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POLICY CONSENSUS AND PURCHASING POWER: Rejecting reform, seeking living wages

5th January 2013
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Do trade unions form an indispensable part of the anti-reform, anti-privatisation policy front?
There is an important aspect of natural economic balances which the popular argument for the tripling of the minimum wage (since 2010) is distinctly unaware. Since morality is tied up with what is practical at an economic level, and everyone by definition has a minimal capacity to figure out consequences of decisions like tripling the minimum wage, such lacunae in awareness can be termed as immoral.   It does not arise from not having been trained enough to realise what would then happen, but in deliberately ignoring such a parameter and hoping it doesn't matter.
 
The point is that the issue for resolution by public policy action isn’t the level of wages but sources of its low purchasing power. This is where the total inanity of the tripling argument comes about, that its professors steer clear of the supply or cost side argument, pretend that it doesn’t exist, and wish to believe that once they can demonstrate that the money (for Sh315,000 monthly for 350,000 people for one year) is available, the case they seek to build has been won. 
 
They don’t wish to go to examining the sources for the sharp decline of the value of the local currency, nor wish for any discussion touching on agents of economic activity, since that would mean removing remaining prerogatives of the state in relation to the ‘commanding heights’ of the economy. In that case there is consensus in the radicals’ camp that all wasteful and cost-hiking parastatals preventing capital from being infused into the economy and changing input costs, the proper reason for low purchasing power, should remain in place. But the ‘national income’ should be shared more equitably. 
 
Put differently, when the basic socialist initiatives of 1967 are yet to be rolled back entirely and a properly constituted market economy based on private ownership of land and major business sectors doesn’t exist, wages have to be equalized. To wit, wage equalization or physical intervention to skirt clear of the tendency of wages to crowd at the minimum to create the best conditions for business to flourish, in the sense of producing cheap commodities, is partly or entirely a result of inefficiency that is tied to the 1967 initiatives. When there is no rail network for the transportation of lowly paid workers, riding in buses is painful but in economic terms it is still a luxury, as one needs two to three buses instead of a single train journey. 
 
Similarly, when housing has remained tied to small scale individual houses and tenancy which is by definition more expensive than housing estates, the necessary wage is at variance with minimal scientific requirements for it to be an effective living wage. What is thus noticed at the level of political isocracy is whether the political system will remain stable on account of its clear inability to resolve the wage hike demand, where it isn’t winning the ‘moral argument’ and is seen to be resorting to the use of force.
 
This reality of the use of force is lingering in every demonstration; despite that what the president was underlining in relation to the minimum wage dispute was that force would rise out of refusal to see reason, on the part of the trade union leadership. It is also this sphere which draws into sharp line of vision, as in targeting practice, the moral tenor or case for the 2009 Manifesto of the Christian Professionals of Tanzania (CPA). It is a lobby group affiliated to the Justice and Peace Commission of the Tanzania Episcopal Conference, grouping bishops of the Catholic Church.
 
Their polls manifesto sought to underline a moral position as to what the priority areas of policy activity should be. None of its academic backers or dons contributing to the collection of essays or articles from which the manifesto was drawn was in the very least aware that parastatals add costs to the economy, and often of a grotesque sort. One example is Artumas Energy being stopped in connecting people with electricity for Sh45,000 including poles and meter, while Tanesco charges anything between Sh0.7m and Sh1.2m and perhaps even higher. Such quotations are routine from client seeking connection to the national grid.
 
Profound anti-reform resistances underline the psychic disposition for defiance on policy work of the government, as continuously groups allied to CPA and others seek radical measures of the sort that weaken the economy even further. When the political action of the president is met with resistance, this can prepare conditions for a minimum of dictatorship so that the country is put on the road to reform by force. Contentions of allocations of land for investors, or the natural gas pipeline project, provide conditions for the use of force, gradually.
 
So far at least one major instance that was leading to relative despotism was eclipsed without some political breakdown, namely the contention in CCM about 'grand corruption,' while by comparison, the demand for a hiked minimum wage is a milder issue. Examined generally, there is always a necessary tendency towards the average wage because the right level of wage or the maximally payable amount as a minimum level of pay isn’t just due to discretion. It is tied up with the existence or availability of other options for those engaged in labor. 
 
