Economist Cees Bruggemans asks what love has to do with ones’ salary, wage, bonus, and benefit packages.<\/p>\n
His answer is short: “Precisely nothing…for work isn’t charity where love has everything.”<\/p>\n
For work in a capitalist market economy is a hard nosed thing, where an employer decides, using his best judgment, what he is prepared to pay, and where the employee has a choice of working for that wage or seek better work conditions elsewhere.<\/p>\n
To accept the offer, and three years or days or hours later to turn around and say it isn’t enough is admissible, except it can’t be one-way. It opens up the negotiation to both sides, at which point the employer can decide he wants out, too.<\/p>\n
To insist on more benefit one-sidedly and enforce it on the employer must come close to being in socialist paradise, which is not what we are in now, even if many would want to be, just as many others would cop out of that one, too.<\/p>\n
Is there a precise, foolproof way of deciding what work, any work, is worth? This question was answered in the negative 80 years ago by Prof Joan Robinson at Cambridge University in the UK.<\/p>\n
When contrasting the wages of rubbish collectors and university professors, tradition and negotiation had decided certain conventions, such as that profs earn more. When the rubbish men joined a union and it succeeded in steadily raising their wages, the professors started to become uneasy as the gap between them steadily dwindled.<\/p>\n
This wasn’t socially right. There should be a law against it? Except there wasn’t a higher authority to whom one could appeal, unless the nanny state is invited to take over and starts deciding what everyone should be paid – but again having no precise model on which to base such decisions.<\/p>\n
Should holders of blue eyes be paid more? Or holders of blue hats? Or of blue certificates, obtained with difficulty? And, pray, why exactly?<\/p>\n
Communist societies also set arbitrary wage levels on a take-it-or-leave basis, but the underlying condition stayed the same.<\/p>\n
Japanese salarymen for many decades earned relative peanuts, with the gap between the highest and the lowest much less than in more open, less socially closed societies.<\/p>\n
In the free for all that is capitalism, employers seek those workers that can do best what they need for the least outlay. This gets tested in the market place where the employer and worker can both test the going rate.<\/p>\n
Through such market testing, conventions come into being, but with so much change as is our daily lot, these benchmarks keep changing rapidly, too. Makes it difficult to keep your bearings.<\/p>\n
Nothing prevents an employer in an open free society to pay more than next door, even if this does not yield him some advantage through higher productivity or some other means.<\/p>\n
It then means profits are voluntarily reduced. In a maximizing model like market capitalism this is an unconventional choice, but it is up to the employer to make it.<\/p>\n
When any type of work is weighed up as to its attributes, someone has to put a price on it that presumably can be sustained in the competitive market place.<\/p>\n
Demand and supply will sort out much of the arguments raised, whether the work is offered at all or whether some other (mechanisation) route is followed, allowing upskilling and better remuneration, if for fewer people as more capital is used and needs to be rewarded, too.<\/p>\n
As to obscenely high senior management and professional rewards, real exceptional talent is scarce, yet there are many employers who all want such talent on the payroll.<\/p>\n
Then it can happen quite quickly that they can start demanding more than what your average rubbish collector will succeed in getting, especially when prosperity is on a roll and goes viral (global), opening up enormous economies of scale.<\/p>\n
Suppressing all this can be done, but few successful people today will willingly don the culture of the Japanese salaryman.<\/p>\n
If still insisting, it may be observed that just after major wars, where everything has been destroyed, there is a much greater general willingness to stand together, keeping differentiation light.<\/p>\n
But when society is on a roll, such niceties tend to go out of the window. As so many other social conventions, such as good manners, besides knowing your place, as it was known. The more is the pity. Regarding some of that.<\/p>\n
As things stand, intimidation has in places taken centre stage. So much for lovelorn labour relations. Expect much more heat in the work place.<\/p>\n
With the platinum strike on a roll, and by all accounts only starting, a massive engineering strike looms next these winter months. With Eskom having run out of juice.<\/p>\n
Our 1Q2014 disappointing GDP performance was only a curtain raiser. More, not less, strain lies ahead as we stress labour relations and business confidence to their design limits.<\/p>\n
By Cees Bruggemans, economist at Bruggemans & Associates<\/em><\/p>\nMore employment<\/h3>\n