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Low Labor Standard Leads South Africans to Export Jobs
March 13, 2004
By SHARON LaFRANIERE
BABELEGI, South Africa - When Tiger Wheels opened a wheel
plant six years ago in this faded industrial town, the
crush of job seekers was so enormous that the chief
executive, Eddie Keizan, ordered a corrugated iron roof to
shield them from the midday heat.
"There were hundreds and hundreds of people outside our
gate, just sitting there, in the sun, for days and days,"
Mr. Keizan recalled in an interview. "We had no more jobs,
but they refused to believe us."
The little shelter might just be the last expansion of this
South African company's operations here. It is hiring
again, but not in South Africa, where one person in four is
jobless. Instead, it has a new plant in Alabama, is looking
to open another in China and may expand its subsidiary's
factory in Poland.
South Africa's failure to keep jobs at home and to
stimulate new ones is turning into one of the biggest
disappointments of the post-apartheid era.
After black majority rule triumphed 10 years ago, the
government bent over backward to attract businesses to an
economy weakened by the export of capital and a global
boycott during apartheid. It cut inflation, liberalized
trade and reduced the budget deficit.
But sound economic policies have not compensated for
unskilled workers, high labor costs, crime, AIDS, the
specter of a collapsing Zimbabwe on the northern border,
and the fact that Africa is, simply put, a bad business
address.
Today, South Africa's underclass is bigger than ever.
Counting those who have given up the search for work,
unemployment has jumped to more than 40 percent, from 31
percent a decade ago. The gap between rich and poor remains
one of the world's largest.
"If things go on like this, we could experience a new
struggle, a class struggle," said Sampie Terreblanche, an
economist with the University of Stellenbosch, who sees the
lack of jobs as the biggest threat to the pact that has
bound blacks and whites together in the new South Africa.
The challenges of growth are demonstrated aptly enough by
Tiger Wheels. For 20 years the company made aluminum wheels
only in South Africa. Then, in 1994, its German subsidiary
opened a factory in Poland that now employs 500 people.
The Polish plant turns a profit. The South African plant,
with 700 workers, either breaks even or loses money, Mr.
Keizan said. The main reason, he said, is that the Polish
workers - much better educated but paid the same wage as
the South Africans - make fewer mistakes.
For every 60 wheels cast at the South African plant, three
must be melted down and recast, 30 percent more than at the
Polish plant, he said. In his view, that is because 9 out
of 10 of his South African workers never finished high
school, while the same proportion of the Polish workers
have university degrees. One-fifth of the South African
workers can neither read nor work a simple calculator, he
said.
Martin Glatt, a co-chairman of Tiger Wheels, said it would
be costly to train the South African workers to the level
of the Polish workers. Not only are the Poles more
efficient; they are also healthier. At its South African
plant, Tiger Wheels loses one worker a month to AIDS.
"You can say that's only 12 a year, out of a work force of
700," Mr. Keizan said. "But it's the 30-to-45-year age
group. Each one of them has accumulated years of skill and
understanding of what they do. It's horrible."
That pain is widely shared. One-third of South African
companies report that AIDS has lowered profits, according
to a recent survey by a business coalition. Economists
estimate that AIDS cuts one percentage point off the growth
of South Africa's gross domestic product.
That translates into a loss of jobs that the country can
ill afford.
The large number of applicants for jobs at a new marine
park in Durban last month is a sign of the growing
desperation of the underclass. About 10,000 people showed
up to apply for 300 openings as guards, cashiers, cleaners
and information officers. When the crowd surged toward the
gate, 17 people were crushed against a steel fence and had
to be hospitalized. About 100 others were injured.
President Thabo Mbeki, facing an election next month, has
promised a $2 billion, five-year program to employ a
million people to build roads, sidewalks and pipelines. But
that cannot make up for lack of growth in the private
sector, where many companies are still playing it safe.
The economy's annual growth rate of 2.8 percent is less
than half what the government predicted after apartheid
fell.
Fayez Omar, who runs the World Bank's operations in South
Africa, said those expectations were simply too high. "It
was unrealistic of anybody to expect that you would
stabilize the economy one year and start growing the next,"
he said in an interview. "The government has done the right
thing. They have laid the foundation for a takeoff."
But even optimists like Mr. Omar do not predict any takeoff
soon, given the lack of skills in the work force, labor
restrictions and other obstacles.
Apartheid left millions of blacks with little education and
no trades. Nearly 60 percent of those who are jobless have
never worked, according to the National Labor and Economic
Development Institute.
In other developing countries, legions of unskilled workers
have kept down labor costs. But South Africa's leaders,
vowing not to let their nation become the West's sweatshop,
heeded the demands of politically powerful labor unions for
new protections and benefits. According to a study
conducted in 2000 for the government's finance department,
South Africa's wages are five times higher than
Indonesia's, even though its workers are only twice as
productive.
In Johannesburg, at least, executives say crime is also a
deterrent. In a World Bank survey in 2000, heads of major
manufacturers in or near the city said crime and violence
were the biggest reasons their companies did not expand.
For foreign investors, in particular, Africa's image is
still another hurdle. South Africa's financial stewards,
banking system and ports may be first world, but the nation
itself still rests in a continent stained by corruption,
war, poverty and, in neighboring Zimbabwe, political and
economic collapse.
Mr. Keizan and the other members of the Tiger Wheels board
say they weighed all those factors and others in deciding
where to build plants. Foremost among them was the desire
of the company to present itself as a global producer. That
meant starting operations in the bigger markets in Europe
and the United States.
Its plans for South Africa are modest: keeping 700 jobs at
the Babelegi plant, an hour's drive north of Johannesburg,
but cutting costs. In the past, that has not been easy.
Three years ago, when the factory was struggling
financially, Mr. Keizan said, the company tried to freeze
wages. After the workers staged a three-day strike, an
arbitrator ruled that they were entitled to the same wage
increase negotiated by an industrywide union.
Mr. Glatt, the co-chairman, later compared the South
African factory's problems with the more efficient
operation in Poland.
"Tell me, where should we make our next investment?" he
asked at a conference on how to create jobs in South
Africa. "Look, I'm sad about this, but tell me, which way
is our board going to vote?"
http://www.nytimes.com/2004/03/13/international/africa/13AFRI.html?ex=1080569821&ei=1&en=7d3ba58bac18c747
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