The South African Federation of Trade Unions (SAFTU) approaches the tabling of the 2026 National Budget at a moment of profound economic and social crisis. South Africa faces mass unemployment affecting approximately 12.4 million people on the expanded definition, deepening de-industrialisation, escalating crime, rising youth exclusion, collapsing municipalservices, and one of the highest levels of inequality in the world. This Budget must respond to this national emergency.
The working class cannot withstand another year of austerity, shrinking services, and policy drift. The central question before the Minister of Finance is whether the state will continue prioritising fiscal consolidation over human development, or break decisively with austerity and place employment, industrial reconstruction, and redistribution at the centre of economic policy.
Breaking with Austerity and Fiscal Contraction
Over the past decade, fiscal consolidation has weakened the state’s capacity to deliver services and stimulate growth. Cutting expenditure in an already crippled economy is economically self-defeating. When the state withdraws spending, it removes income from communities dependent on public wages, procurement, and social expenditure. Demand shrinks, small businesses collapse, and the tax base erodes further.
SAFTU expects the 2026 Budget to decisively reject further austerity. Continued fiscal contraction will deepen social instability and undermine long-term growth. South Africa cannot cut its way out of structural unemployment.
Protecting and Expanding the Social Wage
The social wage, public healthcare, education, housing, social grants, policing, justice services, and basic administration are not a luxury. It is the foundation of social stability and economic participation. Further cuts to public health would worsen staff shortages, medicine stock-outs, infrastructure decay, and delays in care. Underfunded schools mean overcrowded classrooms,declining learning quality, and generational reproduction of poverty. Weakening policing, magistrates’ courts, and correctional services undermines public safety and accountability at a time when crime levels remain alarmingly high.
Underfunded Home Affairs offices delay identity documents and passports, directly affecting employment access and grant applications. Austerity in these sectors does not save money in the long term; it increases social and economic costs.
SAFTU expects the Budget to protect and expand funding for the frontline services and rebuild state capacity.
Jobs and Industrialisation Must Be Central
The fiscal crisis cannot be separated from mass unemployment and de-industrialisation. South Africa continues to experience factory closures, retrenchments, and declining productive capacity across manufacturing, steel, mining value chains, agro-processing, and chemicals. Without rebuilding the domestic industry, revenue will remain constrained and unemployment entrenched.
SAFTU expects the Budget to prioritise:
- Large-scale public investment in infrastructure and energy security
- Industrial rebuilding and localisation
- Beneficiation of minerals rather than raw exports
- Expanded public employment programmes
Industrial policy must be integrated with fiscal policy. A job-creating Budget is the only sustainable fiscal strategy
Progressive Revenue: There Is Money
The narrative that “there is no money” is false. The so-called fiscal gap can be addressed through progressive revenue reforms instead of regressive taxes or spending cuts.
Corporate Income Tax
Corporate tax rates have been reduced over time, despite strong profitability in certain sectors. SAFTU expects measures to reverse excessive reductions, introduce differentiated rates for monopoly sectors, and consider windfall taxes where appropriate.
Capital Gains and Wealth Taxation
Capital gains often face lower effective taxation than wages. Increasing capital gains inclusion rates and closing avoidance loopholes would enhance fairness and revenue. SAFTU has also previously advocated for a wealth tax on ultra-high-net-worth individuals andstronger estate duty enforcement.
Combating Illicit Financial Flows
South Africa loses staggering amounts annually to illicit financial flows, profit shifting, and tax avoidance. Estimates suggest losses of between R100 billion and R300 billion per year. Strengthening SARS enforcement capacity, enhancing transparency in beneficial ownership, and clamping down on transfer pricing abuses are essential measures. Recovering even a fraction of these resources would significantly ease fiscal pressures.
Ending Unconditional Corporate Bailouts
Public funds must not socialise risk while privatising profit. Any state support to the distressed firms must be conditional on job retention, localisation, and worker participation.
Redirecting Finance Toward Development
Public finance institutions and development banks must be aligned toward productive investment rather than speculative flows. Monetary policy must support employment creation and industrial expansion rather than rigidly prioritising inflation targeting at the expense of growth.
A developmental state requires coordinated fiscal, industrial, and monetary strategies.
The Broader Social Context
Crime, youth alienation, and social instability cannot be separated from unemployment and exclusion. With nearly 28,000 murders projected annually at current rates and millions excluded from stable employment and education pathways, the social fabric is under immense strain.
The Budget must recognise that policing alone cannot solve conditions created by economic exclusion. The fight against crime is inseparable from the fight for jobs and economic justice.
A Budget at a Crossroads
The 2026 Budget presents a decisive choice. Continuing austerity will weaken public institutions, deepen unemployment, and intensify social instability. A pro-worker, developmental Budget can stabilise the economy, rebuild productive capacity, and restore hope.
SAFTU expects a Budget that:
- Breaks with austerity
- Protects and expands public services
- Mobilises progressive revenue
- Tackles illicit financial flows
- Rebuilds the domestic industry
- Places decent work at the centre of economic policy
South Africa cannot afford cosmetic adjustments. It requires structural transformation.
SAFTU remains clear: the struggle against unemployment, inequality, and crime begins withtransforming the structure of the economy itself.
A statement was issued on behalf of SAFTU by the General Secretary, Zwelinzima Vavi.
For media inquiries, contact the National Spokesperson at
Newton Masuku
newtonm@saftu.org.za
0661682157
Media Officer
Asive Dyani
0719019564
