[Marxism] (Fwd) Tinkering at the margins of apartheid economics

Patrick Bond pbond at mail.ngo.za
Tue Feb 13 11:46:07 MST 2007

Congress of SA Trade Union response to President Thabo Mbeki’s State of 
the Nation Speech

12 February

For three years now, COSATU has repeatedly raised its major concern that 
the main beneficiaries of economic transformation in the first decade of 
freedom has been big business. Meanwhile the working class and the poor, 
despite progress on social security, have remain heavily affected by 
massive levels of unemployment, poverty and inequality and are the main 
victims of HIV and AIDS.

 From this standpoint we argued that this decade - the second decade of 
freedom and democracy - should be a workers’ and the poor’s decade, in 
which our country should reverse the established trend where, in 
economic terms, the real benefits accrued to the tiny minority of mainly 
white males who continue to dominate the economy in every respect.

Further COSATU has for the past twelve years been campaign for a new 
developmental path that will move our economy away from the capital 
intensive industries such as mining, metals, heavy chemicals and the 
auto sector towards labour intensive sectors that will help create jobs 
on a large scale, whilst meeting the basic needs of the working class. 
In this regard we have repeatedly called for the introduction of an 
active industrial strategy that will be underpinned by an active state 
to drive this process.

We have pointed out that South Africa, like many other African countries 
after liberation, faces the danger of tinkering at the margins of the 
apartheid economy without setting itself to fundamentally restructure it 
and move it into a new growth path. We have rejected the current 
macro-economic policies and pointed out that they are too conservative 
and have elements of neo liberalism and therefore not appropriate for 
the economic challenges we face.

This is a good starting point from which to assess the President’s 
address. Does it accept that this is a fundamental problem and what does 
it propose to tackle it? From this framework we can say the President’s 
speech falls short of announcing a comprehensive and coherent 
development strategy that will address the inherited structural 
deficiencies of the economy. As the consequence of this failure South 
Africa will take a lot more time to address its unemployment, poverty, 
inequalities and the social ills related to this, such as HIV and AIDS, 
moral degeneration and crime.

Having stated so, COSATU however acknowledges that this President speech 
was for the first time business like. The framework of industrial policy 
was announced. A spirit of acknowledging the challenges we face and 
failures of government and a range of intervention measurers were 
announced. This heralds a new hope that we are en route to a real new 
age of consensus building.

COSATU is however concerned at the unresolved contradiction between a 
commitment to a state-driven developmental industrial policy and its 
highly conservative, market-driven macro-economic and fiscal strategy.

Thus for example, the President’s commitment to produce capital goods 
domestically is contradicted by high interest rates, overvaluation of 
the rand, and cheap imports. Likewise budget surpluses are in sharp 
contrast to the need for massive injection of resources into poor 
communities, including through a BIG.

We need an engagement on inflation targeting, exchange rates and fiscal 
policy. The current mix of policies will ultimately undermine 
government’s intentions in the long run. Moreover the current growth 
rate rests on very shaky ground and more needs to be done to change the 
structure of growth away from volatile commodities. We call for a 
serious, more structured engagement on these challenges within the 
structures of the Tripartite Alliance. Having said this we wish to 
comment on the following key working class priorities:

1. Unemployment and Job Creation
Unemployment, poverty and growing inequalities are by far the biggest 
concerns and priorities of the working class and the poor. COSATU’s 
Ninth National Congress decided “to make the jobs and poverty campaign 
the centrepiece of our programme in the coming period”.

On unemployment, the President quoted the figure of 1.5 million news 
jobs being created over the past three years. While any new jobs are to 
be welcomed, the speech overlooked three important problems with this 
figure. The first is that the jobs created are, even before we consider 
other matters, not enough to help us achieve the country’s modest target 
to halve unemployment by 2015. Job creation has on average been 
increasing by 1%.

