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South Africans must stop thinking like victims or we’ll become them

In simple dollar terms, South Africans working in the formal sector earn more than those in any Brics partner country.

South Africans are the world’s worst-off citizens. For many in South Africa, there is no doubt that we are the poorest of the poor – striking teachers state as a fact on the evening news that they are the most impoverished workers in the country.

Next week, the municipal workers will say the same. Miners, doctors and even our former president have all complained about their own poverty.

When the minimum wage was imposed in South Africa, there was an outcry that it was not enough.

While it is true that it may not feed and clothe a family of four if only one person in a household works, it is not low by international and relative standards.

Yes, our minimum wage is low. It is only the 53rd highest in the world. A more complete picture, however, would include the fact that another 105 countries have minimum wages with purchasing power lower than ours. And there are 30 states that do not have a minimum wage.

Sectoral minimum wages are higher

Furthermore, many of our sectors have sectoral minimum wages way above the national minimum wage – and in many of them, the number of people on the minimum wage is less than 10% of the total.

Remember too that for a developing country, SA spends a lot on social income grants – more than almost all other developing countries as a percentage of GDP. Moreover, free water and power are also part of the social wage as is free housing. Transport costs as a percentage of income are high but most other costs are relatively low.

The South African average monthly formal sector salary is the 18th highest out of the 50 countries we have purchasing power parity adjusted wage data on.

In 2017 South Africans in the formal sector had a higher wage than those in Sweden, Japan, New Zealand, and 10 other countries in the rich world – the 34 countries that are members of the Organisation for Economic Co-operation and Development (OECD).

We can buy more than most

South Africans who work in the formal sector earned more than any of our Brics partners in the formal sector. We could buy four-and-a-half times what an Indian employee could and three times that of a Brazilian and twice that of a Chinese or Russian worker, in purchasing power parity terms.

Even in nominal rand terms, South Africans earned more than those in 29 countries, while only 26 countries earned more than us – mostly rich and advanced countries, along with some bigger developing markets.

Even in simple dollar terms, South Africans earn more than any Brics partner country. This is not news to those who read the tri-annual UBS report on prices and earnings around the world, which shows very similar levels of relatively high earnings by South Africans.

Leaders who plead poverty

South Africans obviously do not believe this, and the report is not widely published, but in order to make decisions about protests and strikes, we should make informed decisions at least as far as hurting our economy is concerned.

Our leaders probably do not know these facts either as they are so wrapped up in a victim mindset and perceptions of their own poverty that we are all in danger of being exploited.

But nothing is further from the truth! The problem is the vast numbers of people in the unemployment queue who have nothing or are underemployed by only having ‘piece’ work.

Demanding more without delivering more

Our productivity is, by some production measures, quite poor. In terms of workers employed in crude steel production, for example, SA workers produce less steel per employee than those in India, Malaysia and China. (Even America and other developed countries in part cannot compete with Chinese production per worker and firms often import their basic steel. Hence the tariffs in steel all over the world.)

SA steel production accounted for 2.2% of world steel production in 1987. We fell to less than 0.35% early in 2019.

Not only does South Africa now produce less steel while the world is increasing production, but the Eskom fiasco is also likely to reduce our ability to produce.

Like Zimbabwe, South Africa is in danger of losing its entire steel industry in the next decade due to these low productivity levels and high cost structure.

Source: Economists.co.za

In vehicle production, we seem to fare better but we are still nowhere close to the best. And our wages on the factory floor seem reasonable, particularly when one compares them to the likes of Thailand and Turkey.

Source: Economists.co.za

Yet we are forced to allow massive tax breaks and other subsidies in vehicle production to make it work. A few years ago National Treasury estimated the subsidies to be in excess of R18 billion a year.

Yet motor vehicle production is not keeping its market share in the world either. Despite the massive subsidies, SA is not keeping up despite the positive headlines you may read. Again power blackouts and cost increases will hurt here too.

SA has dropped from the world’s biggest gold producer to eighth place this year. The output ranking has dropped in coal, iron ore and even wool production.

Source: Economists.co.za

If South Africa wants to avoid being a victim of its own victimhood it needs leaders who have the courage and wisdom to inform the public that those of us lucky enough to have a formal sector job have far less to complain about.

The unemployed can complain – but those of us in formal work are generally not as poor as we have led ourselves to believe.

