SAFTU statement on StatsSA’s latest misleading GDP figures

SAFTU statement on StatsSA’s latest misleading GDP figures

The South African Federation of Trade Unions (SAFTU) has noted the third quarter 2020 GDP figures published by Statistics South African (StatsSA).

StatsSA reports that GDP grew by 66,1%. This figure should not give us any false hope of a recovery, because it tells a horrible story of how hard GDP fell due to the hard lockdown in the second quarter (April-June). Naturally after the massive decline in that quarter’s output there would be a bounce-back.

According to StatsSA, South Africa’s economy is still 5,8% smaller than it was on 1/1/2020; so if a magical upturn did not occur in October-November, then we can assume that 2020 is still the worst year of GDP since 1929.

We must even be careful when celebrating the bright spots: agriculture has grown by 11,3% – because of recovery from drought, not a miraculous new ingredient in corporate agribusiness or small farming – while government’s contribution is marginally up, by 0,8% above the level on 1/1/2020. All other industries are down, with construction (-20,0%), transport and communication (-15,6%), and manufacturing (-14,9%) the worst affected.

This means that from June-September 2020, the main source of ‘growth’ was mining – up by 288% – but this is very misleading, and we appeal to StatsSA to put a very large asterisk beside it. GDP only counts the output of non-renewable minerals as a positive in this category; it does not count the depletion of the same minerals as a negative. If you count mineral depletion (since it has gone away forever), then the net benefit of mining to the country’s actual wealth is negative.

There is another flaw in GDP: if during April-September 2020, our poor and working-class women, men and children turned to each other to provide and receive mutual aid in a voluntary manner to survive Covid-19, and if women were made to work all the harder as a result of additional caregiving burdens for children and those who became ill, GDP calculations ignore this work since it was not paid for. Since tens of millions of South Africans were doing much more non-paid work but StatsSA’s economists simply do not recognise this, once again we insist on a major asterisk.

Two final flaws in GDP are that wear-and-tear (“depreciation”) on machinery is not included so the part of the economy that is genuinely productive is overstated; and nor are pollution costs considered within GDP, so the companies that “externalise” their costs by wrecking the environment do so with applause even though the costs are severe to our and future generations. As a University of Pretoria professor, Lorenzo Fioramonti put it in a book by the same name, this is now a Gross Domestic Problem.

When StatsSA recently claimed the unemployment rate had shrunk from 30 to 23 percent because their notion of how many people there are in the “labour market” was borrowed from the north (and thus they knocked several million out simply because they couldn’t actively look for a job during the April-June lockdown), we asked the agency to decolonise. Now that GDP figures are out, and the agency still ignores declines in the country’s mineral wealth underground, unpaid mutual aid and women’s work, machine depreciation and pollution, we repeat the demand that StatsSA join us in the 21st century.

It is true that the agency is slowly adding “natural capital accounting” to its database (for example, in studying the health of river systems). But this is too slow and so far meaningless – and it leaves the whole country periodically befuddled by StatsSA’s quirky work.

The dilemma here is that the mainstream economists and media, along with the middle- and upper-classes, will breathe a sigh of relief that some sort of “recovery” is finally picking up. In the psychological war underway over whether we can find some sort of Just Transition to a recovery that truly builds back better with even social democratic values, StatsSA continues to come down on the side of its Treasury bosses instead.

A recovery? Nothing could be further from the truth, when looked at from the vantagepoint of the commoner. What is happening now is the worst socio-economic degradation, but again it occurs largely below the surface of economists who rely upon GDP data:

  • We are losing our protections against rent collection and foreclosures on loans, and our tiny increase in social grants and temporary unemployment relief.
  • We are losing a housing policy that will now be replaced with apartheid-era “site and service”, known then as “toilets in the veld.”
  • We are losing grants that help cover municipal services – even water systems to wash our hands of germs – in poor dorpies.
  • We are losing access to affordable electricity, as Eskom engages in “load reduction” collective punishments against all who live in a targeted area (even if you have paid).
  • We are losing public transport dedicated to the working class, especially municipal trains and buses.
  • We are losing any hope that the ruling party will formally punish those who unconscionably looted the kitty during and before the Covid-19 crisis.
  • And we are still losing unnecessary lives to a Covid-19 crisis that especially hits hard against poor and working people, black people, women and the elderly, and township and shack settlement residents.

SAFTU is convinced that we must break the circle of economic stagnation, worsening unemployment, poverty, inequalities, ecocide, discrimination against women, xenophobia and crony capitalism.

SAFTU members know that the South African economy can be a lucrative one if you are wealthy and the beneficiary of massive tax cuts and Illicit Financial Flows since 1994. But if you are poor, it will impoverish you further.

South African capitalism has been incapable of addressing the multiple crises of public health, environmental crisis and economic stagnation with creativity, and now does not meet even the most basic needs of the majority, what with well over two thirds of the society below a R50/day upper-bound poverty line. A visit to any township, or informal settlement will provide the harsh evidence of what the majority of our people experience on a day-to-day basis.

The dominant neo-liberal approach to the economy entrenches rather than softens the exploitative practices, and it is time to go far beyond GDP so that racism, gender discrimination, environmental destruction, imperialism and other modes of domination are on our radar screen. After all, the particular development of capitalism in South Africa has left behind a legacy of long-term chronic inequality, unemployment and poverty.

In fact, the success of Capitalism in South Africa has been dependent on the continuing impoverishment of the working class and the poor, what is termed “uneven development.” It has never worked for the mass of its people but has unwaveringly maintained the wealth and privilege of an elite.

This may have been marginally changed in shade by boardroom-fronting Black Economic Empowerment, but it has not fundamentally altered or challenged the power and wealth of those who control the economy, and through that, to influence the political direction of the country.

This is why SAFTU demands that the South African economy be overhauled to rid itself of all the vestiges of racism and colonialism that continue to shape the economy.

SAFTU is currently engaging its allies in the working class as it mobilise for the total economic shutdown on the 24 February 2021, which will be the day that Minister Mboweni will be presenting a budget that will put the last nails in the coffin of the working class. We will be there to hammer those nails back out at him, and reverse this decimating era by working with all other trade unions, working-class organisations, feminists, anti-racists, environmentalists and youth – to reclaim the future from those now slapping their backs as they see StatsSA’s bogus GDP parade pass by.


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