The debate around jobs, jobs at any cost, fair wages, fair working conditions, exploitation and what truly is best for the economy is complex. Don’t let anyone tell you different. If it really were that simple we’d have finished having the same debate while the Feudal System was still active.
However, the recognition of the issue that minimum wages and strong labour laws (in favour of labour) can make labour less attractive, less affordable and therefore lead to lower employment has been missing form government debate for many years.
Then I saw this story on Business Day: Patel grants reprieve on minimum wages. At issue is 385 clothing manufacturers and 22,000 jobs. The companies have been given a temporary reprieve until the end of December to pay wages below legislated minimum wage.
Also at issue is the call for greater protection for the textile industry. Current import duties are around 40%. That is a significant additional cost for all consumers to bear. The vocal employees and unions and employers within the textile industry want us all to pay higher prices so that they can stay in business.
At or near full employment, this protectionism could only make sense if the local textile industry were considered a good prospect for long term competition and value. A so-called infant industry (hopefully one that will grow to become an international player). It’s abundantly clear that the textile industry in South Africa has no special competitive advantage or potential.
However, the argument is more complicated when we have an economy way below full employment, and a competitor country with an artificially weak currency propping up a politically powerful export sector. I’m not (yet) saying protection for our textile industry should be increased, but based on my thinking and research recently I’m starting to understand that the problem is more, not less, complex.
The danger is that the right policy decisions will always be clouded by very loud lobbying and special interest group needs. We need more careful analysis and fewer emotive ideas.