The recent crippling strike by South African auto workers portends renewed industrial friction in the context of gradual, global economic recovery. A number of developing countries in Africa, Asia and Latin America that partially or wholly felt the aftershock of the ?Great Recession? of 2008 are now back on track with renewed growth prospects. But rebounding economies find themselves at a delicate juncture marked by potential labour relations crises that threaten to disrupt the climb back.
South Africa formally entered recession in the last quarter of 2008 and has barely returned to growth. This growth has been powered by gains in manufacturing output, of which vehicles are a prime component. The auto industry has systemic value for the African continent?s biggest economy, accounting for 7% of the country?s GDP. Cognisant of the employment and foreign exchange-generating capacity of the industry, policymakers in Pretoria have encouraged foreign investment and enticed international vehicle firms to set up production facilities. Over the years, the biggest names in the business like BMW, Mercedes-Benz, Ford, General Motors, Nissan, Toyota and Volkswagen have established factories in South Africa.
But the fracas over wage raises for auto workers, which began on August 11th and exacted an industry-wide loss of production of 17,000 units, has ushered in a new reality wherein South Africa is warily being watched as a hotbed of unionism and work stoppages. The chairman of the Automobile Manufacturers Employers Organisation, which was forced to concede a 10% across-the-board wage increase and a ban on labour brokers who peddle replacement workers, expressed doubts about South Africa as a stable production location and its ?ability to attract future investments?.
A key factor that has stoked labour militancy in South Africa since 2009 is the election of Jacob Zuma as the country?s president. Unlike Thabo Mbeki, his business-friendly predecessor from the ruling African National Congress (ANC), Zuma openly called himself a ?socialist? and rode to national leadership on the coattails of the country?s powerful trade unions that played prominent roles in the anti-apartheid movement. The Left wing within the ANC reasserted itself through Zuma?s takeover of the reins, emboldening the mood on factory floors to turn offensive and echo the President?s oft-stated goal of ?creation of decent work?.
Another element that has fuelled the epidemic of strikes and mass demonstrations across South Africa?s private and public sectors is soaring food and fuel prices, which reached a zenith of nearly 11% in 2008 and cooled somewhat earlier this year. The National Union of Metalworkers (NUMSA) justified the strike of 31,000 auto workers under its aegis on grounds of the still-high costs of living for the poor.
NUMSA?s demand for a 15% wage increase, which is three times the current rate of inflation, was also premised on the calculation that most of their members? multinational auto employers are again reporting healthy multi-billion dollar profits. For union organisers, it is time that their constituents got a larger slice of the pie. Corporate profitability, which is on the incline in several sectors including auto, is thus a red rag to the bull, especially when workers perceive they have a sympathetic state like Zuma?s on their side.
A very similar trajectory is unfolding in the garments industries of Bangladesh, where violent confrontations are being witnessed between rampaging workers and security forces trying to maintain order. If auto is a lifeline for the South African economy, then readymade garments form the jugular vein for Bangladesh?s. The apparel industry constitutes a whopping 13% of the latter?s GDP, contributes to 80% of its total export earnings, and employs over 3 million workers who comprise 40% of the industrial workforce.
The sector?s value to Bangladesh?s economy has multiplied in recent years as Dhaka has tried to position itself as a cheaper alternative for textile and footwear production compared to China, which is in the throes of steep state-blessed wage upgradation. The resilience of garment factories?which supply clothes to up-market international retailers such as H&M, Wal-Mart, JCPenney, Zara, Carrefour and Marks & Spencer?was a key enabler of Bangladesh?s quick exit from the economic downturn of 2008.
But since export orders were back up and cash registers were ringing again, a conglomerate of Bangladeshi textile unions decided to challenge employers and extract higher benefits when the iron was hot, i.e., as managers were vulnerable in a context of uncertain but positive revenue expectations.
Prime Minister Sheikh Hasina, whose Awami League party banks on a traditional socialist support base, fanned garment workers? cause by acknowledging in the national parliament in July that their wages were ?insufficient? and ?inhumane?. With political signals working in their favour and inflation eating into real incomes, the well-organised unions took to the streets for weeks of violence and haggling over salaries. The defiance of some protesters even after the government intervened to double the wage levels to $43 per month has now taken a war-like turn, with police cracking down hard and activists announcing from hiding that the fight will go on until they achieve a decent monthly pay of $72.
A triangular dynamic of foreign multinational buyers, local contractors and workers jostling over wages, costs of production and share of profits has also surfaced in the garments sectors of Cambodia and Vietnam. Thus far, the outcomes of industrial conflicts in most of these cases have been compromises rather than outright victories for labour or management. The main reason for the drawn results is that states, however Left-leaning, are struggling to balance social equity with economic competitiveness, which is the magic potion to decisively banish recession.
The author is associate professor of world politics at the OP Jindal Global University