Legacy of the racial subsidy has yet to be overcome

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What dire household financial situation drove rock drillers to wage low-intensity war on their employers in Marikana in 2012?

Debt and dependants. That was the conclusion I drew, not from what I knew about rock drillers, but by extrapolating from my own experience in a middle-income black family, where my parents’ salaries were expected to take care of almost everyone in the extended family.

It boggles my mind to think how my parents did it when, at one point, there were up to 20 people living in our home in the suburbs. What was happening was not some natural "clan" way of African communal living transplanting itself into modernity. It was the continuation of a model of South African industrial economic relations in which black households came to depend on a relatively small pool of income earners.

Historically, the mining sector erected this archetypal labour extraction model because, for a long time, the sector paid male migrant workers as though their wives and children were healthily subsisting off the land in the so-called "native reserves" — a well-documented phenomenon that Achille Mbembe called "the racial subsidy".

By the 1970s, this "racial subsidy" enabled white SA to enjoy the highest standard of living in the world and it was the rise of labour militancy in that era that started forcing employers to bear the true cost of labour.

It is the relative success of SA’s labour in decreasing the "racial subsidy" over the past 30 years that has seen wages and employment conditions improve across the board, albeit unevenly.

Unfortunately, no one could predict that, in the 1990s, a new political order would also coincide with the rise of cheap imports from Asia, causing a jobs bloodbath from which SA has never recovered. Since then, state grants to pensioners and children have had the unintended effect of taking the place of wages as formal employment shrinks. In doing so, grants have played a critical role in further dismantling the "racial subsidy" borne by households, but have not gone far enough because the unemployed dependants of working age increase.

Five-million young adults who should be either in tertiary education or working are financially dependent on someone else who is either working or receiving a state grant. In this context, black earners are overwhelmed by ever-rising household expenses. For middle-income professionals, the potential to opt out of shabby state education and health adds further expense to existing extended family obligations. The cash-flow solution for many households has been a revolving door of debt, which was seen in Marikana, where workers watched their pay gouged by interest repayments to microlenders.

This brings me to a recent debate on the main drivers of inequality that was triggered by a column by Mike Schussler and the subsequent responses by Jonny Steinberg, Gilad Isaacs and Jeremy Seekings. The main focus of the debate was whether high unemployment or wage inequality between bosses and workers was the main driver of inequality in the South African economy. It struck me that at the heart of the debate was the daily experience of black households and the precariousness of managing many dependants over time.

Schussler’s blaming of union wage demands rings hollow in a country where inequality was created by the excessive "racial subsidy" that gave whites what they consider a normal middle-class lifestyle. Black families are still playing catch-up.

Yet Steinberg’s response was even odder when it presumed unemployed young adults would prefer to have household breadwinners earn higher wages at the expense of creating job opportunities for them. Seekings and Isaacs rigorously unpacked some complex data sets but left me stuck in conundrums about which numbers should have analytical priority.

This higher wages/greater employment debate is important because it gives us a framework to look at the structure of the average black household and its relationship to income. For many black families, so much decision making really comes down to how to manage the demands on the pay packet because too many people in the household do not work.

Mkhize lectures in history at Rhodes University.


Article Source: Business Day