South African Unions Reject Government’s Wage Restraint Call

The Congress of South African Trade Unions, the nation’s largest labor grouping, rejected government calls for wage restraint, saying a cap on pay increases would further widen the gap between rich and poor in one of the world’s most unequal societies.

The government’s growth strategy, released on Nov. 23 aimed at creating 5 million jobs over the next decade, calls for a “pact” between government, business and labor to create jobs and enhance economic competitiveness.

It proposes workers earning between 3,000 rand ($436) and 20,000 rand a month agree to wage increases that are slightly above the inflation rate, while pegging raises for those earning between 20,000 rand and 45,000 rand to inflation. Those earning more than 45,000 rand a month would receive below-inflation increases or have them capped.

“We are now told we will fall into the category of workers who must demand only inflation and a moderate real increase if the government has its way,” Zwelinzima Vavi, Cosatu’s general secretary, will say, according to e-mailed comments prepared for delivery at a rally being held to mark the federation’s 25th anniversary in Johannesburg today. This “is an insult if you consider how much our bosses are paid for working in air- conditioned offices whilst we sweat for almost nine hours every day for peanuts.”

The drafting of the new growth plan was overseen by the Economic Development Ministry headed by Ebrahim Patel, the former head of South Africa’s main clothing workers union. Business Unity South Africa, one of the country’s main business groupings, also rejected aspects of the plan on Dec. 2, saying it provides for too much state involvement in the economy and will deter investors and skilled workers.

‘State Grants’

The 20 best-paid directors of companies in 2008 listed on the Johannesburg stock exchange earned 1,728 times the average South African worker’s income, Cosatu President Sidumo Dlamini will tell the rally.

“Forty-eight percent of South Africans live on less than 322 rand a month and 25 percent now survive on state grants,” Dlamini said. “An average African man earns 2,400 rand per month, whilst an average white man earns 19,000 rand. Most white women earn around 9,600 rand per month, whereas most African women earn 1,200 rand.”

Cosatu, whose affiliate unions represent about 2 million workers, has been part of South Africa’s ruling alliance since all-race elections in 1994.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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