make for even less job creation.
• Schussler is an economist.
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