Easy credit 'a cause of labour strife'

Unsecured lending is one of the most destabilising factors in labour relations and has had a "devastating" effect on South Africa.

This is according to Kuben Naidoo, adviser to Reserve Bank governor Gill Marcus, and political analyst Steven Friedman, who yesterday spoke about the economic and political realities that business - and especially agriculture - face in the current economic climate.

Naidoo and Friedman agreed that unsecured lending and garnishee orders affected both economic and political stability.

"Unsecured lending has a devastating effect on South Africa," said Naidoo. "The anecdote is that Marikana is a large squatter camp with almost no fixed structures, but 11 microlenders."

He said that as far back as 2002-2003 hundreds of thousands of public servants had garnishee orders against them.

"We had a situation in the police in which tens of thousands of police men and women were taking home less than R750 per month, after all the deductions for microloans, insurance and garnishee orders," Naidoo said.

"Imagine the political instability of that. Imagine the opportunity for corruption. It is a major problem."

Friedman said unsecured lending was a big cause of strikes.

"Because of unsecured lending and people buying more than they can afford, our labour relations are made more difficult," Friedman said.

"Perhaps the most brutal part of the unsecured lending story is that we have many South Africans who are borrowing more than they can repay, and that is one of the reasons why we have such tensions in the workplace.

"We have a situation on the mines, for example, in which employers say to their workers, 'We've given you a reasonable increase', but the workers say, 'We can't manage with the increase you've given us' and there is a sense in which they are both right."

Friedman said part of the problem is South Africa's history, because "some of us have lived very well at the expense of others".

"More South African households own TVs than fridges. So it is more important for South Africans to show their neighbours that they own a television than it is for them to keep their food fresh.

"That tells a very important story about the values people are encouraged to embrace," he said.

"The message is very clear that the South African who is worthy of respect is the person who owns a certain level of consumer goods."

Naidoo said the Reserve Bank is negotiating with the banks to stop garnishee orders.