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South African Wage Board Policy: An Alternative Interpretation

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Arnt Spandau (1972). South African Wage Board Policy: An Alternative Interpretation. South African Journal of Economics, vol. 40(4). Economic Society of South Africa.
Type journal article
Scope Economics and economic history of apartheid
Method mixed
Period studied 1925–1971
Regions South Africa
Themes labour markets wages, inequality poverty unemployment, business and state, origins segregation, mining migrant labour, unions strikes
Citation key spandau1972

Argument

Spandau critiques D. E. Pursell's three-phase periodisation of Wage Board policy and his claim that since 1957 the Board has pursued a 'new deal' for non-White earnings. He argues that the civilized labour policy rested more on tariff conditions, the Fair Wage Clause and the Apprenticeship Act than on high minimum wages. He holds that wartime narrowing of the skilled/unskilled gap came from regressive cost-of-living allowances and direct manpower controls rather than Board determinations. He reads the 1950-56 'drift' as wage restraint that matched government growth policy. He uses 1959/60-1970 wage data to show racial differentials widened. Wage Board determinations are a small part of labour policy, and market strength and payability drive actual differentials.

Evidence and method

Wage Board reports, Department of Labour reports, Board of Trade and Industries report, War Measures and Government Gazette, the 1942-43 Census of Industrial Establishments, Department of Statistics wage data (South African Statistics 1968, Statistical News Releases 1971), SAIRR Survey of Race Relations, Hansard (1972), and Pursell's three papers.

Place in the debates

Findings

  • Civilized labour protection relied on tariff-linked labour conditions, not just minimum wages. (p. 1)

    Section 4 (1) (c) of this Act instructed the Minister that the maintenance of unsatisfactory labour conditions in industries protected by a duty, when brought to his knowledge, had to be published in the Gazette.

  • The skilled/unskilled wage gap narrowed during and after WWII, contrary to Pursell's reading of the source. (p. 2)

    whereas the median proportion that unskilled wages constituted of skilled wages in five industries in the three largest industrial centres was 18 per cent in 1938, it had increased to 23 per cent by 1950

  • Regressive wartime cost-of-living allowances modestly reduced the White/Bantu differential in engineering (example for 1942-43). (p. 2)

    Prior to taking the cost-of-living allowance into account, the average White/ Bantu wage differential was 4,71 to 1, while, after inclusion of this allowance, it became 4,49 to 1.

  • Direct wartime manpower controls, not the Wage Board, drove wage-structure change in engineering. (p. 3)

    In the case of the dominant engineering sector the evidence suggests that the Wage Board's actions were of secondary importance in bringing about changes in the wage structure

  • African living standards deteriorated relative to need in the early 1950s (the 'income deficit' rose from £3 0s 5d in 1944 to £7 11s 5d in Johannesburg in 1954, per Table 1). (p. 3)

    Pursell is, however, correct in pointing out that at least during the early 1950's, the relative standard of living of Bantu deteriorated in South Africa.

  • Wage Board policy in 1950-56 is reinterpreted as wage restraint consistent with growth and price stability goals. (p. 4)

    the Wage Board's policy during the years 1950 to 1956 concurred with the overall economic policy objective of fostering economic growth under conditions of relatively stable prices

  • The Board's determinations were a minor part of labour policy and had limited effect on wages. (p. 4)

    Consequently, the Wage Board policy has had only a limited influence on prevailing wage structures.

  • Racial wage gaps widened in the 1960s (mining: White R192 to R365; Bantu R12,50 to R18,30, 1959/60-1970). (p. 5)

    What emerges clearly from Table 2 is that the average racial wage differentials have been widening during the 1960's, both in absolute and in relative terms.

  • The Wage Board never investigated mining, where African wages were lowest relative to White wages. (p. 5)

    But, although not excluded by statute, Wage Board investigations have never been undertaken in respect of the mining sector.

  • The White/Bantu differential is highest in high-paying sectors (6,7:1 in electricity, 3,4:1 in retail, 1970). (p. 6)

    Table 3 shows also that as White average incomes fall, so do average wage differentials between Whites and Bantu.

  • African relative bargaining power is greater in weak sectors, so Board determinations aimed at marginal firms cannot narrow differentials. (p. 6)

    the weaker the economic payability of a particular economic sector, the stronger the relative bargaining position of the Bantu vis-à-vis the White, and vice versa.

  • Lack of African trade unionism limits wage gains. (p. 6)

    their lack of trade union organization undermines their chances of generous pay rises.

