SAFTU’S REFLECTIONS ON THE NEW MULTI-PARTY GOVERNMENT
The South African Federation of Trade Unions (SAFTU) notes the Opening of Parliament Address (OPA) delivered by President Cyril Ramaphosa, which communicated the Medium-Term Development Plan determined by the Cabinet Lekgotla of the multiparty government (Government of National Unity).
Part A: FRAMEWORK
In the aftermath of the National Election, and during the political party engagements to create the so-called Government of National Unity (GNU), SAFTU convened its Political and Ideological Commission (PIC) which made the following demands:
a) Greater public ownership and the reversal of the unbundling of Eskom and State Companies,
b) Fiscal expansion and a more sensible monetary policy (backed by tighter exchange controls) so that public service institutions can get more resources to increase public service headcount, infrastructure and equipment, and interest rates can be lowered dramatically (as occurred in 2020-21),
c) Strong anti-corruption stance and clean government from municipalities to public service institutions, from SOEs to Higher education institutions. Destroy the construction mafias and criminal syndicates, which include much of corporate South Africa (usually rated among the top two “economic crime and fraud” capitalist classes in the world by PwC),
d) Industrialise the economy and create jobs in the process, primarily through vitally-needed solar, wind, energy-storage and climate-adaptation infrastructure (as witnessed by lack of preparedness for the highly destructive storms that hit parts of South Africa shortly after the election).
e) Protect the Constitution’s Bill of Rights, particularly labour, women, and socioeconomic rights.
Additionally, we identified short-term demands to address the working class’s immediate crisis. These were:
a) The crisis of unemployment is urgent and needs to be addressed immediately
b) The housing crisis in the cities exposed by Johannesburg fires is urgent
c) The building of human infrastructure in the neglected rural areas and former Bantu stands constitutes a crisis
d) The saving of Eskom and defeating of load shedding
The President representing his Cabinet put forward three strategic priorities for the next five years:
1) To drive inclusive growth and job creation
2) Reduce poverty and tackle the high cost of living and
3) Build a capable and ethical developmental state
This is an acceptable broad framework for SAFTU, albeit we would have preferred a commitment to eradicate poverty, not reduce it. Committing to reducing poverty allows this government to evade accountability, as any minuscule reduction could still mean they have fulfilled their priority.
The devil is in the details and will be in the plans and implementation programmes to meet the priorities. In the 20th-century debates between liberals and socialists, a liberal Friedrich Hayek acknowledged that both camps want the best for society; however, the difference lies in how to build such a society.
Broadly, priorities like eradicating unemployment and poverty cannot be achieved within a capitalist mode of production because the logic of capitalist accumulation reproduces unemployment and poverty.
SAFTU is keenly awaiting a more elaborate policy to advance this framework. We anticipate that this is where we will see disagreements, as already hinted in the OPA. We have argued that neoliberalism, the worst of all austerity programmes (budget cuts), will frustrate the objectives of creating an inclusive economy, eradicating poverty, and building an ethical and developmental state.
Government lacks credibility among ordinary citizens, especially given that they have made commitments that they have failed to fulfill in the past years. When the President says this is a rejuvenation, it means nothing because this is a repetition of what he has said previously in his State of the Nation addresses.
Every policy that has ever been enacted since 1994 has aimed at growing the economy and eradicating poverty. The “Accelerated and Shared Growth Initiative for South Africa” (AsgiSA) in 2006 set out to halve poverty and unemployment between 2004 and 2014. In 2012, the National Development Plan (NDP) aimed to grow the economy at an annualised rate of 5.4%, reduce the unemployment rate to 6%, reduce inequality to a 0.60 Gini-coefficient, and eradicate poverty by 2030. The Economic Reconstruction and Recovery Plan (ERRP) set forth to “tackle the historical structural inequalities, unemployment and poverty.” Instead of explaining why it has dismally failed to eradicate unemployment, poverty and inequality, the government now presents the exact programme using the same rhetoric used nearly a decade ago.
Even if we welcome this broad framework, there absolutely exists no reason to believe that the government will achieve these ambitions, precisely because it does not want to alter the macroeconomic framework of neoliberalism.
Part B: Details of OPA
a. Inclusive growth
SAFTU welcomes commitment to inclusive growth, especially employment equity and protecting the “hard-won rights of workers.” The historical legacies of racism and patriarchy have distorted the labour market to the disadvantage of traditionally marginalised racial groups. The recent Employment Equity report revealed glaringly these distortions of work occupations, in which women occupy 1,6% of top management positions despite constituting about 49% of the economically active population.
However, what this government does not comprehend is that inclusive growth cannot be achieved solely through affirmative action. The lack of it is primarily caused by the capitalist mode of production. Hence, affirmative policies have only been successful in the public sector, not the private sector.
