The South African Federation of Trade Unions (SAFTU) is not surprised by the latest StatsSA report, which shows that the South African economy grew by a mere 0.6%. This dismal performance is yet another confirmation of what we have repeatedly warned: the neoliberal economic framework imposed by the ruling elite—rooted in budget cuts, privatisation, and a neocolonial economic structure—will never deliver meaningful growth or development for the majority.
South Africa remains trapped in an economic structure that prioritises profit extraction for multinational corporations and local elites while suffocating industrialisation, job creation, and redistribution. The government’s continued commitment to austerity, as dictated by the National Treasury, is deepening economic stagnation. Instead of investing in the real economy—by expanding public sector employment, fixing crumbling infrastructure, and supporting local manufacturing—the government is obsessed with cutting expenditure and appeasing credit ratings agencies.
The 0.6% growth rate exposes the fallacy that budget cuts will stimulate economic recovery. In reality, they are a death sentence to economic expansion. By slashing spending on critical services like health, education, and policing, the government is not only eroding essential public services but also shrinking overall demand in the economy. The job losses in the public sector, the failure to fill vacancies in hospitals and schools, and the ongoing water crisis—all aggravated by austerity—are symptoms of a government that has abandoned the working class.
Rejecting VAT and Neoliberal “Solutions”
The state’s reliance on regressive taxation measures like VAT hikes to address the fiscal crisis is unacceptable. Increasing VAT does not address the structural problems in the economy; instead, it further burdens the poor, who already bear the brunt of economic mismanagement. The fundamental issue is not a lack of revenue but a refusal to tax the wealthy and overhaul an economy built on colonial patterns of wealth accumulation.
SAFTU Demands:
1. An end to austerity and budget cuts—The government must abandon its obsession with fiscal consolidation and instead prioritise public investment in infrastructure, housing, and basic services.
2. Tax the rich, not the poor—Increase corporate taxes, wealth taxes, and financial transaction taxes instead of relying on VAT, which disproportionately affects the working class and the unemployed.
3. Industrialisation and job creation—Develop a state-led industrial strategy that prioritises manufacturing, food sovereignty, and public sector expansion.
4. Strengthening public ownership—Reject privatisation and expand state ownership in key sectors, ensuring that industries serve public needs rather than private profits.
5. A new economic framework—Break from neoliberal policies and shift towards a redistributive, people-centred economy that uplifts the working class.
The reality is clear: as long as South Africa remains locked in a neocolonial economic model and follows Treasury’s neoliberal dictates, the economy will continue to stagnate, and inequality will deepen. SAFTU calls on all workers and progressive forces to unite against austerity and fight for an alternative economic model that serves the people, not the elite.
People before profits! End austerity now!
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
