CHAPTER 2 A PROFILE OF SUBCONTRACTORS IN THE CAPE
2.6 WAGES
Table 2.29
Mean Wages per week by Tradess Mean Wages per week (R)
Trade Cleaner Labourer Artisan Apprentice Foreman
B/layer 57 69 134 76.5 194.5
Carp/er 75 77.5 157 100 200
Plast/er n/a 80 155 135 n/a
Painter 47 64.5 98 n/a n/a
Elec/n n/a 95.5 225 n/a n/a
Plumber n/a 88 225 n/a n/a
Mean 53 72.5 147 100 196
Mean wages for both artisans and labourers are lowest amongst painters. Mean wages for labourers are higher in the electrical
(R95.50) and plumbing (R88) trades than in the wet trades.
Similarly, mean wages for artisans in the electrical (R225) and plumbing (R225) trades are significantly higher than artisan wages in the wet trades.
It is important to qualify the wage rates above in three respects. First, the survey and related discussions suggested that workers were unable to supplement their wages through any additional source of employment. Of the 515 workers·for which information was available, only 21 (4.1%) had access to any additional source of employment (Appendix B, Table B6).
Second, the wages refer to actual on-site income. They do not take any period of unemployment into account. For the 534 workers for which information was available, 176 workers (33%) had been unemployed for at least three months in 1988 (Appendix B, Table B7).
Third, only a very small proportion of workers receive Industrial Council stamps and the associated holiday, pension, death and sick benefits. Out of the 545.workers for which data were available, only 50 workers (9.2%) receive these stampsS6
(Appendix
a,
Table B8). This result was to be expected, given the small proportion of registered firms.2.6.2 Comparative analysis of Wages
It is illustrative to compare the wage rates on site with the cost of +iving and the statutory cost of labour in the region.
The former provides a guide to a sUbsistence level of income in
55. The artisan column for bricklayers excludes blocklaycrs in the interests of comparability across trades. . 56. The electrical trade is.not part of the Industrial Council (or the building industry. and operates its own bonus system. The term
'stamps' is used in this case for co~venience ..
the western Cape, while the latter indicates the cost of labour to LSEs in the region.
The Minimum Living Level (MLL) and the Supplemented Living Level (SLL), calculated by the Bureau of Market Research at UNISA (B.M.R., 1989), indicate the minimum cost of living in the Western cape.57 The MLL is a stringent measure of a subsistence family budget.
The MLL denotes the minimum financial requirements of members of a family i f they are to maintain their health and have acceptable standards of hygiene and sufficient clothing for their needs ... The MLL is the lowest sum possible on which a specific size of family can live in our existing social set-up (BMR, 1989:1).
The SLL, in turn, aims to provide for a family at a low standard of living.
The SLL makes provision for more items than the
MLL ... The SLL is not a subsistence budget, nor is i t a luxury budget. Perhaps i t can be described as an attempt at determining a modest low-level standard of living (B.M.R., 1989:1).
This study will refer to the above measures for an African family of f i ve58 in the Western Cape, as estimated by the BMR, in
February 1989.
Table 2.30
MLL and the SLL for the Western Cape (Feb. 1989)
Measure Amount
Supplemented Living Level R163.60 pw Minimum Living Level R122.90 pw Source: Bureau for Market Research, Feb 1989
If one adopts the requirements for the SLL, the income condition is R163.60 per week. The mean wages for artisans and labourers are both below this level. Of the 524 workers for which wage data were available, 477 workers (91%) were unable to maintain a family at this low standard of living. In fact, the vast
57. For two reasons it was decided to use the estimates of the B.M.R., rather than the Household Subsistence Level (HSL) calculated by the Institute for Planning Research at the University of Pon Elizabeth (IPR, 1989). The DMR deals with an average family. whereas the HSL deals with a hypothetical family. Further, the BMR presents estimates for a variety of raRlily sizes. lbe HSL is restricted to one size of family.
