SANE Views

Vol.7 No.14, 06 June 2007

IS THERE A NATIONAL INCOMES POLICY?

SANE VIEWS

Margaret Legum

What decides who gets paid what? If people’s income is decided without an integrated plan, then incomes policy becomes a matter of personal or collective power, wrangling and argument. There is nothing so practical as a good theory, if only because it helps conversation around who gets what.

Is it supply and demand – market forces - that decide pay-packets? Is it about government’s income? Or is it something ethical: about ‘fairness’ or compassion? Or a vision for society? Is there an underlying idea of entitlement to a living income, or is it about obligations to deliver? How are these criteria linked?

The ANC’s Economic policy documents suggest a mixture of these, probably because it seems to reconcile different tendencies in the movement. That is characteristic of all democratic movements; the trouble is that it leads to repeated unresolved conflict like strikes. So it is worth noticing where each criterion is being used.

Market forces are usually given as the reason to raise top civil servants’ incomes. That makes practical sense. The corporate sector’s BEE-fuelled search for Black strategists, managers and scarce technicians with an existing track record - in a skills legacy of the evil Bantu Education Act - becomes a magnet for government-experienced Black people. To keep them, we need to match corporate salaries. It is not about fairness but about market necessity.

But top political positions are surely different. Is there a shortage of people wanting Cabinet positions? Wanting to be President? Even of those wanting to be MPs or Chairpeople of Portfolio Committees? Surely not, because those jobs carry status, capacity and influence that motivate people interested in politics in a democracy. Indeed anyone asking to be highly paid to do those jobs is suspect. I certainly do not want them representing me. So MPs who make market referenced cases for improving their salaries are simply abusing their power to set their own salaries.

Pay for others on the civil service payroll is justified not by supply and demand but by government budgets. But we know that teachers and nurses and technical experts are deserting their posts as soon as others offer them better conditions. They leave posts in which their daily grind includes the work of unfilled posts, and their pay is a fraction of that offered elsewhere. This applies to practically every profession in the civil service – whether teaching, nursing, police, judicial system…name it

The result is to hollow out the very instrument the government needs to carry out the vital systems for its rationale - the developmental state with a bias to poor people. The immediate victims are poor people - those who most need state service and support – not only because of the paucity of the service, but because the people giving it suffer the humiliation of taking home poverty wages and the contrast with top incomes. But in the long run it is the government itself and its legacy that must suffer.

Of course government budgets must come into it - as they do when we decide to fund 2010, conciliation processes in Africa, a new embassy, free education. We are often told government has plenty of money: capacity to spend is the problem. Undermining that capacity seems irrational.

Latterly, encouraging professional competence has been offered as the basis of new pay scales of striking civil servants. But such criteria are not linked to the improved pay of policy-makers: perhaps there are reasons around defining their output. So how do you judge the output of teachers and nurses working in understaffed institutions in poor areas, where their clients are desperate, sometimes violent, often unsupported children. In a school I know every staff member has informally adopted at least one child in the school – out of sheer pity. They are paid R7,000 a month

I want to suggest there is actually an implied theory that in fact underlies incomes policy. It links the discredited theory that wealth filters down, to the new distinction between first and second economies. It is sometimes preceded by a semi-mystical claim - ‘speaking from a place of abundance’. And goes on to suggest that ‘it’s OK to be rich; we should attack poverty, not wealth.’

Being rich means having access not to high bank balances but to the large quantities of the resources that money entitles you to consume – food, accommodation, energy, transport, communication technology, health care, manifold education, beautiful living space, service, chunks of wilderness for holidays, sports facilities and whatever else the luxury business can dream up.

If you believe that ‘ a place of abundance’ means there is no limit to the availability of those resources – that the planet can produce enough of them to enable wealth for all – then you are right to set a good example by being rich. But if you think there is a limit to those resources, then your large consumption must imply others’ much small access.

If there is a limit to resources, then your wealth is a function of others’ poverty; and you cannot diminish poverty while supporting unlimited wealth. The success of the ‘first’ economy – partial as it is for all but the top 20% - is linked to the fact that we ‘cannot afford’ to give everyone a living wage, despite our wealth.

I suggest government’s confusion over rationale arises from the culture at the top – whether in or out of government circles – that wealth at the top is top priority, and that it will help eliminate poverty. It is a global belief. It helps rich people feel good. It is disconnected from the evidence.