Labour

Workers' Labour Matters

     by Patrick Craven

Thank you very much for inviting me to address you this evening. It is a great honour to be asked to speak at such an important event, at an appropriate time of year - just after May Day when the labour movement around the world celebrates its successes and reassesses the challenges that face us.

The theme for today has been "Workers' Labour Matters". It most certainly does matter; as Sophocles once said, "Without labour nothing prospers." I don't know what Sophocles had in mind when he said that but it expresses very well the classic Marxist view that all wealth is created by the application of workers' labour to raw materials and machinery to create manufactured commodities with added value. Everything we eat and wear, all the machines we use at home, the transport, energy, water and sanitary networks would not exist without the daily toil of the millions of workers who labour produces them.

To many of you here this may seem obvious. But there are many others who seem oblivious to that reality. The CEOs of our top companies, including Eskom, try to justify their massive salaries and bonuses as a reward for the value they have added to the company. In many cases these rewards bear no relation at all to the company's good performance, but even if the company has expanded its turnover and profits, it is the workers, not the chief executives, who created that extra wealth.

Workers' wages do not however reflect their central and indispensable role in the production process. Their incomes never increase in proportion to the value they have added and never rise at the same rate as the extra profits their labour power has generated for their employers. They do not get 'incentive bonuses' when company profits increase.

The employers would love to get way with zero increases or even wage cuts if they could. It is normally only through strong union organisations and the threat, or use, of strike action that enables workers to improve their standard of living.

Nowhere is this more obvious than in the food sector, which illustrates better than any other the basic problem of the capitalist system. The extra money the consumers pay in the shops never finds its way into the pockets of poor farmers, still less the workers in the farms, bakeries, dairies and food-processing plants.

On the contrary these are amongst the worst paid workers regardless of the price of their products. Many will be experiencing one of the classics symptoms of the capitalist economic system - that the workers will not be able to buy the very commodities that they produce.

So we have poor, even starving people at both extremes of the food chain, the workers and the majority of consumers, while in between we have the Nestles, Kellogg's and Walmarts, and here in South Africa Tiger Brands, Woolworths and Pick n Pay making huge profits from the rising prices.

This is getting even worse with the recent price increases. This is presented in the media as a worldwide 'crisis' - and for at least 100 million of the world's poorest people it most certainly is a crisis, which has led to riots in a number of countries.

But a comrade of mine raised an interesting question about the characterisation of this as a 'crisis'. It could imply that until this sudden acceleration of price increases there was nothing fundamentally wrong with the way the world's food was produced and distributed before these sharp increases. In reality nothing fundamental has changed in the way food is produced, distributed and marketed. It has always been organised to benefit the rich and powerful agri-business combines at the expense of the workers and the poor consumers and the increases have only made it that much

worse.

The industry's spokespeople like to claim that they are following the principles of free competition, but the reality is that prices are, and always have been manipulated to boost profits. Promoting and maintaining scarcity is crucial to this. The capitalists' biggest nightmare is the consumers' dream - a superabundance of food so that there is plenty to go round at the lowest possible price.

In the worst cases, such as the case of Tiger Brands and several dairy companies in South Africa we know that their already substantial profits have been supplemented by price-fixing, and the Competition Commission is busy investigating other links in the food price chain to check if there is any evidence of more price fixing. It would be surprising if it were not the case that price-fixing takes place around the world as well.

In Europe, Japan and the United States, the players in the agri-business industry have found even better, quite legal ways to up their profits. Not only are they raking in huge profits from the rising prices but are receiving huge government subsidies as well. In France alone these subsidies amount to the equivalent of R310 billion a year. How can anyone defend this as 'free enterprise'? It is blatant profiteering at the expense of the workers and the poor.

In addition we now have the development of the biofuels industry, which is swallowing up potential food to convert into fuel. In the USA alone it is estimated that as much as a quarter of this year's maize crop will be used to create ethanol. This is pushing up food prices even more and giving even bigger profits to the subsidised American big farmers.

