In a recent briefing published on this website, Zwelinzima Vavi indicated that I must be "the first target" in his war against low wages. He claims I have an ideology of "a quarter loaf is better than none". As the following photograph, taken at a busy intersection in Johannesburg, reveals, my "ideology" is evidently shared by South Africa's poor.

In his briefing Vavi fails to question the morality of minimum wage laws and governmental social support, by means of which we have forbidden someone to be usefully employed at R11 per hour in order that we may support him at R8 per hour in idleness. The poor in South Africa are forced into indolence by being prohibited from working for anything less than the statutory minimum wage.

Vavi is correct that I personally will not work for R278 a week. In reality I will not work for R278 an hour, which raises the interesting question of why people earn what they do. Vavi lives in a world where workers' wages are determined by fierce confrontations between workers and employers. In this world, employers inevitably drive wages down to the bare-minimum survival level, and unions play the role of raising wages above the survival level with no adverse effects.

In truth wages are determined by the same forces that drive the prices of everything: supply and demand. This may sound trite, but the concept "supply and demand" does at least capture the central intuition of economics concerning wages, namely that people tend to be paid what they are worth. If someone is paid more than he is worth, he will lose his job. If he is paid less than his worth, he will find another job on more favourable terms. This is why trade unions, by raising wages, cause unemployment: employers keep those employees whose productivity justifies the higher wage, and retrench the rest. In other words, the reason I do not work for R278 per week is that I am worth more than that to an employer. I have marketable skills, scarce expertise and unique experience that allow employers to get more than R278 per week out of my labour.

Reading the rest of Vavi's briefing, it strikes me how his strident language is indicative of the thuggery that goes on in his labour cartel. Cosatu must "build worker power". I must be a "target". Workers must "demand" significant wage improvements. Companies must face "the full might of the law!" This is not the language of an organization growing in confidence and esteem. It is the language of an organization on the back foot.

Cosatu-affiliated unions are losing members in the private sector. Indeed, there are now more union members in the public sector (2.2 million) than in the private sector as a whole (1.7 million). Trade union membership, both in absolute numbers and as a proportion of the total workforce, is way down. Due to the loss of membership, union dues have declined by R95 million over the past year. On average last year, just 1.4% of union members turned up on a strike. Cosatu is experiencing a crisis of relevance, and its members are voting with their feet.

Picture: A beggar’s placard on William Nicol Drive, Sandton

Click here to sign up to receive our free daily headline email newsletter