Fundamentally, the capitalist mode of production is premised on private ownership of the means of production, with profits reaped by capitalists. Logically, it follows that the financial wealth is reaped by the individual bosses of a capitalist enterprise, and collectively as a social class, at the expense of the class of labourers. In other words, any economic growth under capitalism means more increased wealth for the capitalists, with little gains accruing to workers.
South Africa needs its Reconstruction and Development Plan. Such as plan cannot be based on a government that cuts its spending. We demand that the current fiscal policy be based on massive corporate tax and shifting the tax burden to corporations and not the poor.
We demand that the monetary policy based on the removal of exchange controls be scrapped. This policy has robbed South Africa of the resources it so desperately needs to develop. There can be no development in the face of an inflation-targeting policy that has led to the prime lending rate of 8.2%, with citizens paying as much as 11.75% interest rates.
b. Municipalities
We welcome the commitment to “ensure that capable and qualified people are appointed to senior positions in municipalities.” Despite the little resources municipalities receive, more could be done to deliver services to our communities. The main impediments are political appointments and corruption.
Political appointments have sometimes resulted in people without competence and qualifications taking over municipal management. In addition, corruption, which takes the form of procurement fraud and nepotism, has, apart from incompetence, been detrimental to municipalities’ capability to deliver services.
Procurement fraud has looted little funds, compromising social and recreational programs and infrastructure development and maintenance. Nepotism has meant that people are appointed to positions for which they are not qualified, even in junior and ordinary positions.
c. Turning “our country into a construction site.”
SAFTU welcomes the commitment to turn the country into a construction site. Given the infrastructure backlog in public service institutions such as hospitals, schools, and clinics, it is important to ramp up the construction of such infrastructure. For instance, the National Education Infrastructure Management System (NEIMS) reported that out of a total of 23,276 schools in the country in 2021, 17,832 had no libraries, 19,840 had no natural science laboratories, and 15,584 had no computer centres.
In addition, there is a backlog in social housing, exacerbating the problem of houselessness whereby people live in zinc shacks that cannot withstand strong winds, torrential rains, and fires. Children in rural areas of Kwa Zulu Natal, Eastern Cape, and Limpopo have had to cross rivers every day to school because of the lack of bridges. The General Household Survey has shown that running water has become a problem because the water infrastructure has collapsed or does not exist. Indeed, these infrastructure problems warrant the country being turned into a construction site.
However, the existential threat to these infrastructure ambitions is fiscal austerity and corruption.
d. “Public-private partnerships”
SAFTU does not support public-private partnerships (PPPs) because they are used to dismantle government’s monopoly in producing critical goods and providing essential services. In the prison industry, the government’s monopoly was broken by the creation of Kutama Senthumule and Mangaung Prison.
In the energy transition, blended financing, which could take PPP vehicles, has served to underwrite private sector investments at the expense of the public purse.
Quite ironic, the PPP in correctional services has been entirely financed by the state, as opposed to how the public is persuaded to accept it as a mobilisation of private sector investment. So, PPPs have evidently ‘socialised risks whilst privatised the profits.’
SAFTU rejects the concept of the state guaranteeing private sector investments. If they are the real entrepreneurs they claim to be, they must shoulder all the risks in their business adventures. The state must establish projects and companies of its own.
e. “Processing our minerals.”
SAFTU welcomes the commitment to “processing our minerals so that we export finished products rather than raw commodities.” This has been our outcry as a federation, that industrialisation will not be achieved without the creation of secondary industries to beneficiate our mineral resources. In our input to the President in October 2023, we pointed out that the beneficiation of our mineral resources should be paired with the drive to disincentivise the hyper-financialisation of our economy if we are to industrialise.
f. Freight Logistics Roadmap
SAFTU detested the Freight Logistics Roadmap when it was enacted because it envisions the unbundling of the logistics utility, Transnet, and the liberalisation of the logistics industry—that is, creating a market and opening it to private sector companies.
SAFTU wants the government to invest directly in Transnet. Such investment must expand freight logistics to accommodate a growing economy and upgrade the network and communication technology.
g. “stabilising debt”
SAFTU is disappointed that this government still commits to fiscal austerity, hidden behind the so-called debt stabilisation. To ordinary people, the idea of “steadily reducing the cost of servicing our debt so that we can redirect funds towards other critical social and economic needs” sounds responsible. But this premise implies an austerity policy of fiscal consolidation through budget cuts.
Budget cuts will render every other commitment unattainable. Under a fiscal consolidation policy, the “turning of the country into a construction site,” using the Social Relief of Distress Grant “as a basis for the introduction of a sustainable form of income support for unemployed people,” and other areas of service delivery will not be realised.
The idea that the government has run out of money is not only a lie but also a faulty ideological premise.
SAFTU wants the new government to spend money on public institutions so that we can build infrastructure, close all the vacant posts, expand the staff establishment in the public service, introduce a basic income grant, and create mass public sector jobs.