58. The BMR estimates the two measures for both Coloured and African families in the Western Cape. The measure (or the African family is generally slightly lower and is employed for the purpose of Ihis study. A family sil.e of five is used, as the data collated in this study indicates that the average size of family among the workers is 5 (see Appendix B. Table B9).
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majority of workers did not meet even a stringent measure of sUbsistence income.
The MLL is R122.90 per week. Of the 349 labourers and cleaners for which wage data were available, 333 (95.4%) earned below the MLL. In the case of artisans, 52 of the 176 (29.5%) artisans for which data were available, earned below the MLL. In total, 385 of 524 of the workers interviewed (73.5%) earned wages below the sUbsistence level of income for the Western Cape.
The statutory cost of labour in the Western cape is set by the Industrial Council for the region.59In this study minimum wages have been calculated at nine hours' work per day, reflecting the 45 hour work week which is common to the majority of firms
(Appendix B, Table B5). This would actually understate the minimum wage, as no additional pay is included for overtime.
Table 2.31 indicates wages on site and the relevant statutory cost of labour for each category of labour in the Cape Peninsula at the time of the survey. .
Table 2.31
Comparison of Wages on Site with the Statutory Cost of Labour in the Cape Peninsula
A B C
Wages Min Basic statutory(b) A/C'lOO (e)
on site Wage Cost
p/week p/week p/week
Cleaner R53 R85.0S RlOS.lO SO.4
Labourer R72. SO R116.l0 Rl43.3S SO.6
Bloeklayer R132 R2lS.S5 R262.80 SO.2
Artisan Rl47 R283.9S R3S6.69 41.2
Foreman R196 R31S.90 R39S.84 49.S
(a) Wages are calculated for a nine-hour workday which is common to most of the sample firms (Appendix B, Table B5) .
(b) The statutory cost includes the minimum basic wage and the employer's compulsory weekly contribution to the Industrial Council Stamp Fund.
(c) This column shows wages on site as a proportion of the statutory cost of labour in the region.·
Source: Statutory Cost of Labour from the Industrial Council agreement for.the .Cape Peninsula as revised on
31/10/88. Weekly wages ~nsite .taken from Table .2.28.
The minimum basic wage shows the legislated weekly minimum wage for the various categories of labour, exclusive of the proceeds of Industrial Council stamps, in terms of the Industrial Council
59. For background details on the Industrial Council system and minimum wages in the building industry. please consult Appendix A.
Agreement. On average, wages on site in this survey are 40%
lower than this measure.
The statutory cost of labour indicates the total cost of labour in terms of the Industrial Council agreement. It includes both the basic minimum wage and the cost of the employers' weekly contribution to the Industrial Council stamp system. By not adhering to minimum wages and the stamp system, operators are able to reduce labour costs by an average of 51.62%.
Given that LSEs are registered with the Industrial Council, the statutory cost of labour indicates the minimum cost of labour in LSEs. In fact, available evidence suggests that actual labour costs in LSEs are above the statutory cost of labour (C.S.S statistical News Release P.0.281, March 1989). Nevertheless, the 50% differential between wages on site and the statutory cost of labour indicates the significant labour cost advantage to
subcontractors in the industry. This differential is in the same range as the average differential, found in the international literature, of 40%-60% between labour costs in SSEs and LSEs (see Krafchik, 1990).
It is interesting to note that the differential between artisans' and labourers' wages in terms of the statutory labour cost
(59.8%) is greater than the differential found on site in this study (50.7%). This is due to the widespread use of unskilled labour to perform skilled work.
2.6.3 Summary
The wage analysis in this section confirms the patterns
identified in the international literature. The wages received by workers are low in comparison to the cost of living and the cost of labour to LSEs in the region. In fact, 75% of workers earn less than the minimum financial requirement for a family of five in the region. On average, wages on site are 50% lower than the statutory cost of labour as specified in the Industrial Council agreement.
The low wages probably reflect the macro-economic oversupply of labour as much as they confirm the primary attraction of
subcontracting to LSEs and other entrepreneurs, viz. the ability to undercut official wages and other labour costs. From the point of view of economic development, the level of wages in the sector places limitations on the role of subcontractors in generating income.
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