13.01.2013

Farm pay hike may spark job losses

THE National Development Plan, endorsed by the ANC last month, projects that agriculture has the potential to create a million jobs by 2030 but with the ongoing strikes the sector is expected to lose more than 200,000 jobs within three years.

The strike by Western Cape farm workers resumed this week with demands for a daily wage of R150 compared to the current government-determined minimum of R69.

However, a report by the Bureau for Food and Agricultural Policy on agricultural wages released last week showed that if average farmworkers' wages increase by more than R20 a day many typical farms would not be able to afford it.


The bureau said structural adjustments would have to be made to accommodate the higher wages. These would include mechanisation and consolidation of farming units.

The National Development Plan, however, assumes that almost half of the jobs created by agriculture will be through subsistence and small-scale farming.

Loane Sharp, labour market analyst at Adcorp, said the number of jobs in agriculture have fallen from about 1.8-million in 1994 to 661,000 today.

This is mainly because of the abolition of the agriculture control boards (which helped to subsidise some industries), increased mechanisation and automation because of technological advancement and significant increases in minimum wages for farmworkers.

Sharp said the number of jobs in agriculture will fall further to 450000 in the next three years, leaving 200,000 more people jobless.

"These strikes are seriously disruptive. They damage South Africa's reputation as a reliable source of high-quality fruit and vegetables and they adversely affect the supply chains.

"The knock-on effects on the transport and logistics sector are dramatic. Employment in agriculture will fall further for these reasons," said Sharp.

John Purchase, CEO of agricultural business chamber Agbiz, said the strikes will affect production. Farmers will suffer losses and be unable to cover all their costs.

"They will have to borrow more or restructure their businesses. Those who can afford it will mechanise more and others will look at areas of farming that are less labour-intensive," he said.

"The knock-on effect will be of markets looking for new suppliers. Once a market has found a new supplier, it will not come back [to South Africa]. We are already struggling to retain our markets in Europe."

This was echoed by Michael Laubscher, chairman if the Hex Valley Table Grape Association.

"The international market wants security," he said.

"A supermarket wants to know that I can provide 30,000 cases of a certainty variety of grapes. If the supermarket doubts that it will get that product from me it will find it somewhere else."

The bureau report showed that a pay rise of R20 a day could lead to a decrease of 0.8% to 2.8% in exports of agricultural and food products from SA and an increase of 0.2% to 1.5% in imports of these products.

It warned that this would have a negative effect on the trade balance. Laubscher said the irony is that while most of the strikers are seasonal workers the permanent farmworkers will be the ones suffering from job losses if wages are raised too much.

Permanent workers work out more expensive for a farming operation as they are paid for an entire year and are provided with benefits like housing and subsidised electricity, he said.

So a farmer can afford to pay temporary seasonal workers R10 or R20 more a day if he employs fewer permanent workers, he said.

At the moment, labour accounts for 40% of input costs in the table-grape industry, Laubscher said.

Because 85% to 90% of farmworkers in South Africa are not union members there are many voices claiming to speak on behalf of the workers in the Western Cape.

The Food and Allied Workers Union (Fawu) is one of these.

Katishi Masemola, general secretray of Fawu, said the union was sensitive to concern about job losses due to high wage increases, but wanted to see the financial formula and rationale behind such concerns.

Short-term gain with long-term loss is "not in anyone's interest", he said.

Article source: www.bdlive.co.za

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