When the market can absorb people to do a better paying job instead of whatever occupation they may have, the combined effect of these alternative occupations drives up the wage, to attain ‘harmony,’ more accurately seen as an equilibrium. The problem with moralistic analysis is that it sees the issue in terms of living conditions and the necessary product, even in terms of the ‘rational’ level of family members that one should have. Yet, realistically, ll these elements can’t be factored into the calculus for a minimum wage. 
 
They say ‘out of sight, out of mind,’ for if these needs can’t be kept in view when someone purchases a commodity, it isn’t possible for them to be taken account of when one is determining the minimum wage, But they come on hand when one raises a different issue, say of remuneration of skilled labor. Even then the reason for its acceptability is that it eases discussion, for instance as to how much an employer is prepared to pay for this or that element of the ‘package,’ building up income prospects. Otherwise the real bottom line is the operator’s awareness of costing that is not to be crossed in relation to that specific need for skills, so not as to upset the applecart of the company’s products and prices. No morality comes up in minimal or in skilled pay.
 
Still another dimension arises in examining the moral aspects of demands for tripling the minimum wage, that of inertia of labor in relation to lowering costs of commodities or cost of living as the principal aspect the moral argument relates. The question simply is whether the workers who demand a ‘living wage’ from the government and employers are tuned to offering a ‘living wage’ for others when they are in their power. Do they also belong to those limiting such ‘living wage’ symbolically or in practice? 
 
 
In a sense it is workers who constitute the main hindrance to rationalizing the ownership structure of the ‘commanding heights’ of the economy as well as land. The urban working class has ability to paralyze the state in case it transgresses the limits placed on it by the sacred character of the tenets of the Arusha Declaration. This is what a conference of bishops told then President Ali Hassan Mwinyi in May 1993 that he should desist from policies of ‘selling the country’ by moves to privatize public companies. This has characterised the CCM outlook since 1995, and it largely constitutes a key element in the current policy consensus, nationally.
 
Despite that an electoral platform is drawn up for each political party, there is a policy consensus that has been reached by public discussion in a clear and demonstrable manner.  It is undeniable that resistance to privatization was part of the 1995 polls demand. So ex-President Benjamin Mkapa can’t be criticized for failing to privatize the main axis of the economy chiefly in telecommunications, electricity, ports, insurance, railways, household gas. The main areas of consensus are that they shouldn’t be put to privatization, and still constitute the main sources of input costs.  
 
In like manner the fourth phase presidency came into office on the basis of an unstated view of the need to roll back globalization, that President Mkapa did not do enough in that direction. The key backers of President Kikwete were seeking measures to insert economic activity more into the hands of the state and away from globalization. In this sphere as well the president isn’t quite doing as much – but in keeping with the policy consensus, he hasn’t touched the ‘no privatisation'  areas of the 1995 polls and the 2005 polls, in which case ‘social contract’ persists.
 
So there is a clear isostacy implication in relation to action of the fourth phase leadership in policy, and what went into policy set up or thinking up to this moment. It constitutes the cardinal dimension of ethics of the demand for a tripling of the minimum wage, since this demand ignores the purchasing power impact of an economy dominated by parastatals. Having discounted their dear parastatals from income or purchasing power parameters, TUCTA then demands higher wages as a moral issue, and presumes that prices will remain the same, thus life be easier.
 
This is finally an immoral argument as the workers are demanding a tripling of the minimum wage to meet costs of living which are too high. Purchasing power is low because the workers, along with churches, media, NGOs, academia and any other groups, have rejected the privatization of the anemic parastatals they cherish and constitute their vision for the country, a well governed state where parastatals play a leading role, which is more or less an inanity in economic rationality. In terms of isostasy, the intensity with which this sentiment against globalization and privatization is felt is directly proportional to the intensity of inefficiency and thus costs felt as low purchasing power of the local currency.
 
By a corollary, the higher purchasing power (far beyond the nominal wage) of those with connection to foreign exchange or such activity is felt on a daily basis. The latter advantage is expressed as positive conditions for investment and the creation of jobs, and negative for the sense of equity when it is expressed in the need for a living wage for all. It fosters anger of the working class for those whose conditions are good in the status quo, forgetting that the trade unions form an indispensable part of the anti-reform, anti-privatisation policy front. They should take the current purchasing power situation with ease, since it is its direct result.
SOURCE: THE GUARDIAN