With population growing at about 2.8%, the country need to create far a 
greater number of jobs than we have managed this far. Of serious concern 
to COSATU is the fact the growth of job seekers whilst we seemingly make 
snail’s pace progress in cutting unemployment. Secondly, and 
regrettably, most of the jobs created are low-quality jobs - casual and 
unsustainable forms of employment, concentrated in some of the most 
vulnerable sectors of the economy – wholesale and retail, construction 
and agriculture. This means we are not addressing the challenge of 
poverty eradication and income inequalities that are so rife in South 
Africa. Thirdly unemployment affects our people differently. It 
discriminates more against young people, women and black people in 
general, in particular Africans. Government statistics show that of all 
unemployed people 80% are aged between 15 and 34 years. Using the narrow 
definition of the unemployed that cuts out those too discouraged to 
search for employment, females make just under 30% compared to 21% of 
the males unemployed.

The overwhelming majority of the unemployed remain the blacks in general 
and Africans in particular. The political implication of this to our 
revolution is huge. It is in this context that we asked a serious 
question last year “has democracy failed workers and the poor?”The 
commitment to ‘ratchet upwards’ the Expanded Public Works Programme is 
welcome, but the key to resolving this massive crisis of unemployment is 
a new industrial strategy, which the government has been developing for 
four years. We welcome the President’s assurance that this is now 
shortly to be finalised but there is not yet enough information to 
indicate whether this will lead to more job-creating economic growth.We 
note with concern the vague reference to reducing the costs of doing 
business, and need to know what this will involve, but welcome the fact 
that this year there was no mention of ‘reforming’ the labour laws, to 
deal with alleged ‘inflexibility’. We hope that this issue has been laid 
to rest and that we can focus on how to implement these laws more 

We are however totally opposed to the whole idea of a partial ‘wage 
subsidy for low-wage employees’, which will reward employers who 
underpay their workers and encourage them to get rid of these young 
workers as soon as the subsidy expires, or be used to displace older 
workers whilst doing very little to create quality jobs that will help 
the country eradicate poverty. If the government wants to implement an 
across the board wage subsidy, as opposed to this proposal, they would 
need to engage on the details of such an idea. COSATU welcomes the fact 
that fluctuating exchange rates are recognised as an impediment to 
growth, as we have been arguing for years, and we hope that this will 
lead to an end to the unjustifiable increases in interest rates.Overall 
the economic policies outlined in the speech are too vague and limited. 
They will leave the existing, skewed distribution of wealth intact and 
will not lead to the second decade of democracy belonging to the workers 
and the poor.

2. Eradication of Poverty
On poverty, we note the many references to a more comprehensive social 
security system and in particular the idea of ‘a social security tax to 
finance basic retirement savings, death, disability and unemployment 
benefits’. We have in principle supported the introduction of retirement 
savings but we believe that the devil is going to be in the detail. 40% 
of all workers in the formal sector shamefully earn less than R2500 a 
month. Tax and administrative costs must not combine to mean that 
workers’ take home pay in the context of this extra ordinary levels of 
low wages, tax and other administrative costs associated with the 
retirement funds must not combine to push workers deeper to the poverty 

We hope that government does not see this as a back door to side step 
its constitutional responsibility to provide pensions to the aged. We 
call for negotiations to avoid unilateralism that will have the effect 
of snatching defeat from the jaws of victory. We regret that the 
government is still failing to clearly respond to the demand for a Basic 
Income Grant, which remains the best short-term measure to relieve 
poverty and promote the economies of poorer communities.

COSATU will continue to campaign for the introduction of the Basic 
Income Grant and hope that the ANC, which in its congress called for an 
open debate on this, will finally honour its mandate and engage its 
alliance partners on this important question. COSATU is pleased at the 
pledge to increase the number and pay of nurses, teachers and police but 
we shall be checking that the budget speech on 21 February actually 
makes adequate provision for this. Our affiliates will also be 
monitoring very carefully to check that this actually happens. COSATU 
welcomes the ideological shift in government approach to the role of the 
public service. In particular we welcome the appreciation of the need to 
increase the public service in critical areas of service delivery and to 
ensure that public servants are adequately remunerated.

