Video clips; What does SA need? Tell us about your privilege?

What does South Africa need?

Tell us about your privilege?

Two short video clips I created during the #RhodesMustFall protests at UCT. These clips were all made to gauge and report on the level of understanding felt by students.

These clips were made for InkuluFreeHeid and appeared on their Facebook page originally.

Minimum wage implications on Job Creation and Equality: a South African review

In June of 2014, President Jacob Zuma delivered his annual State of the Nation address to parliament and the state at large. He made mention of the need to combat wage inequality and called for stakeholders to investigate a national minimum wage (South African Government, 2014a). Various organisations, with COSATU at the forefront, have since started to research the implications, and campaign for the implementation of a national minimum wage.

This article will provide a comprehensive overview of what a national minimum wage involves, how it might affect employment statistics and whether it will aid inequality and the Gini coefficient. Brazil’s minimum wage policy will be examined at length and conclusions will be drawn on whether the Brazilian example could work in the context of South Africa.

Figure 1 below illustrates the relationship between minimum wage and employment.

In Figure 1 the minimum wage requires workers be paid a higher wage than the equilibrium would dictate in a perfectly competitive market; it is important to note that this is not always the case. In many developed countries workers are paid above minimum wage to satisfy demand and supply effects. The graph, however, would be an accurate depiction of the South African example where equilibrium wages are low due to high unemployment and, thus, an overwhelming supply of labour to the market.

Trade Union Budget Proposals and their Economic Growth and Inclusion Prospects

Earlier this year Finance Minister, Pravin Gordhan, presented the 2014 Budget Speech in parliament. The purpose of the budget speech is to outline the year’s fiscal policy; how the government plans to obtain its funds and how it plans to spend them. More importantly, however, is how the 2014 fiscal policy will affect economic growth and inclusion in South Africa. While Gordhan has, in the context of his speech, made it clear how the policies are intended to work towards growth various trade unions have disagreed and offered their proposals in response.

This essay will aim to compare and analyse the plans of government (as per the budget speech) in conjunction with the proposals put forward by trade unions. An evaluation will be done in terms of the affordability and possible outcomes of each proposal. Both the budget speech and the responses by trade unions provided substantial plans and counter-suggestions, this paper will focus on just three; the issue of government planning to offer tax relief to lower income earners while trade unions propose an introduction of various taxes, and the highly contested issue of a youth wage subsidy. Each topic will also make reference to possible bias that trade unions may have and why they may argue strongly for some policies and against others. Given the political nature of trade unions and fiscal policy, coupled with 2014 being an election year, various political issues are unavoidable and will too be discussed.

Defining economic inclusion and economic growth will be central to this discussion. Economic inclusion is present, as per the European Bank for Reconstruction and Development (n.d), when “broad access to economic opportunities” exists. This implies that all citizens of South Africa regardless of class, gender and educational level are able to access job opportunities and other economic activities. Economic growth is simply a real increase of a nation’s income over a period of time (Blanchard, 2011). In this paper economic growth will commonly be expressed as a growth in GDP, aggregate output or consumption.

The budget speech and trade unions in Context

On the political front, critics of the 2014 budget speech argued it was “muted” and, given that 2014 is an election year, was simply being used as a vehicle of voter appeasement (!!!). These allegations are interesting as they offer perspective on the framing of the budget speech and the choice of policies presented. Fiscal policy is traditionally used to combat financial problems but it is worth considering that this year the budget speech placed importance on making consumers and businesses happy as a tool to garner votes.

Monopoly; Smith vs Schumpeter and the social cost

Monopoly markets, and the firms which dominate them, have since ancient times played an unequivocal and enduring role in shaping the current global economic landscape (Perloff, 2008). This have created concurrent contention surrounding the economic benefit of such structures, with debate by academics, national governments and Intergovernmental organisations over the benefits and costs of such arrangements, with some advocating for and others deploring against. The incongruence on opinions by the various institutions has seen many legal responses, from competition law which seeks to curb monopoly powers and collusion, to the state formation of monopoly firms and the implementation of patents for innovation. This essay shall provide a balanced encompassment of such differing views on monopolies, and the underlying theory which support such arguments, with a particular emphasis on how these are relevant to the economic environment of South Africa, and significant focus will be placed on the social costs of a monopoly.

Although many types of monopolies exist, for the purpose of this essay a monopoly shall be defined as, “the only supplier of a good for which there is no substitute” (Perloff, 2008:360).

Two renowned theoretical academic opinions on monopoly which largely conflict each other were propagated by Adam Smith and Joseph Schumpeter. Smith, who is widely regarded as the ‘father of modern economics’ and a proponent of free market principles, guided by the ‘invisible hand’, was a fierce opponent of monopoly markets (Wight, 2007). Schumpeter was of contrasting opinions with the belief that monopolies were essential for innovation, and the profits earned could be used for research and development; ultimately cultivating an efficient and dynamic economy (Gilbert, 2006).

Does South Africa still require affirmative action policies?

South African management positions (both top and senior) remain occupied largely by a white, male populous while improvements in the employment standing of designated groups (namely woman, blacks and those with disabilities) is continuously lacking (Department of Labour, 2013: 52-53). It is the role of affirmative action policies, like the Employment Equity Act and Black Economic Empowerment, to shift these statistics to better reflect the South African reality. The evidence available paints a grim picture; despite the end of apartheid and its policies, the landscape of the workforce remains generally unchanged with a white majority in management positions and women under-represented. It will be argued that affirmative action is undoubtedly necessary, and will remain so for years to come, but the policies must be amended to better achieve the goals.

This essay aims to critically address the sensitive issue of affirmative action and its role in South Africa’s path to equality. The Department of Labour’s annual report and the findings therein will form the cornerstone of the debate in favour of affirmative action, but the opinions of various academics will be called upon to provide alternative policy solutions. Because of time and length constraints this essay will limit its analysis to national figures and will give special focus to management statistics.

Evaluating affirmative action in South Africa
The role of affirmative action in South Africa is to ensure equal opportunities for blacks, women and people with disabilities (Department of Labour, 2014). Affirmative Action is carried out in South Africa through two broad policies; the Employment Equity Act and Black Economic Empowerment (BEE). BEE is intended to supplement the Employment Equity Act and it does so by focusing solely on race objectives, while the Equity Act protects all designated groups.