If we are not careful and productive we will believe ourselves poor. Why? Because we demand more without delivering more productivity compared to the rest of the world. This year Sri Lankans, for example, will probably become richer than us.

South African production struggles to compete and we lose jobs and income to other countries.

The graphs above show the results of the worrying trends.

Mike Schüssler is an economist at Economists.co.za.

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COMMENTS   23

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Unfortunately the world is not as simple as simple $ terms.

After deducting 2 sets of taxes (one to government and one to private sector) for essential services, education, healthcare, security, transport & insurance..

Having to live in fear your family’s safety on a daily basis while building a moat around your house. Expecting violent crime to show up on your doorstep anytime soon.

Constant threats of government looking to nationalize your property, pensions, your job (via AA).

With falling savings rates and ever rising risks in SA, those other BRICS aren’t looking too bad and the developed world is certainly better.

I fully agree that we have a tax burden problem. read my articles about it on another website.

We also have a heavy redistribution of tax money that leaves very little for those paying it. (As well as the fact that many of our neighbours use many of our services too such as health, education and even social grants.)

We also have an ineffective government so we need extra security and more of our own teachers as well as health care.
But our formal sector salaries are high and our productivity is not and that means we have to address this first or we lose to other countries the whole time.

Higher formal sector salaries are arguably due to demand and supply of labour and less about competitiveness.

There’s still a skills shortage in South Africa in some parts of the economy that allow for it. Other resource rich countries like Saudi Arabia, Australia etc with demand for skilled labor outstripping supply, have similar salary dynamics.

The answer to raising productivity lies in more competition. The banking sector shakeup in SA would be a good example.

Economists always pushing on a string..

Public and private earnings?

but hey “South Africans must stop thinking like victims”,

just then they might not have their brains blown out for a cellphone or a car..

South Africa is the only country in the world with a special set of laws to protect and enable people with the victim mentality and slave complex. Locals are remunerated for their loser attitudes and their lack of accountability. Laws such as BEE, EE, the Mining Charter, the security of tenure, the Labour Laws, the incremental tax rate, free housing and services, high municipal taxes for those who have an address, free tertiary education, quotas in sports, quotas in schools and the demand for land are all manifestations of the victim mentality.

The problem is that the victim mentality is highly contagious. Nobody will study, improve himself and work hard if he can get similar results by simply claiming to be a victim.

The socialist parties like the ANC, EFF and IFP represent more than 70% of citizens. We are ruled by the losers with the victim complex. Those who accept responsibility for themselves are less than 10% of society, yet they must carry the rest. The few responsible citizens are forced to provide for the majority who suffer from the victim mentality.

If there is such a thing as the law of history, then it states that such a nation of slaves eventually exterminates themselves through poverty, hunger and disease.

“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” -Winston Churchill

Spot on Sensei. Everything this government and it’s hordes of crony bureaucrats touches turns to sh1t. Here is a simple fact that, to me, puts this clearly into perspective. After WW2 Germany and Japan were decimated, yet, in the next 25 years they rebuilt their countries and were among the 5 most successful economies and exporters in the world. In the past 25 years that the ANC have been in power our country has gone downhill at an ever increasing rate. They took over a well organised and functioning economy and destroyed it. Considering that entropy takes no effort versus rebuilding a country from ground zero the contrast is sickening. IMHO our biggest danger lies in being positive. We are already victims, that paradigm is now history. Einstein: “to keep on doing the same things the same way and expect a different result is the definition of insanity”. By extrapolation of that definition and in our circumstances we are insane to expect any improvement.

“If there is such a thing as the law of history, …”
What history teaches us (or tries to) is that we don’t learn from history.

Great to have this info but you have not separated the private and public sector in your article, nor state enterprises and private ones.
Please give the facts for each group so we can get to grips with the issue of a bloated civil service and state subsidised employees living off the fat of the land.

Spot on. Public sector employees are paid obscene amounts of salaries and perks which are not market or productivity related. Think parasite Eskom. Their average salaries are double the national average.This skews your stats.

Sadly South Africans have been victims of apartheid and 25 years of un-precedented ANC corruption and policies. This has its toll on everyone and the whole economy.

Yes we are victims to sorrowfulness….to see a once “functional” land destroyed.

