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Address by Zwelinzima Vavi at the launch of the South African Informal Traders Alliance
16 May 2013
Thank you very much for inviting me to address this important gathering of one of the most enterprising but also most exploited sections of our society – the hawkers and vendors, small farmers and others in the burgeoning informal economy.
The informal sector is growing around the world, as a direct consequence of the relentless rise of unemployment, and the rapid casualisation of labour, which pose a massive challenge to the international workers’ movement.
It has left more and more workers at the mercy of ruthless employers who will drive down wages, hire and fire workers at will and flout laws to protect workers` health and safety, and use the threat of retrenchment to enforce their will.
The horrific tragedy which killed 1 127 clothing workers in the Rana Plaza building in Bangladesh is the grotesque end result of a race to the bottom in wages and conditions. Workers were forced to work for the lowest wages in the world (as low as R350 a month!) in a building which was built illegally and had already been condemned as unsafe.
Faced with the grim choice of that kind of employment, or none at all, millions of workers have opted to take their chance in the informal economy. Respected labour analyst, Peter Waterman, estimated in 2012 that the traditional working class makes up only 15% of the global workforce, with the remaining 85% being part of the informal economy.
In Africa, according to International Labour Organisation statistics, somewhere between 60% and 90% of the active population is employed in the informal economy. In sub-Saharan Africa, if South Africa is excluded, the share of informal employment in non-agricultural employment is 78%.
These millions of workers are an integral part of our class, and we must unite against those big business ‘experts’ who try to drive a wedge between workers in the formal and informal sectors. They claim that employed workers are an ‘elite’ who are the biggest threat to small businesses. On the contrary there is far more that unites us than divides us, and we need each other if we are to solve our many problems.
We live in the same poor communities. Our children attend the same under-resourced schools. The money you make from selling goods and comes mainly from the meagre earnings of our members. If wages fall, so does demands for the products you are selling.
We live in the most unequal country in the world. We both suffer from the two-tier service provision, where the mainly black poor majority have to endure pathetic levels of service in healthcare and education, housing and transport, while a still mainly white, rich minority can buy world-class private services.
We also share a common foe: the highly monopolised big business cartels, like the big retail chains, who pay minimal prices to the farmers and producers but charge exorbitant prices to consumers. Meanwhile they ruthlessly exclude informal traders from the shopping malls. As we speak Checkers Shoprite, \now in competition with Walmart are opening more shops in the townships, squeezing out of that space for small shop owners and informal traders such as yourselves.
Our economy still suffers from concentration of the means of production and power in the hands of white capitalists. Direct Black ownership of the JSE listed companies remain below 5%. The JSE is still dominated by few very large firms. About 50% of JSE is accounted for by only 6 companies and more than 80% is accounted by large banks and companies engaged in the core of the minerals-energy complex.
Crucial sectors of the economy continue to be dominated by few large conglomerates with cross directorships. This is the common concern shared by labour, informal sectors workers and small medium enterprises. So yes we should form tactical alliances with SMMES to fight against this domination.
Other firms regularly get hauled before the Commission for price-fixing and/or collusion in the awarding of contacts, as in the recent case of 18 construction firms. Companies in the bread, dairy, milling and pharmaceutical industries have been convicted of price-fixing and investigations are pending into private healthcare the glass manufacturing industry.
All these restrictive practices are designed to keep competitors like you out of the market place. The biggest obstacle to the growth of small business is big business, not the workers!
While a tiny minority of enterprising informal workers go on to become successful entrepreneurs, for the vast majority the informal sector means grinding poverty. They generally have no contracts, no fixed hours, and no sick pay or maternity leave.
Yet although their individual incomes are low, cumulatively these informal workers contribute significantly to the economy. The ILO has estimated that in 16 Sub-Saharan countries, on average, the informal sector contributed 41% to gross domestic product, ranging from 24% in Zambia to 58% in Ghana.
The 2010 UN Congress on Trade and Development Report draws a clear connection between the growth of the informal sector in Africa, and the inability of African economies to develop manufacturing industry. It confirms what COSATU has been saying in relation to South Africa. The main reason why we have failed to create employment is that that we remain trapped in an economic structure which we inherited from the days of colonialism and apartheid, which is over-dependent on the export of raw materials, in South Africa’s case its gold, platinum, coal and diamonds.
That is why COSATU has been campaigning so strongly for a new developmental growth path to take us out of the economy we inherited from colonialism and apartheid and build one based on manufacturing, with a skilled labour force in sustainable well-paid jobs.
That is the only way we can hope to achieve the government’s ambitious target of creating five million new jobs by 2020, a target which the latest employment statistics for the first quarter of 2013 suggests is drifting out of reach. Indeed if the current trend continues, we could end up with a net loss of jobs by 2020!
We have made huge gains since 1994 in establishing democracy, entrenching human rights and extending social benefits. Over 3 million houses have been built, giving shelter to over 15 million people. Six million households have gained access to clean water since 1994 and electricity has been connected to nearly five million homes. 15 million people are receiving social grants. Of those, 9.5 million are children less than 14 years old, compared with 2.4 million in 1996.
On the economic front however, workers` lives have not been fundamentally transformed; because of the massive levels of unemployment and the growth of the low-paid and insecure jobs, millions of South Africans in economic terms are no better off, or even worse off, than before 1994.
