Food price rises are a major factor behind the wave of strikes
August 10, 2007
 By Terry Bell
An overall decline in the standard of living for the majority of workers, coupled with growing job insecurity, lay behind the recent and often bitter wave of strikes. And it seems likely, for the same reasons, that more labour discontent will erupt.
What has bedevilled debate about these disputes has been an increasingly complex and often highly confusing numbers game.
The government, as an employer, continues to insist that wage rises should be matched to inflation; that workers are better off now than in previous years.
However, it is agreed that the cost of living has increased. The questions are: by how much, at what rate and for whom?
The government, and employers in general, continue to define inflation as the rise in the consumer price index, excluding interest rates on mortgages.
At the same time, the Reserve Bank and the government are committed to inflation targeting, which means that, by their calculations, the overall cost of living should increase at a rate of between 3 percent and 6 percent a year. Anything that threatens this must be resisted.
Because the South African economy has opened up to the world, many of the increases are determined by global market prices. About these, the government can do little or nothing. But it and other employers are often in a powerful position regarding the level of wage rises.
Yet the wage rises demanded by trade unions are usually geared merely to maintaining a basic standard of living. They are a reaction to price increases.
This fact tends to be forgotten as various figures are bandied about, giving spin doctors plenty of muck with which to muddy the waters.
Unions demanding double-digit wage rises are portrayed as greedy - and destructive of an economy maintaining stability via relatively low inflation. The unions respond by claiming that the increase in the cost of living for their members is much higher than the official inflation rate.
Two publications due for release next week should illustrate clearly why the union claim is accurate. The Cape Town-based Labour Research Service (LRS) is scheduled to produce its annual Bargaining Indicators report and the National Agricultural Marketing Council (NAMC) will publish its quarterly food price fluctuation figures.
The LRS report shows that the wage and welfare gap between bosses - in the shape of company directors, both executive and non-executive - and workers has continued to grow over the past year. Researcher Saliem Patel points out that the average worker now has to work 273 years to earn what an average chief executive is paid annually.
Last year the average chief executive was paid more than R8 million a year, while executive directors, on average, received more than R4.5 million. Even the average fees of R309 269 paid to non-executive directors was a huge leap beyond the R29 861 earned by workers on minimum wages.
On Monday the NAMC should produce its latest figures on food price fluctuations over the past quarter. The last quarterly figures, published in May, resulted in "shock report" newspaper headlines.
The figures revealed that, in the year from March 2006, the price of cooking oil, for example, had risen by 21.9 percent, bread by 9.2 percent and maize meal by 31.5 percent.
These figures were challenged, but all the measurements produced over the past year showed an upward trend in the cost of living, with the price of food - the major factor in lower-income households - leading the way. Transport costs, too, continued to rise at a rate well beyond the average official figure for inflation.
Because of the disputes about how much costs may have risen, I had a researcher check on the prices of 11 basic food items favoured by low income families at a local supermarket over the past three months. The items included bread, mielie meal, sugar, samp, tinned fish, flour, cooking oil and margarine.
I shall continue to have these prices monitored throughout the rest of the year as an additional yardstick for measuring the real inflationary impact on working class households.
From the beginning of June to the start of this month, the average increase in these low income staples was nearly 10 percent. And because the prices were recorded at the beginning of each month, they do not include the large price rises in flour and bread that are now becoming evident.
Over the past three months, milk has been the main driver of this basic food price inflation, with a 32.6 percent increase from R3.99 a litre to R5.29. Sliced white bread recorded a 20 percent increase, from R3.99 a loaf to R4.79, while a kilogram of mielie meal cost R4.45 in August as opposed to R3.99 in June.
On this basis, wage rises below 10 percent mean, for those on basic incomes, a probable decline in the standard of living. Once again it is workers who take the strain, so there should be little surprise that there is a growing fightback.
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