Paper short abstract:

Workers co-operatives emerged in the South African clothing industry in response to rapidly rising minimum wages. The trade union dismisses them as 'sham' yet it is an open question whether these new industrial formations offer workers a better and more dignified working life than wage labour.

Paper long abstract:

This paper discusses the rise of workers' co-operatives in the South African clothing industry. Workers co-operatives emerged in response to pressure from the National Bargaining Council for the Clothing Manufacturing Industry (NBC) to pay rapidly rising minimum wages in the face of intensifying international competition. These minimum wages, set by the South African Clothing and Textile Workers Union (SACTWU) and urban-based employers, were too high for the labour-intensive end of the industry producing relatively simple garments for the mass market. Many Chinese-owned enterprises in places like Newcastle (in the KwaZulu-Natal midlands) opted to restructure their businesses into partnerships with workers' co-operatives (mostly comprising their previously employed workers). Members of workers' co-operatives are not subject to NBC minimum wages because they share profits rather than earn wages. The rise of workers co-operatives in the clothing industry is testimony to the power of minimum wage setting institutions to drive labour-intensive capitalist enterprises out of business - but it also speaks to the possibility of more progressive and inclusive forms of production and distribution emerging in this archetypical 'sweatshop' industry. Precisely because workers' co-operatives emerged as a defensive response to minimum wage regulation, SACTWU dismisses them as 'sham'. Yet, so far, all legal challenges to these co-operatives, and to the institutional framework for them, have failed. The jury is out as to whether workers' co-operatives will succeed in competing with Chinese imports, and whether these new industrial formations offer workers a better and more dignified working life than wage labour.