Page 8, 22nd March 1974

22nd March 1974
Page 8
Page 8, 22nd March 1974 — South African wages in the spotlight

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South African wages in the spotlight


The issue of south African wages exploded like a bombshell in this country as a result of Adam Raphael's

brilliant piece of journalism in the Guardian last year.

Many British companies repudiated the accusation made in his report and the House of Commons therefore set up a conimittee to find out the truth of these allegations. The committee has now reported and its findings have substantially borne out the Guardian's reports.

When this report appeared. Christian Concern for Southern Africa was already preparing for a seminar on the question of the responsibility of British investors in the South African situation. The principle owners of British industry are the major Financial institutions such as the insurance companies, pension groups, the units trusts and the churches. It has always been accepted that the prime responsibility of these institutions was simply to invest their income wisely i.e., get the best return consonant with the safety of the capital.

This attitude has however changed radically over the last few years. Investment institutions. it is now realised. have not only financial but also social responsibility for the activities of the companies in which they invest.

In a recent report the Confederation of British Industry pointed out that "shareholders, as the owners of business. have a responsibility that extends beyond the actual buying and selling of shares. They must 'exercise this responsibility more fully in the future and be provided with the proper information on which they can form their own judgement in so doing ... the larger institutions have the resources to make themselves well informed. .

"Many single institutional holdings are large enough to exert a significant influence on the policy of the company concerned. In most hest known British companies the combined holdings of the institutions are large enough to give them a decisive influence on boards of directs."

CCSA was fortunate to secure the participation at its seminar of people from some of these major institutions the NCB Superannuation Fund. the Church Commissioners, Prudential Assurance Co.. Legal and General Assurance Society Ltd.. Commercial Union Assurance. the GI C as a well as representatives from the Methodist and Baptist Church and the Society of Friends.

Commons committee on South African wages! This report contains a list of 63 (out of 141) British companies which arc at present paying some of their black employees in S. Africa below the poverty line. These are not fly-by-night firms but on the contrary many of them are household names British Leyland, Unilever, Barclays Bank, GEC, CadburySchweppes, Dunlop, Tate and Lyle, RTZ, EMI. Eveready, Rank-Hovis-McDougall, Thorn Electrical Industry. Vickers. The Poverty Datum Line to give it the official title describes not just a low standard of living, it represents the barest minimum for survival. In preparing such a Poverty Datum line major items are taken into consideration: (1) minimum amount of food necessary for health, (2) minimum amount of fuel and lighting compatible with health. (3) minimum amount of clothing For health and decency, (4) minimum amount of cleaning materials for health.

According to one expert, Professor Bateson, the Poverty Datum line "does not allow a penny tor amusements, tor sport, for medicine, for education. For saving. for hire purchase, for holidays. for odd bus rides, for newspapers, stationery, tobacco, sweets, hobhies, gifts, pocket money or comfort or luxury of any kind."

In other words, British companies are paying some of its black employees in South Africa just enough to keep them alive in order that' they can go on working.

The House of Commons committee produced a Code of Practice for British Companies operating in South Africa. This Code states that companies should employ the same stan dards in South Africa as they use in this country. On the ques tion of wages, companies should realise that they are not

prevented by law from improving the wages and conditions of their black employees; that the basic minimum wage for all employees should be 150 per cent of the Poverty Datum Line and that wages should be determined according to.job evaluation and not according to race; differentials between white and black workers should be reduced and the advancement of Africans into more qualified and better paid jobs should be encouraged by providing training facilities and by promoting Africans into more responsible posts rather than recruiting skilled labour from abroad.

On the question of conditions, the Code urges cornpanics to ensure adequate medical services, pension schemes comparable in benefits IC) those of white employees, and provide free or subsidised meals. In particular, companies must realise the effects of the migratory labour system on African employees and do all within their power to ensure that they have a legal right to live with their families. Companies should raise the standards of housing conditions for migrant labour and provide legal advice and assistance for African employees in relation to the 'pass laws'.

On the question of trades unions. companies were directed to formulate a definite policy with regard to industrial relations and should support the establishment of collective bargaining on behalf of African employees preferably through trades unions but. where this is not feasible, through democratically elected works committees with freedom to discuss wages and conditions. of employment.

Hnally, the companies were exhorted to he as concerned with the social performance of their subsidiaries in South Africa as they are with their financial performance and that therefore at the highest level directors should have a thorough knowledge of the economic. social and political forces which govern the lives of their African employees.

The two 'standard criticisms levelled at such a programme are that the Africans are not ready for it and that the companies cannot afford it. The

Code of Practice squarely confronts both these issues. On the first it comments: "Companies which complain of a lack of aptitude or ambition on the part of African workers ma find that the problem lies sith their own management ." On the Iasi it points out that there are "profit advantages in being a good employer. and it is in a compimy's wider interest to maintain a good reputation. The Libility to pay basic wages above the relevant PDL now, at least to all male adult employees, should be regarded as one of the minimum conditions for maintain i rig or establishing a business interest in South Africa', Furthermore. it is often argued that any improvement in African wages would be counterproductive as it would throw many out of work. Against this it can he seen that higher African wages and thus greater Atriean spending power will create more employment than it replaces. Corporate Responsibility and the Institutional Investor: The aim of this seminar held last November at the London Business School was to discuss with people from the major institutions how they saw their social responsibility. Identifying the main reason for the seminar, the Chairman of CCSA in his introduction pointed out that the Christian in Britain is not in a position of commenting on the "ethics of the situation as an outside observer. As a citizen he shares to some extent in the economic benefits of these investments and it is very likely that his Church as an institution derives part of the income necessary for its work from investments in companies with South African connections" It was generally accepted by the participants that the institutional investors should use their financial muscle when they felt a company was "acting in a socially irresponsihle manner". The reasons for such act i&ni %WOW he in part moral and in part financial. It was argued that a company acting. irresponsiblâ–  would eventuallY harm its reputation and thus its financial position. GeMnerrTal .w Ph aol m pe rr eos fe nL teegda d 1 one e of the papers, identitied three conditions which would have to he fulfilled before the major institutions would he willing to act 'Turn to P. 10

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