Complaining about bad governance is not equivalent to being a victim . accepting same and saying or doing nothing about it will certainly do the trick. this regime has taken a once unjust but vibrant economy and f@&$ it up

This article is just a rant.

Without the specifics of a well-thought-out solution, this is a missed opportunity.

“Don’t worry, be happy!” is an empty encouragement by itself.

Moneyweb would add real value to its articles (and readers) if it insisted – as a matter of editorial policy – that authors MUST properly address a solution to the “problem” they so enthusiastically identify. Otherwise there is little point to their contribution except to add to the general noise.

The article does provide the solutions by implication. For the victim mentality to come to an end, the government should stop incentivizing it. This means that all discriminating and racist policies like BEE and EE should be scrapped. That the labour laws and mining charter be adapted to reflect free-market policies. That municipal rates and taxes are not allowed to be “distributive”. Individual property rights should be respected. The power over the legislator should not be misused in order to steal from the minority to bribe the majority.

In short, the government will have to implement the economic policies of the FF+ and to a lesser extent the policies of the DA. For that to happen, the voice of the majority should be ignored, for they have the slave mentality and will always vote for a policy that promises redistribution. Therefore, for South Africa to grow like Singapore, we will have to abandon the constitution, human rights and democracy.

A democracy is a system that offers citizens the opportunity to change their environment to reflect their mindset. If you live in a democratic country where the majority finds refuge in the victim mentality, you are basically screwed.

I completely share your sentiments.

But this happening all at once?

Never going to happen! It’s just too much of a culture shock, and too much to absorb in one go for the electorate that we have.

I totally agree with Schussler’s premise of a “victim mentality” being bad for the country.

The issue is, HOW do you fix that? It’s not enough to simply command the populace to “snap out of it!”

Try that tactic (by itself) with a patient with clinical depression, and you can simply provoke the patient to commit suicide the minute he leaves your practice.

This analogy is not out of place for SA as a nation.

You must be able to offer a practical intervention that’s accepted by the PATIENT (not you alone!) as the FIRST step to brightening up their lives.

And then, there must be a steady path of small bite-sized, connect-the-dots successive steps that will lead to the permanent cure.

Schussler does not provide this path. And that’s the pity.

The article is hardly a rant; it’s very accurate.

Complaining at length without offering a real solution is the very definition of a rant.

“Accuracy” has got nothing to do with this observation.

The problem with this article is that Schussler spent 95% of his energy convincingly laying out his premise, and then gave next-to-bugger-all of his undoubted expertise to his solution. And especially, HOW this would be implemented.

Instead, he states the blindingly obvious in a short throw-away paragraph at the end.

Gosh, Louise, if your kids had written this they would have been indulged with an A for effort, and a C (at best) for the conclusion.

The bar is much higher for professional ECONOMISTS writing paid-for articles.

Their value is NOT in merely identifying what the problem is (in this case, Schussler’s premise is neither original nor ground-breaking). Nor is it in lengthy repetitive evidence. The local sports coach or “Monday quarterback” could likely have given the same observations.

The professional value of the “expert” here lies in mapping out a DETAILED solution AND path to the implementation of the solution he’s identified.

I expect better from Schussler (and he’s certainly capable of it!).

Unfortunately groups of victims are popping up everywhere often disguised as political parties. Tomorrow there will be an illegal march and gathering at Eskom Megawatt park organised by the BFLF.

Every few months the local community has to scramble to ensure that Eskom chaos does not spill over into the surrounding area.

The victims are doing everything they can to make sure that our productivity levels drop even further. Legal processes mean nothing so the freedom charter seems to be producing anarchy.

Government Grants don’t help but exacerbate the problem. Overpopulation is the biggest cause of poverty and enhances the victim mentality. Education, encouraged birth control and reward for a job well done instead of for stealing and robbing the economy wiould go a long way in changing attitudes.

SA has people who are employed but don’t work but are paid for this.
SA has people who are not employed and don’t do any work, but are paid for this too.

Why would anyone see any advantage in being productive?

Same applies to SA’s leaders. The example comes from the top.

‘….leaders who have the courage and wisdom to inform the public that those of us lucky enough to have a formal sector job have far less to complain about.’

This will never happen!

To explain the substantial gap between actual and perceived ability, a big portion of the populace will continue to blame apartheid and a biased system for their failures. I acknowledge that our past plays some part but at some point one must move on…..increasingly i doubt that SA will ever be able to.

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