The South African Federation of Trade Unions (SAFTU) warns the working class and the poor to expect yet another anti-worker and anti-poor budget when the Minister of Finance tables the 2024 Budget on 19 February. Suppose the past Medium-Term Budget Policy Statement (MTBPS) is any indication. In that case, this Budget will deepen budget cuts, undermine public services, and entrench the neoliberal economic agenda that has left millions of South Africans in poverty and unemployment.
There is also pressure by jingoistic militarists to amplify our flow of soldier corpses from the Democratic Republic of the Congo – a war our mining and oil companies want us to fight to regain the status quo of capitalist extractivism. And the destruction of USAID by a Washington team led by Gauteng native Elon Musk – partly on the spurious grounds of alleged discrimination against Afrikaner farmers – means that R7.5 billion in extra funding for vital AIDS medicines will need to be found. The Reserve Bank’s failure to cut interest rates at the rate SAFTU has suggested also means a far higher debt repayment burden than we should be bearing.
Since after the 2008/9 global economic crisis, successive budgets have imposed devastating cuts in public expenditure under the guise of fiscal consolidation. At the heart of these budget cuts is the relentless drive to achieve lower deficits to GDP, dictated by the IMF, credit rating agencies, and financial institutions.
The IMF, in particular, has been twisting the Treasury’s arm in the wake of the foolish, unnecessary $4.3 billion loan the late Finance Minister Tito Mboweni contracted on behalf of future generations when we were weak, in the first wave of mass COVID-19 deaths. Further World Bank loans – including billions of dollars now being negotiated by Treasury – will continue to maximise Washington-Consensus power over our fiscal sovereignty. These loans began in earnest after apartheid ended, with the corrupted $3.75 billion Medupi coal-fired power plant credit by the World Bank, which well knew about Hitachi bribery of the ANC later successfully prosecuted under the Foreign Corrupt Practices Act in the U.S. in 2015. (Donald Trump has just announced this law will be repealed.)
Since the October 2020 medium-term budget, the government has prioritised fiscal consolidation over the people’s needs, leading to severe underinvestment in critical sectors. Since then, and until next year, the IMF and Treasury have imposed an 18.1% reduction in per-person government spending, leaving state failure as far as the eye can see. Austerity is nearly three times more severe today than in the 1996-2001 GEAR home-grown structural adjustment programme.
These cuts have slashed crucial social services, deepened the crisis in healthcare and education, drastically reduced infrastructure investment and maintenance, and exacerbated the collapse of municipalities. The government’s neoliberal programme has meant that instead of investing in a public-led industrial and employment plan, it continues to impose measures dictated by credit rating agencies and financial capital.
SAFTU reiterates its rejection of the anti-poor and anti-worker austerity agenda, which is being pursued under the so-called Government of National Unity, where the ANC and DA continue their collusion in implementing policies that serve big business and global financial institutions at the expense of the people. The ongoing budget cuts have had dire consequences:
- Public Sector Job Crisis: The government has frozen public service vacancies in essential sectors such as healthcare, education, and policing, leading to overburdened workers and deteriorating service delivery. Community Health Workers (CHWs) and Community Caregivers (CCGs) remain in precarious employment, with the Western Cape province refusing to implement their uniform absorption. However, a recent court order now compels the government to insource CHWs nationwide, and we expect full compliance with this ruling.
- Retrenchments and Early Retirement in Public Service: The government initially terminated the contracts of public works programme workers over age 55 (though at least temporarily has paused that attack) and, more worryingly, is implementing an early retirement programme across the public service as part of its job-cutting strategy. This comes despite South Africa already falling far behind international norms on police-to-public ratios, doctor-to-patient ratios, teacher-to-pupil ratios, etc. The goal of ‘insourcing’ the super-exploited tenderpreneurs’ labourers – as #FeesMustFall protesters achieved at our universities – remains the objective of all trade unions but is persistently opposed by the neoliberal state.
