The labour dilemma

While farmworkers are suffering due to higher inflation, especially food inflation, farmers are also suffering due to the increased input prices. The labour department will have to take both sides into account in its deliberations for the 2009 to 2011 wage determination.
Issue date : 13 June 2008

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Wages account for about 17% of total farm inputs. Minimum farm wages are set out in a sectoral determination, and the 2009 to 2011 period was announced by the labour minister in April 2008.

Now Agri SA, TAU SA and NAFU will make submissions to the labour department. How agri and labour will differ Organised agriculture will point out that agricultural input prices increased sharply during the past year, as did the farm requisite prices (Table 1). Increased input prices have caused a sharp decline of farm profitability and farmers will argue they can’t afford a wage increase higher than the rate of inflation. rganised labour will refer to the food price increase of 15,6% year-on year in March and that further increases are likely.

They will also mention the general CPI inflation rate of 10% plus. Wage settlements during the first quarter of 2008 were at 7,8% and labour will probably ask for at least a 10% increase. Hence the Labour Council will need Solomon’s wisdom to achieve a fair and sustainable dispensation.

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But whatever they decide, each farmer will still determine how many labourers he can afford. Considering that from 1993 to 2006, 465 000 farm jobs were lost – a decrease of 42% – if wages become too expensive, there will be more job losses. Man vs machine and more labour laws A cademics argue that the cost of labour is much lower than the cost of capital and that higher wages won’t increase the move towards more machinery and less labour.

This may be true in theory, but modern technology not only displaces labour, it also increases productivity with more precise control over inputs, processes and outputs. Examples are the use of precision cultivation equipment with automatic steering in crop production and computer-based management systems in dairy herds. In many ways, machinery’s more dependable than humans and while it’s true that it needs operators, it’s easier to manage a workforce of skilled workers than unskilled and sometimes unmotivated workers.

And despite machinery being more expensive, farmers will continue to replace workers with machinery to save labour costs and effort. G overnment will also have to consider the other factors that make labour less attractive. Farmers want the right to dismiss a worker when necessary and don’t want to hear the minister accusing them of illegal evictions when they legally dismissed workers and adhered to correct procedures.

As government increases the number of laws that govern farm labour, farmers will find this yet another reason to reduce their worker numbers. Dr Koos Coetzee is an agricultural economist at the MPO. All opinions expressed are his own and do not reflect MPO policy. |fw