At a time when South Africa is trying to counter the divestment campaign against it with arguments that business is working for the betterment of the country's blacks, employers in this tribal homeland are paying factory laborers as little as $7 a week.

That is less than one-fifth of the minimum wage laid down for such workers in industrial agreements in the rest of South Africa.

The so-called homelands -- the 13 percent of South Africa allocated to the black majority -- are exempted from the laws governing industrial relations, and labor unions are not permitted in most of them. That means employers can pay what they like in these regions.

Millions of people have been relocated to these undeveloped regions from other parts of South Africa under the system of segregation called apartheid. The influx of people and the resulting massive unemployment has distorted the law of supply and demand, allowing employers to pay what black labor leaders call "starvation wages."

Moreover, the employers are paying only a fraction of the meager wages. The South African government pays most of the cost with a 95 percent wage subsidy bill.

The government also pays 75 percent of the rent for factory premises, as well as other subsidies, under a decentralization program designed to encourage industrialists to set up in the homelands, thereby reducing the flow of blacks to the cities of what is officially regarded as the white sector of the country.

Because of the exemption from the industrial laws, businesses are able to exploit the system to include in the subsidies even their top-paid white managers, who earn around $1,500 monthly.

An official, who did not want to be quoted by name, explained how this was done. A business must reach agreement with a government body called the Decentralization Board on the number of employes it needs in a factory. The board will then pay the 95 percent subsidy for those earning up to $55 a month.

By paying many black workers much less than $55 a month, the official explained, an employer can keep his entire wage bill, including the salaries of his highly paid white managers, within the limit for which he can claim the 95 percent subsidy. In this way, some industrialists are paying as little as $1,400 a month in wages for a labor force of 500.

"I don't know whether the government intended the system to be exploited in this way, but the industrialists have been doing it for three years, and they are within the law," the official added.

Adriaan Poggenpoel, a senior accountant at the Qwa Qwa Development Corp., which helps industrialists set up in the homeland, explained that an engineering firm employing 900 workers could qualify for subsidies totaling nearly $1 million a year.

Combat Sales, a manufacturer of steel furniture, has two factories in Qwa Qwa that together are that size and employ that number of workers.

According to managing director Norman Shill, Combat Sales pays a basic wage of 17.5 cents an hour to its unskilled female workers and 27.5 cents an hour to its unskilled male workers for a 40-hour week.

Factory manager Kenneth Brown estimates that 60 percent of the 900 workers are in the unskilled category. Most are women.

This means that, with the subsidy, Combat Sales is paying more than half of its workers about one cent an hour, compared with a union-negotiated rate of 87 cents per hour for unskilled laborers in the metal industry in the rest of South Africa.

"I don't think you can term it exploitation," said Shill in an interview. "We have never had a philosophy of exploitation. I would like to pay the people more, but unfortunately there is an economic recession, and I cannot afford it.

"If the economic climate improves, I will be the first to increase the wages," Shill added.

Asked whether he considered $7 a week a living wage, Shill replied, "I have whole families working in my factories, and when you have three or four members of a family earning that then, yes, I think it is a living wage.

"I agree it is not a very high wage, but then again it is better than no wage at all. If my factories were not there, then those people would be out in their little houses doing nothing and earning nothing."

Although it devised the decentralization program, the South African government disclaims responsibility for the low wages, reasoning that it has given the homelands that much self-government.

Qwa Qwa is the smallest and most crowded of South Africa's 10 tribal homelands. It is 185 square miles in area -- little more than that of Johannesburg.

When it was proclaimed a homeland 15 years ago, its population was 23,000. Now it is nearly 500,000. It is situated on the northern border of Lesotho, in the foothills of the towering Drakensberg mountains. Farming is impossible in this steep and overcrowded place, and it is 200 miles from the major centers of industrial employment.

About 9,000 persons have found work in the nearby country towns of Harrismith and Bethlehem. Hundreds of others gather daily at a labor bureau in the capital of Phuthaditjada, hoping to be recruited as migrant workers in distant cities, for which they can earn $30 a week and send part of that home.

Recently, Johannes Sibanda, 57, waited at the labor bureau along with many others. He had walked from his village five miles away, as he has been doing for two years.

Sibanda missed out on work again that day, although the director of the bureau, Johannes Corneelse, said it was an unusually good day: he managed to find jobs for 65.

The local factories offer the only other jobs -- and that is where people like Sibanda, who is unskilled, are paid $7 a week instead of the $30 they can get outside.