- Municipal Collapse: Austerity has deepened the crisis in local government. Municipalities are unable to provide essential services, leading to water shortages, electricity crises, and infrastructure decay. Even the traditionally white suburbs are feeling the pain of state failure. Aside from their investments in solar panels to go off-grid, the petit bourgeoisie may confront the national water crisis with the kinds of protests we know so well in the townships. Municipal ruling parties will be punished hard in next year’s local government elections.
- Privatisation and Outsourcing: Instead of investing in a strong public sector, the government pushes privatisation, allowing profiteers to exploit essential services while workers and the poor bear the brunt. The Public-Private Plundering model continues to fail society, but ideologues insist that State-Owned Enterprises be given the vulture treatment.
- Illicit Financial Flows and Lost Revenue: The government has failed to tackle illicit financial outflows, which siphon billions from the country’s economy. SAFTU has repeatedly demanded measures to curb these outflows, including stricter financial regulations, exchange control tightening, clampdowns and prosecutions of corporate tax dodgers. The ‘grey listing’ of South Africa by the Financial Action Task Force has helped reveal how slacker ‘regulators’ in the Reserve Bank, Treasury and prosecuting agencies were asleep at the wheel. But with the neoliberal turn in mid-2024 through the Government of National Unity, we have no confidence that financial tsotsis are being properly pursued. Witness how the United Arab Emirates gets such hospitable treatment from our government when extradition requests for the Guptas are laughed at in Abu Dhabi and Dubai.
- The Social Wage Under Attack: The ongoing below-inflation increases for social grants will leave millions of the most vulnerable people unable to afford basic necessities, further deepening inequality. Last year’s increase from the 2020 R350 monthly grant for unemployed people to R370, but with far fewer recipients than when it was introduced nearly five years ago, only emphasises how tokenistic South Africa’s welfare state has become under conditions of austerity.
SAFTU’s Demands for a People-Centered Budget:
- Deficit and Public Investment: We reject the IMF and credit rating agencies’ push to reduce budget deficits at the expense of development. The apartheid regime ran larger deficits – up to 125% of GDP in 1932 (compared to around 70% today) – but used public funds to build Eskom, Spoornet (Transnet), Iscor, Sasol, Telkom, the Post Office and other key public institutions. The government should take inspiration from this historical precedent – which solved ‘the poor white problem’ – and rebuild the public sector rather than dismantle it.
- End Austerity – Invest in Public Services: The government must abandon its fiscal consolidation strategy and increase spending on education, healthcare, policing, defence, home affairs, labour, etc. All public sector vacancies must be filled, and CHWs and CCGs must be fully absorbed with full benefits across all provinces.
- Tax the Rich, Not the Poor: To ensure that the rich and big businesses pay their fair share, the government must implement a wealth tax, close corporate tax loopholes, and reverse corporate tax reductions.
- Expand Social Protection: To protect the poor from the rising cost of living, the Basic Income Grant must be introduced at R1500, and social grants must be increased above the inflation rate (since poor people’s price increases typically are 2-3% higher than rich people’s).
- Industrialisation for Jobs: The government must pursue a pro-worker industrial policy to create decent jobs, build domestic manufacturing, and end reliance on exploitative multinational corporations.
- Reject Privatisation: Essential services such as water, energy, and transport must be publicly owned and managed in the people’s interests, not profit-driven private companies.
SAFTU calls on all workers, the unemployed, and the poor to mobilise against this austerity budget. The working class cannot afford to sit back while our lives and livelihoods are sacrificed for the elite’s profits. We reaffirm our call for mass anti-austerity demonstrations and urge all progressive forces to join the fight against neoliberalism and budget cuts. We call on SAFTU, COSATU, FEDUSA, and NACTU members to join other working-class formations in demonstrating against the budget cuts in Cape Town on February 19, 2024.
People Before Profits! No to Austerity! Forward to Mass Action!
A Statement was issued on behalf of SAFTU by General Secretary Zwelinzima Vavi.
For more details, contact the National Spokesperson at:
Newton Masuku
066 168 2157
Newtonm@saftu.org.za
