FEW issues are more divisive when debating economic policy options in South Africa than the relationship between wage levels and job creation. There is no disagreement about the imperative for job creation. But what kind of jobs can be created when businesses, to survive, must compete with low labour costs in countries such as China and India?
In one camp are those who believe any job — including those that can be sustained only at low wages — are preferable to unemployment. Then there are those who demand all jobs meet the requirements of "decent work" — defined by the International Labour Organisation as work that "delivers a fair income and provides security in the workplace and social protection for workers and their families".
These differences are demonstrated in two conflicts. In the first, violent strike action and demands to double farm wages in the Western Cape are countered by warnings that this will lead to farm closures, mechanisation and significant job losses — concerns that led the government to establish a low minimum wage for farm workers in the first place.
In the second, clothing producers in Newcastle are challenging in court attempts to force them to raise wages to a national minimum agreed through collective bargaining in which they did not participate. They argue this places jobs at risk and the Centre for Development and Enterprise has warned that enforcing this minimum wage could mean more than 16,000 job losses.
In both cases, warnings of job losses as a result of unaffordable wages are countered by union arguments that low-paid jobs undermine the "decent work" agenda accepted by the government. They maintain employers can pay more and, in the clothing sector, that low-paying firms obtain an unfair advantage over employers who pay a "living wage".
Brokering agreement in such emotional debates is probably impossible. But there is probably acceptance that well-paid workers must produce goods that produce revenue at least equal to what they are paid — otherwise companies will make a loss and close.
But how do we reach such a point in South Africa? The foundation of any productive workforce and the creation of "decent work" is good basic education. All workers need a reasonable education that they can build on through on-the-job training and work experience to raise their productivity. Unfortunately, South Africa’s education system fails to prepare most of its children for productive employment. Poor education is probably the most important cause of our high unemployment.
This weakness is often disguised by the focus on the pass rate in the grade 12 exams. This ignores the reality that many young people never reach grade 12 in the first place.
Government statistics show that only 26% of the cohort of students in the Eastern Cape who were in grade 1 in 2001 reached grade 12 last year. A 62% provincial pass rate means only 14% of the original cohort of students passed matric — 86% of young people of school-leaving age in the Eastern Cape enter the labour market without any educational qualifications. Very little provision is made for them to acquire additional skills. The reality is that most job-seekers have education levels that are inadequate for jobs representing "decent work".
Even passing grade 12 is no passport to a job. Behind the standards debate of what represents a pass, lies the harsh fact that very few who pass matric obtain marks higher than 50% in the subjects that link to the world of work — maths, science, accounting or economics. When pupils who pass matric maths reveal no knowledge of how primary-school concepts such as fractions work, we need to be very worried.
Improving the basic education system has to be the top priority in addressing our unemployment problem. Fortunately there is global evidence that better success than at present could quite easily be achieved with sufficient political and societal will. Some schools already achieve exceptional results.
One such school is Mbilwi Secondary School near Thohoyandou in Limpopo. Mbilwi is a no-fee school because of the community it serves. With a huge grade 12 class of 421 pupils, in class sizes sometimes of 70, Mbilwi achieved a 99.3% pass rate last year — 325 students achieved university exemption and 715 subject distinctions were obtained. All students at Mbilwi do maths and 90% pass — maths literacy is not offered.
The teachers and students of Mbilwi are the real heroes of a democratic South Africa. It must be possible to emulate what they achieve on a much larger scale nationally. If more schools and pupils can do this, the issue of low-wage/ high-wage jobs will no longer be so emotional. We will have come a long way towards creating young people with the learning and commitment to achieve the productivity levels needed for sustainable high-wage employment growth.
• Keeton is with the economics department at Rhodes University.