South Africa should invest in improving workers' economic literacy to strengthen the country's labour relations, an analyst said on Thursday.

"One of the things that is a by-product of 15 to 20 years of Cosatu's view of the world is that employees do not believe a single word that management says," labour economist Andrew Levy told a Bureau for Economic Research conference in Johannesburg.

"They [workers] also have no understanding whatsoever that a 60% increase is not obtainable. In fact, it is bad negotiation. Because you are going to have to make the biggest move down from 60% to an area where there is a reasonable view of settlement – 8% to 9%."

He said workers needed to understand the economic context within which their companies operated. This would better inform their wage demands.

"The price for not changing is that the currency will continue to slide, unemployment will continue unabated, violence will remain with us. This is the price that South Africans should not have to pay.

"We are at war with unemployment. This is the time for common sense and determination."

The National Union of Mineworkers recently announced it would seek wage increases of between 15 and 60% from mining companies.

Levy proposed that government should restructure the bargaining system used to negotiate wage settlements. He described the current system as a "wage fixing cartel".

"It institutionalises the power of unions across an entire industry so that they can speak and determine wages in plants where they have no membership at all."

Since the 1970s, almost every country in the world had moved away from a centralised bargaining system, Levy said. The current system failed to relate wage increases with efficiency and productivity.

"What I'm suggesting is that we continue to bargain at centralised level, but we do not bargain for an actual wage. What we should do is to bargain for a range within which the wage will fall."

Once the range for the wage increases had been set centrally, unions would negotiate productivity-linked increases at individual workplaces.

Levy said if a union did not have representation, it should not take part in negotiations. He proposed that strikes ought only to be at national level and for the range of the wage increase.

"Having said that, national-level strikes are less frequent and less probable."

No strike ought to take place at plant level.

"If the union and employers reach a deadlock at plant level it will go to compulsory wage arbitration," Levy said.

"What we are trying to do here is to link pay with productivity. That is a matter of economics... .It's do-able, all that it requires is a political will."

He said high wage increases not accompanied by greater productivity put companies under pressure, forcing them to employ fewer people.