SAFTU appalled at Edcon’s potential job losses
The South African Federation of Trade unions is appalled at the prospect of the imminent liquidation of Edcon, which could lead to the loss of 140 000 jobs, 40 000 employed directly and 100 000 indirectly. It would be the single biggest loss of jobs in the country’s history.
The country that already has the world’s sixth highest rate of unemployment could well move up to first place. With the impact on all those dependent of the workers’ incomes it would mean over a million more South Africans being plunged into deep poverty.
No less serious would be the negative effect on the economy; just when it has crawled out of a ‘technical recession’, it would face sliding back into a deeper slump. Even the big business leaders have woken up to the devastating impact of this. An editorial in the pro-capitalist Sunday Times says: “It’s vital for our economy to save the 140,000 Edcon jobs”:
“If Edcon, owners of Edgars, Jet and CNA, cannot be rescued, about 140,000 South Africans could lose their jobs. If this happens it would be the biggest jobs bloodbath SA has seen in decades and would be disastrous for the economy.”
This collapse of Edcon reinforces SAFTU’s view that the Workers Summit was a sham. Even the Sunday Times, which celebrated Ramaphosa’s promise that the country would create 275,000 new jobs every year and that his administration would work to avoid mass retrenchments and job losses, now has to concede that:
“That celebration could be short-lived. The news… that retail giant Edcon could file for liquidation as early as the beginning of the new year will send shivers down the spines of those who have been tasked, and have worked so hard, to turn this economy around.”
What of course the Sunday Times and other business commentators and leaders cannot see is that this threat to 140 000 jobs is the price we are paying for successive ANC governments slavishly following neoliberal free-market policies dictated by international financial institutions and credit rating agencies.
These policies – austerity budgets, downsizing ‘bloated’ workforces and squeezing more money out of the poor through the VAT and fuel levy increases, higher interest rates and hikes in ‘sin taxes’, while cutting taxes on the rich and doing nothing to prevent the outflow of capital from the country – were what has caused the crisis of mass unemployment, deepening poverty and widening unemployment.
By far the biggest reason for Edcon’s crisis is simply that fewer and fewer South Africans can afford to buy the good on sale in their stores, because they have too little to spend. As SAFTU has said again and again, unemployment is not only a human tragedy for the workers and their families who are directly affected, but the the economy as a whole.
The unemployed and the very poor are left struggling to survive from day to day, with no cash left to spend in shopping malls. So less and less money is being injected into the economy, which leads to further job losses. The poor are effectively excluded from the economic life of the country. And their numbers are growing all the time.
The Sunday Times editorial hopes that this Edcon liquidation can be averted by an act of generosity by the shopping mall owners. The are asking for what it calls “a two-year rental holiday” in return for a 5% share in the business.
Edcon is also seeking R700m emergency funding from its owners – banks and global investment funds R2bn and from its lenders – and a R1.2bn bailout from the state-owned Public Investment Corporation (PIC). It also plans to reduce the number of its stores.
But the capitalists’ guiding principle is always “an injury to one is an opportunity for another”. Will owners of other stores in the malls be happy to compete with a rival paying less or no rent, at a time when they too must be facing the same problem of lower demand for their goods as a result of rising poverty?
Shopping mall owners will also have shareholders’ interests to consider. One of them, Pareto, which owns Southgate and Westgate and Cresta malls n Johannesburrg, Bloemfontein’s Mimosa Mall, The Pavilion in Westville and a share of Sandton City is owned by the Government Employees Pension Fund.
This raises the problem of a bail-out by the PIC, which manages workers’ pension money. SAFTU has raised many times the lack of any democratic control by the workers whose retirement funds are invested in the GEPF and managed by the PIC.
Workers’ representatives must be elected on to their two boards and they must be bound by mandates from the workers on where their money should be invested. There is no way that workers can be forced to bail out a bankrupt private firm, when its fellow capitalists and the government have refused to do so.
Capitalist propagandists like to pretend that their system is based on free competition between rival companies, which is in any case not true in South Africa’s highly monopolised capitalist economy. Yet now that one of them has been driven out of business they expect workers’ money to bail it out.
The GEPF’s assets must be invested in accordance with the Fund’s developmental investment policy, whose objective is to earn good returns for the members and pensioners of the Fund while supporting positive, long-term economic, social and environmental outcomes for South Africa. The developmental investment policy has four key pillars, which include “Job creation, new enterprises and broad-based black economic empowerment”.
This would allow the GEPF and PIC to invest in Edcon but any rescue-plan must be mandated by the funds’ members and Edcon must be turned into publicly owned workers’ co-operative and democratically managed to ensure that the money is invested to save jobs, provide the best possible service to consumers and protect the pensioners’ savings.
SAFTU will add the Edcon crisis to the agenda for its three-day shut-downs early in 2019, starting with the nation stayaway on 26-27 March, because its plight is symptomatic of the dire consequences of the government’ s neoliberal economic policies which lie at the heart of the retailers’ failure.