Unemployment is still rising; the informal sector is growing and more formal sector jobs are being ‘informalised’. Clothing factories are outsourcing production to ‘home-workers’; parts of the retail sector are being franchised; the public service is outsourcing work to ‘tenderpreneurs’.
Some workers are formally self-employed and supposedly independent, but are also often exploited by suppliers, municipal authorities and others. Most are not organised in unions, making them vulnerable to different kinds of exploitation and oppression.
The existence of this growing army of unorganised workers inevitably impacts on the power and conditions of unions in the formal sector. It enables employers to reject wage demands by threatening to sack the workers, outsource their operations and hire other workers from labour brokers.
A significant proportion of informal sector workers are immigrants, who have come here seeking work and economic opportunities. Many employers, particularly in construction, catering and farming, exploit this chance to employ vulnerable, sometimes illegal, immigrant workers and reduce their labour costs still further, as well as flouting labour standards.
This can generate conflict between South African workers and immigrants, and fuel the kind of xenophobia which flared up exactly five years ago in South Africa, when worker fought worker, African fought African, 60 were killed, dozens raped and over 100 000 displaced.
We have to fight relentlessly against such attempts to shift the blame for poverty and unemployment on our fellow African workers and make them scapegoats. We must link these outrages to the underlying social crisis and turn people’s anger against their real enemy – the capitalist system of production, distribution and exchange.
All this poses massive challenges to the trade union movement. We cannot dodge our responsibility to unite our two memberships into a force for change. In the words of the Belgian trade union federation, CGSLB: “Providing a trade union framework for informal economy workers is a challenge for every continent: it enables precarious and informal economy workers to have access to the trade unions, to be represented by them, supported and defended.
“They have the greatest need to be defended, because they are not protected. They have the greatest need to be represented, because they are not recognised and above all not listened to.”
Getting informal sector workers organised is the absolutely necessary first step in improving wages and conditions, but we appreciate that it is never easy to organise workers who often have no fixed employer or workplace, including those who are nominally ‘self-employed’ but are often just as poor.
We need to build alliances with civil society organisations working in the informal sector and organisations of informal-sector workers like yours, with a view to understanding their concerns, how they organise and who they represent.
Back in 2005 COSATU held a workshop to confront this challenge. It identified some of the key problems:
- The labour laws generally do not apply to the self-employed, but regulate relations between employers and employees, which means there is no framework for bargaining and few minimum standards.
- For the self-employed, negotiations must focus on new issues, such as securing the right to trade from municipalities, obtaining cheaper inputs from suppliers, and establishing collective benefit schemes.
- The issue of scope becomes more difficult, since membership is no longer defined by relations to an employer.
- Some political problems may arise. Do the self-employed invariably have the same interests as the employed workers? How do we ensure a stable progressive character for the proposed organisation?
The workshop came up with the following proposals:
1. All unions should organise the informal sector within their scope, and report regularly on progress.
2. COSATU should set up a project to organise self-employed street vendors and producers, with the following guidelines:
- The organisation would campaign, amongst others, for the right to trade, for access to financial services, for government services such as identification papers, social grants and social insurance, and for formation of co-ops.
- Collective bargaining by the organisation would follow the norms of mandating and accountability. It would focus on the identified campaigns plus other demands raised by members. It could work with SAMWU to negotiate with municipalities, and engage with the Employment Conditions Commission on minimum rights and standards, which do not currently apply to the self-employed.
- To ensure the working-class character of the project, only the self employed with no more than three “assistants” (but not employees) could join. There would be a set quota for women leadership.
- The organisation would charge subscription fees, and also try to get government support
Frankly, eight years later we have not done nearly enough to take these proposals forward. We must do better!
COSATU must be a home for all working people, but especially for the most vulnerable layers. Sub-contracting, casualising and informalisation deny workers the human rights that our constitution and laws are supposed to guarantee them: the right to organise and to engage in collective bargaining, and to work in safe, healthy and decent conditions.
That is why in March we organised a very successful Collective Bargaining, Organising and Campaigns Conference. Although it focussed primarily on the employed workers, we did not ignore the plight of the unemployed and informal sector workers. The declaration reaffirmed our demand for comprehensive social security and a basic income grant, to ensure that no South African, whatever their employment status, will be living in poverty.
Government also has a crucial role. The South African government has signed ILO conventions guaranteeing workers’ basic rights, but too many of the principles enshrined in these conventions, our constitution and labour laws are honoured in words but ignored in practice.
It is worth going back to the Civil Society Conference which we organised in 2010, which declared that “South African citizens have a constitution and laws which give better guarantees of social justice, human rights and equality than almost anywhere else in the world. Yet in practice millions are denied these rights, especially socio-economic rights.”
To the individual worker, secure and well-paid employment not only brings an income but self-respect, self-confidence and personal dignity. To society, lower unemployment brings more people into the market economy, as they spend their wages on goods and services, which in turn creates more new jobs to meet the growing demand and more business opportunities for you in the informal sector.
We can, and must transform the lives of workers in the informal economy but you will not be handed security and wealth on a silver platter. No real, lasting improvements in the lives of the poor will be won without a struggle for we know power concedes nothing without a struggle. We had to fight for our political emancipation in 1994. 19 years later we must revive those same traditions of selfless struggle to in our economic emancipation, justice and peace.
United we stand; divided we fall