All this illustrates how the price of food bears less and less relationship to the wages of the real food producers - the workers. And what applies to food is basically the same in every other sector. Arcelor Mittal sell steel on the basis of 'import parity pricing'; the price they charge consumers has nothing to do with the cost of production, or the value added by the steel workers, but on the prevailing world market price. Sasol sells its petrol at the price dictated by the OPEC oil cartel, even though they produce it from coal much more cheaply.

So how then can we move towards an economy, in South Africa and the world, in which the workers who create the wealth enjoy the fruits of their labour?

There is no quick, easy solution, given that this is a global problem. But that does not mean we have to sit back and do nothing. The historic message of May Day is that the workers united can change the world. The solidarity action taken by SATAWU in refusing to unload a cargo of arms destined for Zimbabwe was a fine example of this tradition.

COSATU has been campaigning, together with the governments of South Africa and other developing countries, since long before the recent dramatic food price explosion, for a reform of the world trade system. The rich Northern countries, which already have a huge advantage, with heavily subsidised, tariff-protected and monopolised companies, are pressing for the poor Southern countries to open up their markets to even less fair terms of trade by cutting their remaining tariffs to protect their industries and agriculture.

Having failed to reach agreement through the World Trade Organisation, the European Union is now trying to negotiate 'economic partnership agreements' with individual countries in Africa, Asia and Latin America, something that South Africa, to its credit has refused to sign. There is still a long struggle ahead but it is a fight we cannot afford to lose.

Within South Africa there are steps we can take immediately to lessen the impact of rising prices on the poorest consumers. Social grants and the minimum wages of those workers covered by sectoral determinations must be increased urgently to compensate for the drop in their real living standards. Unions must insist that this year's wage increases are at the very least above the inflation rate. I believe however that they should be higher, both because of the higher rate of inflation of food, which forms a high proportion of the poorest families' incomes, and because inflation increases do nothing to reduce the huge and growing levels of inequality in our society.

Another critical part of the solution to the food price crisis is to speed up the process of land reform so that more land can be used to grow food. Wealthy landowners are turning far too much potentially arable land into game parks and golf courses. The one potential benefit of rising prices is that new small farmers who get access to land can more easily make living but only if they get the land in the first place.

But that still would leave the rest of the food chain dominated by the big, profiteering private companies. To deal with this COSATU's Section 77 submission on food prices demanded:

Ø        An end to super profits and super salaries for executives;

Ø        An immediate reduction in basic food prices and the freeze in future food   

           price increases;

Ø        Dismissal of CEOs in agricultural, food manufacturing and retailing companies   

found guilty of collusive practices, and other anticompetitive conduct;

Ø        One or more state-owned enterprises operating across the value chain of  

staple food products such as maize meal, bread, milk, some vegetables, etc be set up within the next two years;

Ø        A National Food Price regulator to determine prices or raise for these stable

food products;

Ø        Nationalisation of the maize-meal, bread and milk value chains.

The last demand has attracted the most attention and controversy but in my view is the key to a solution. The 'market economy' in South Africa and the world has totally failed to provide food at an affordable price to millions of the poorest consumers. 'Free enterprise' is a myth in this, and indeed in other sectors. It is a system of monopoly capitalism which manipulates the market to create artificial shortages of food so as to push up prices and profits.

State intervention is vital.

The form of nationalisation is not spelled out in the Section 77. I personally would not favour a monolithic National Food Corporation run by a bureaucracy like the one mismanaging Eskom. There should be democratic workers' management through cooperatives, but subject to an overriding mandate to maximise production, maintain minimum standards of quality and give workers good wages and benefits.

Without the reform of the world trading system however such a programme would be difficult. That is why an international, co-ordinated campaign is necessary.

I have focussed on food because it is both topical and such a good example of what is wrong with the present capitalist system, but the same principle applies to all other sectors. In every industrial sector we see the same problem - the workers who create the wealth struggle to earn enough to live on while their employers enrich themselves at the expense of both the workers and the consumers. Only a democratic socialist solution can put an end to the poverty and hunger which always exists under capitalism and which is now getting even worse as prices cut living standards even further.

Patrick Craven is the National Spokesperson of COSATU. This is his address at the IOLS-Research/CCS Workers Festival at UKZN on May 7 2008

Click here to comment on this article