Why South African workers are not overpaid
Chris Malikane takes issue with Mike Schüssler's recent South African labour market analysis, commissioned by the trade union UASA. But in a classic case of the pot calling the kettle black, Malikane commits some of the very same errors he identifies in Schüssler's work, bluntly rounding off his effort in claiming that the "white workforce... must have its wages halved."
Malikane accuses Schüssler of an abuse of statistics, but then wastes no time in stepping into the same statistical quagmire. If Schüssler was convenient in his use of average wage levels for different skill levels - instead of using mean wage levels, as Malikane wants him to - Malikane was ruthless in his deterministic reduction of distinct persons to essentially members of racial categories. Malikane commits this throughout. One striking example is when at one stage he drops skills from his equation and says that 95% of working white South Africans earn more than R2 000 per month and half of Africans earn less than R2 167, which supposedly points to racism.
But is Malikane, an associate professor in Economics, truly oblivious to the fact that differences in educational attainment - which greatly influences the general pattern of wages - correlates with "race" in the South African context? Regardless of the historical reasons behind this current situation, it must surely be recognised that at present educational attainment varies substantially across race groups: more concentrated amongst white and indian and less concentrated amongst coloured and black categories. A reader aware of this distribution of educational characteristics could just as well have inferred that wage differences across race groups are evidence of "educationalism" (and not racism).
Malikane also claims that lowering wages won't solve the "structural unemployment" situation in South Africa. He is correct, but for the wrong reasons.
First of all, simply cutting wages was not what Schüssler was advocating, as Malikane suggests, but nevertheless: there is no general prevalence of worker overpay in the private sector in South Africa. Insofar as both Malikane and Schüssler succumbs to the overpay fallacy - Schüssler loosely looking at average workers and Malikane expounding on the overpaid "white workforce" - both are wrong.