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September 26, 2010

Wage Laws Squeeze South Africa’s Poor
By CELIA W. DUGGER

NEWCASTLE, South Africa — The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor — the supposed beneficiaries of the crackdown — clambered atop cutting tables and ironing boards to raise anguished cries against it. “Why? Why?” shouted Nokuthula Masango, 25, after the authorities carted away bolts of gaily colored fabric. She made just $36 a week, $21 less than the minimum wage, but needed the meager pay to help support a large extended family that includes her five unemployed siblings and their children. The women’s spontaneous protest is just one sign of how acute South Africa’s long-running unemployment crisis has become. With their own industry in ruinous decline, the victim of low-wage competition from China, and too few unskilled jobs being created in South Africa, the women feared being out of work more than getting stuck in poorly paid jobs. In the 16 years since the end of apartheid, South Africa has followed the prescriptions of the West, opening its market-based economy to trade, while keeping inflation and public debt in check. It has won praise for its efforts, and the economy has grown, but not nearly fast enough to end an intractable unemployment crisis. For over a decade, the jobless rate has been among the highest in the world, fueling crime, inequality and social unrest in the continent’s richest nation. The global economic downturn has made the problem much worse, wiping out more than a million jobs. Over a third of South Africa’s workforce is now idle. And 16 years after Nelson Mandela led the country to black majority rule, more than half of blacks ages 15 to 34 are without work — triple the level for whites. “The numbers are mind-boggling,” said James Levinsohn, a Yale University economist. As the debate about unemployment intensifies, the government’s failure to produce a plan 16 months after President Jacob Zuma took office promising decent jobs has led analysts to

months after President Jacob Zuma took office promising decent jobs has led analysts to question his leadership, though he has promised to act soon. Experts debate the causes of the country’s gravest economic problem, with some contending that higher wages negotiated by politically powerful trade unions have suppressed job growth. But most agree that the roots of the crisis lie deeper, in an apartheid past that consigned blacks to inferior schools, drove many from their land, homes and businesses and forced millions into segregated townships and rural areas where they remain cut off from the engines of the economy. Then with the advent of democracy in 1994, the African National Congress-led government had to simultaneously rebuild an economy staggered by sanctions and prepare a disadvantaged black majority to compete in a rapidly globalizing world. Further complicating matters, just as poorly educated blacks surged into the labor force, the economy was shifting to more skills-intensive sectors like retail and financial services, while agriculture and mining, which had historically offered opportunities for common laborers, were in decline. The country’s leaders invested heavily in schools, hoping the next generation would overcome the country’s racist legacy, but the failures of the post-apartheid education system have left many poor blacks unable to compete in an economy where accountants, engineers and managers are in high demand. The shortage of skilled workers has constrained companies’ ability to expand, economists say, and in some cases, professionals from other African countries have taken the jobs. The fall of tariff barriers since 1994 has also exposed industries like garment manufacturing to low-wage competition from Asia. As Chinese-made clothing has flooded the domestic market, the number of garment workers employed in South Africa has plummeted to 60,000 from 150,000 in 1996. If the more than 300 factories violating minimum wages ultimately close down, 20,000 more jobs could vanish. “We’re at a crossroads,” said Leon Deetlefs, national compliance manager for the bargaining council of union and employer representatives that sets minimum wages for the garment manufacturing industry. “There are a huge number of workers who stand to lose their jobs.” Last year, as South Africa’s economy contracted amid the global financial crisis, unions negotiated wage increases that averaged 9.3 percent. The International Monetary Fund hypothesized in a report last week that companies were unable to pass on higher labor costs during the country’s recession and laid off workers instead, contributing to job losses that were among the highest seen in the G20 industrialized nations.

Mr. Zuma promised last week at a national gathering of the governing party in Durban that the cabinet would act soon. But it remains unclear how decisively he can move. His party, the African National Congress, conceded in a report last week that its alliance remained divided over what should be done. Eight months ago, Mr. Zuma proposed a wage subsidy to encourage the hiring of young, inexperienced workers. But it ran into vociferous opposition from Cosatu, the two-millionmember trade union federation that is part of the governing alliance, which contended that it would displace established workers. The plan has stalled. While officials wrangle, the unemployment crisis festers in places like Newcastle. During the rowdy protests at the factory last month, the police warned that the situation could turn violent, according to Mr. Deetlefs, the bargaining council official. The sheriff withdrew. The factory closed. But broader resistance from Newcastle factory owners and concerns about large job losses led to a monthlong moratorium on factory shutdowns after 26 were closed nationally. Officials from the government and the bargaining council are now pushing offending factories to come up with plans to pay minimum wage. The shuttered factory here has since reopened. When the clock strikes five, thousands of black women still pour from the factories here and line up at bus stands for the ride back to their townships. But workers fear the reprieve will not last. Newcastle’s garment industry is a product of apartheid’s social engineering. The apartheid state sought to keep most blacks from moving to dynamic big cities reserved for whites by offering large subsidies to light industry to locate on the borderlands of rural areas. The Taiwanese began opening clothing factories here in the 1980s. And since the end of apartheid, entrepreneurs from mainland China have joined them. Some of the more successful Chinese factory owners drive BMWs and Mercedes Benzes, but others operate on a shoestring. All say they must be allowed to pay wages on a lower scale to stay in business. At the Wintong factory, proprietors Ting Ting Zhu and her husband, Hui Cong Shi, who are saving to put their only child through college, say they start a machinist at $36 a week, far less than the minimum wage. They themselves live in a single room in their red brick factory. The women who work for them, also striving for their families, have seen their industry wither. Some 7,000 people in Newcastle have lost their jobs in recent years as three large factories went out of business. Emily Mbongwa, 52, was one of the casualties. She lost her job in 2004. She never found another one.

in 2004. She never found another one. “The factory passed away,” she explained sadly, as if describing a death in the family. During the apartheid years, Ms. Mbongwa, who never learned to read or write, worked as a maid in the home of a white Afrikaner family, rising at 6 a.m. to make breakfast and finishing at 9 p.m. after the dinner dishes were done. She tended the family’s two boys, but when they got to be 9 or 10 years old, they started called her derogatory names for a black woman. After the family moved away, she went to work at a garment factory, where she said she was treated with respect. The hours there were shorter, the pay better and she started a small business selling shoes to other workers. She eventually earned enough to build her home. Now, she is back to where she started, surviving by looking after other women’s children. She charges $14 a month for each of the five children she watches from 6 a.m. to 6 p.m., five days a week. One recent morning, a woman arrived and passed her baby through the back door to Miss Mbongwa, who was wearing a loose house dress and black wool cap. Holding the baby on her lap, she said wistfully, “Long ago, there was a lot more work in Newcastle.”