Wage disgrace

South Africa is in the midst of strike season - but it may just as well be called silly season. Sure, wage demands are a serious issue, and the wage gap between entry-level workers and those a bit higher up the ladder does need to be narrowed.

But, at what cost to the economy?

So far, media reports have put the recent municipal strike at millions of rands that have been lost to the economy.

But the striking workers got a decent 13% settlement that was probably much better than what they would have if they had continued emptying our dustbins instead of upending dustbins and littering the streets with trash confetti, which they will have had to pick up again anyway.

I'm sure Eskom staff must also think they will get a decent increase - especially as they effectively have the power to shut down the country. Workers want 14%, and Eskom is offering 8%. Regardless of what contingency plans may be in place, I suspect they will get a decent settlement.

Ditto workers in the petroleum industry, another sector that can bring SA to its knees. In April, there were warnings that petrol stations would run dry if the strike went ahead. Fortunately, the industrial action was averted.

Strikes are hitting all sectors, and now it's Telkom's turn.

I understand the workers' frustrations, I really do. Entry-level employees at the telecommunications company were getting paid R3 604 a month three years ago, according to the last wage agreement posted on the Communication Workers Union Web site.

This amount was to increase at 6.25% every year after that, so after last year's increase, they would be earning close on R4 500 - assuming I've worked this out right.

Salary settlements at way more than inflation - such as the municipal workers' wage deal - are bound to affect inflation, as companies' costs will go up.

Nicola Mawson, group financial editor, ITWeb

But then inflation started running away. In 2006, the average inflation for the year was still within the Reserve Bank's target of keeping the number between 3% and 6%, coming in at 4.6%.

In 2007, the average had crept up over the target band and was 7.2%, and last year - the year the credit crunch really started hitting home - average inflation was 11.5%.

Thankfully, it has started coming back down again, with June's figure at 6.9%.

But that doesn't take away the fact that food prices are still high, although coming down. Nor does it nullify that Telkom staff were only getting 6.25% increases at a time when inflation was almost double that. Talk about eroding your buying power.

Step away from the bare cupboard for a moment, and consider the wider consequences.

Salary settlements at way more than inflation - such as the municipal workers' wage deal - are bound to affect inflation, as companies' costs will go up. Economists warn about this all the time.

And I don't need to spell out that if salary increases push inflation higher, then we go into the ridiculous cycle again. Only this time without the US's sub-prime lending crisis to make things much worse.

If inflation spirals upwards again - apart from us spending more on everything - interest rates will also go back up, unless incoming Reserve Bank governor Gill Marcus has a different mandate to her predecessor, Tito Mboweni.

Assuming the worst, this would then lead to another round of retrenchments, and people losing their assets on auction. This is not conducive to economic growth, not by a long shot.

I doubt very much that any of these thoughts have occurred to striking workers.

But some striking union members seemed to get ruder than that, and I'm not just referring to Telkom staff singing president Jacob Zuma's trademark song, “Awulethu Mshini Wam”.

Even nastier than that, Telkom's property operations have been vandalised and sabotaged. Now the telecommunications company is threatening legal action, as it has every right to do.

The pity is that this will sour negotiations, and it certainly will not portray workers as being needy individuals who have to put bread on the table, but rather as vicious people who don't actually want an agreement at all.

In addition, these workers have the power to cut SA off from the global economy, inadvertently putting us back into the dark-old-days when we had to fend for ourselves. I certainly would not invest in a country where electricity, telephones and fuel can so easily be turned off.

We would find it especially difficult to survive on our lonesome without these tools of work. Perhaps it's time to buy a farm.