Evidence ledger

Sources used

Source Kind Period How used
Customs Tariff and Excise Duties Amendment Act, No. 36 of 1925, Section 4 legislation gazette 1925 Shows that tariff protection was tied to civilized labour conditions, an additional policy instrument Pursell omitted.
Board of Trade and Industries, Report No. 282, Investigation into Manufacturing Industries in the Union of South Africa, 1945, para. 336 commission or official report 1945 Supports the claim that tariff protection was expected to promote civilized labour employment.
U.G. No. 43-1934, Report of the Department of Labour for the Year ended 31st December, 1933 commission or official report 1933 Documents the Fair Wage Clause for government contractors as a civilized labour instrument.
Wage Board, Report upon the Work of the Board for the Three Years ended 28th Feb. 1929 (Three Year Report) commission or official report 1926-1929 Used to rebut Pursell's reading that high minimum wages were the main civilized labour instrument and to show the Board's aim of widening the gap.
U.G. No. 30-1938, Report of the Department of Labour for the Year ended 31st December, 1937 commission or official report 1937 Evidence of growing social concern for unskilled wages in the Wage Board's 1936-49 period.
U.G. No. 46-1954, Report of the Department of Labour for the Year ended 31st December, 1952 commission or official report 1938-1950 Shows the skilled/unskilled wage gap narrowed from 18 to 23 per cent between 1938 and 1950, contradicting Pursell.
U.G. No. 45-1941, Report of the Department of Labour for the Year ended 31st December, 1940 commission or official report 1940 Quotes Wage Board criticism of the cost-of-living principle in the 1937 Wage Act.
Wage Act, Act No. 44 of 1937, Sect. 8(e) legislation gazette 1937 Establishes that the civilized-wage principle was replaced by a cost-of-living principle.
War Measure No. 38 of 1942, Government Gazette No. 3058, 22 May 1942 legislation gazette 1942 Source for the regressive cost-of-living allowance scale used in the worked example of wage-gap compression.
Census of Industrial Establishments 1942-43, U.G. No. 20 of 1946 industrial mining census 1942-43 Supplies average weekly pay for Whites (130s.) and Bantu (27s. 7d.) for the cost-of-living allowance calculation.
Official Year Book of the Union, No. 29, 1956-57 official statistical series 1941-1945 Describes the wartime Controller of Industrial Manpower, wage freezing and dilution in engineering.
South African Institute of Race Relations, A Survey of Race Relations in South Africa, 1956-57, p. 169 secondary literature compilation 1944-1954 Source of Table 1 on essential minimum expenditure, average income and income deficit of Bantu families.
P. K. Lomas, 'Some Aspects of Profit Re-Investment in the Union', SAJE 1955 secondary literature compilation 1948-1950s Supports the claim that the 1948 collapse of industrial share prices led firms to rely on retained profits.
House of Assembly Debates (Hansard), No. 13, 1972, cols. 6653-6655 parliamentary debates 1972 Minister of Labour's statement to show broader labour policy beyond the Wage Board is restrictive.
Physical Planning and Utilization of Resources Act, No. 88 of 1967, Sec. 3(1) legislation gazette 1967 Cited as an instrument pressing employers to raise Bantu productivity, an exception to Pursell's claim.
Department of Statistics, South African Statistics 1968 and Statistical News Releases P. 8 (5 May 1971) and P. 8.4 (29 Oct 1971) official statistical series 1959/60 and 1970 Source of Table 2 on average monthly White and Bantu wages in mining, manufacturing and construction, showing a widening differential.
Department of Statistics, Statistical News Releases P. 8 (5 May 1971) and P. 8.4 (29 Oct 1971), 1970 sector wages official statistical series 1970 Source of Table 3 on 1970 White and Bantu average wages and differentials across six sectors, showing the correlation between White pay and the differential.
Pursell I, II and III (Bantu wage and Wage Board policy papers, 1968-1971) secondary literature compilation 1945-1971 The object of the review: Pursell's claims and the evidence he cites are examined and re-tested.

Inference

Quantification: Descriptive tables.

Critical review and reinterpretation. Spandau re-reads Pursell's cited official sources (Wage Board and Department of Labour reports, legislation), then gives a short worked example on wartime allowances and compares published average wage tables across sectors and years (1959/60 vs 1970). The arguments are mostly qualitative and rely on correlation in Table 3 without statistical testing.

Key claims

Claim Basis Strength
Civilized labour policy rested on more than high minimum wages, notably tariff conditions, the Fair Wage Clause and the Apprenticeship Act. (p. 2) Customs Tariff Act 1925, Board of Trade Report 282, Department of Labour 1933 report and the Wage Board three-year report, read against Pursell's citation. Partial data
Pursell misread his source: the skilled/unskilled wage gap narrowed during and after WWII, with the unskilled share rising from 18 to 23 per cent. (p. 2) Department of Labour Report 1952 (U.G. 46-1954) quoted directly. Partial data
Regressive wartime cost-of-living allowances and direct manpower controls compressed the White/Bantu wage differential more than Wage Board determinations did. (p. 2) War Measure 38 of 1942 with the 1942-43 industrial census wages in a worked example (4.71 to 4.49), plus the Official Year Book on the Controller of Industrial Manpower. Illustrative or anecdotal
Wage Board policy in 1950-56 was not purposeless but concurred with a government wage-restraint policy for growth, as Bantu living standards fell relative to the subsistence minimum. (p. 4) SAIRR income deficit table, Richards quotation, and Lomas on share prices and reinvestment; the link to wage restraint is conjecture. Asserted
Wage Board differentials are not indicators of government policy and have had limited influence on wage structures; market forces matter more. (p. 4) Hansard statement of the Minister of Labour, Pursell's own list of wage determinants, and the observed widening of the earnings gap. Partial data
Racial wage differentials widened in absolute and relative terms in the 1960s, contradicting Pursell's 'new deal'. (p. 5) Department of Statistics, South African Statistics 1968 and Statistical News Releases, Table 2 (1959/60 vs 1970). Systematic data
The White/Bantu wage differential rises with White sector pay, so Bantu bargaining position is weaker in more profitable sectors, and mining shows the anomaly and has never been subject to Wage Board investigation. (p. 6) Table 3 (1970 sector wages, six sectors); the claim about no mining investigations is asserted without a cited source. Partial data

The author's caveats

Notes that wages in kind are not included in the Table 2 wage data. Notes that Pursell's computations lack base or reference years. Otherwise little reflection on the limits of the average wage data.

Gaps in the evidence

The argument relies on sector averages for two time points and a six-sector cross-section, with no controls for occupation mix, hours, or productivity, so it cannot separate Wage Board effects from market forces. Wage Board determination-level data, compliance data and earnings by occupation and firm would be needed. These existed in Department of Labour and Wage Board records and census material, but are not used here. The wage-restraint and 'market forces' explanations are asserted rather than tested.

Replicability: Data public and well described.