3. Restructuring of the Public Service
On restructuring the public service, we insist that this must not be 
imposed unilaterally but must be negotiated with the public sector trade 
unions. We welcome the ideological shift over the past three years. We 
are clearly moving away from the ideological dogma of cutting public 
sector workers’ numbers to satisfy text book formulae, to the 
recognition of the critical role the public sector plays in the economic 
development. We call for the referral of the current Public Service 
amendment Bill to Nedlac.

4. On HIV and AIDS
On HIV/AIDS, we note and welcome the President’s commitment ‘to 
intensify the campaign against HIV and AIDS’ but feel that this is still 
not given the priority it deserves. It is a huge national crisis, but 
was not included in the President’s list of features of South African 
life that are ‘ugly and repulsive’ and is given far less space in the 
speech than crime. Workers list HIV and AIDS second only to employment 
creation as a priority for the country. In the context of a situation 
where it is estimated that between 800 to 1000 people die of AIDS 
everyday in South Africa, we would have expected the President to give 
more space to this challenge than he did to the problem of crime. We 
welcome the unity that was achieved last year on this important front. 
We are working with the government to ensure that SANAC is restructured 
and made more representative and to ensure that a new strategy is 
released by March, etc.

This is indeed a very welcome change to previous years. We hope no one 
will undermine this progress. The commitments made last year between 
government and civil society require a consistent and coherent message 
on dealing with the pandemic and we feel that the President should have 
been even bolder in addressing this pandemic.

5. On land and agrarian reform
The snail’s pace of land redistribution is undoubtedly one of the 
sources of tension in rural areas. While COSATU welcomes the President’s 
pledge to speed up land redistribution we still insist that far more 
radical steps must be taken if we are to meet the targets. There is no 
coherent agrarian reform in South African. Poverty afflicts rural 
communities more forcing migration to cities and compounding the housing 
problem of the country. Generally we share the President’s concern at 
the lack of capacity in all spheres of government. We are simply tired 
of hearing over and over again the problem of rollovers. This further 
delays genuine freedom to millions of our people.

We urge the President to use more his prerogative to employ and fire 
Minister to ensure that he in the most unfactionalist fashion deal with 
non performers from Cabinet level down to wherever he has an influence 
as the head of state. In reality there are non-performing Ministers who 
are not being dealt with.

6 . Crime and restructuring of the judiciary
COSATU supports the President fully when he states that ‘the 
overwhelming majority of violent crimes against the person occur in the 
most socio-economically deprived areas of our country’. COSATU fully 
supports the measures to deal with this serious social problem. We 
however wish to make very clear that our priority number one is the 
extraordinarily high levels of unemployment and poverty, followed by the 
HIV and AIDS epidemic. The only way to root out crime is when the 
country addresses those two principal tasks.

We welcome the President’s statements on the security guards’ strike and 
the commitment to ensure more regulation of the industry as part of a 
coherent strategy to fight high levels of crime. We are disappointed 
that the President did not endorse the remarks of his Minister of 
Agriculture and Land Affairs, Lulu Xingwana, about the "inhumane 
treatment and abuse of farm workers”. As far as we are concerned this is 
a ticking bomb. The estimated 1 million farm workers will one day rise 
up against their daily abuse by the majority of the racist white 
farmers. When this happens COSATU shall stand firmly on the side of 
those whose abuse is not prioritised enough by the society. In the light 
of recent outrageously lenient sentences imposed on, for example the 
farmer who shot a child he claimed to mistook for a dog, COSATU 
reiterates its demand for the total transformation of the judiciary. We 
urge government to be bolder in its assertion and determination to 
achieve the transformation of the judiciary. Whilst crime is of course a 
major concern, the government is right to oppose the hysterical 
exaggeration of crime by right-wing politicians and the media, and to 
emphasise the fight to eradicate the underlying causes of crime.

7. Public Transport
COSATU felt that the section of the address on public transport failed 
to begin to grasp the depth of the problem. Taxi capitalisation, the 
Gautrain and one or two other rail ‘corridors’ will do nothing to 
alleviate the daily misery, and high cost endured by commuters every day.

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