SAFTU Condemns President Cyril Ramaphosa and big business for being so cold in the face of tribulations facing the working class and poor
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SAFTU told you so! No economy will ever grow under the thumb of neoliberalism and austerity programmes

SAFTU told you so! No economy will ever grow under the thumb of neoliberalism and austerity programmes

SAFTU is not surprised at all by the news from the StatsSA that the South African economy shrank by 1.4% in the fourth quarter of 2019. This follows a revision of the figures that show that the third quarter of 2019 shrunk by 0.8%.
The economy is therefore in a recession for the third time since 1994 and it is bound to happen again.

According to StatsSA, 7 out of 10 industries contracted in the fourth quarter, with agriculture seeing a massive 7.6% decline. We have warned our society about the need to address the single greatest crisis Africa faces this century: climate crisis. The droughts and floods facing South African in 2017-19, including the ongoing devastation in the food-growing areas of the country, ensure volatility in commodities, so we must dedicate more social resources to irrigation and foods that are climate-resilient, and we must also decarbonise with a Just Transition, so South Africa does not continue to contribute so much to agricultural catastrophises. And our neighbours also need our support, since Mozambique and Zimbabwe suffered even more extreme droughts and floods last year, with massive levels of hunger and even starvation. That means more refugees from areas hit even harder by rural crisis than we are.

StatsSA must surely be aware of the climate crisis, and why both worsening droughts and floods are anticipated? Apparently not, for the statement today admits, “Ironically, as drought affected one industry, heavy rains damaged another. Flooding at some power stations and disruptions to coal deliveries caused by rain contributed to the electricity, gas and water supply industry’s poor showing in the fourth quarter. The industry didn’t escape the shock of the heatwave either. Falling dam levels in various parts of the country resulted in water restrictions, reducing activity in the water supply industry.”
The next sectors in crisis were transport and trade, down 7.2%. Since this is a larger sector than agriculture, StatsSA recorded the fall in transport and trade as “the main drags on overall activity, according to the latest GDP figures.” Again, the lesson is clear: globalisation has gone too far, and even before the Corona Virus demolishes international commerce, South Africa became far too vulnerable to the neoliberals’ export-led ‘growth’ model.

Manufacturing also fell 1.8%, thanks to lower outputs of motor vehicles, other transport equipment, wood, paper and publishing. Each of these sectors should be getting state support, because our country’s poor and working people are crying out for locally-made public transport like train carriages and kombi taxis, furniture and reading materials. Capitalism has not been kind to these sectors recently, so it is time for a socialist state to balance the economy by providing society more basic-need subsidies.

According to StatsSA, “The prize for the longest losing streak goes to construction. With its sixth consecutive quarter of economic decline, the beleaguered industry has only seen one quarter of positive growth since the beginning of 2017.” This is shocking in a country with such huge housing and public infrastructure shortfalls! Given the record of corruption in the private sector, the government should be establishing state building capacity to mop up all the vast excess capacity in labour and machinery.
Finally, there is another loser to lament, according to StatsSA: “The number of civil servants employed decreased across all levels of government, with the exception of municipalities. This dragged the industry lower by 0,4%. In particular, contracts for part-time employees came to an end across a number of higher education institutions.”
This is another shocking reflection of a government hell-bent on austerity, even though the decline in the civil service correlates to a decline in service delivery and a rise in protests in the second half of 2019.

On the positive side, there is more output today in healthcare, social work, recreation and education (up by 0,7%) than before. But StatsSA argues that “Mining growth [1.8%] in the fourth quarter was driven largely by platinum group metals, iron ore and gold,” failing to recognise that a GDP increase also corresponds to a wealth decrease, because South Africa’s “natural capital” of non-renewable resources falls faster, the more these minerals are extracted. The GDP is useless to us here, because it counts only the credit for production, not the decline in our society’s wealth (since the minerals don’t grow back).
Perhaps most disturbing, GDP counts finance as a positive [2.7% rise], without really asking whether financial services helps or hurts the overall economy, given speculation and parasitical activity that is so notorious. The Johannesburg Stock Exchange, for instance, has suffered a decline from more than 61 000 to recent levels of 51 000, but it is still the highest level in the world (after Hong Kong) in the crucial Buffett Indicator: market capitalisation/GDP. So we are still in an economy driven by “financialisation” which is a drag on the real economy, as it takes resources away from real economic activity.
We are already in the middle of a hard-hitting job-loss bloodbath, one which affects every sector of the economy. The coming “4th Industrial Revolution” will make it worse, by all accounts. We are at the edge of a precipice, and fast reaching the point of no return. We shudder what the StatsSA report will show for the 2020 first quarter and the rest of the year.
SAFTU together with a growing number of working-class formations have been making repeated calls for economic justice, which unfortunately fall on deaf ears of a pro-corporate government and rating agencies. We have said that the economy is on the wrong ‘growth’ path and simply reproduces poverty, unemployment and inequalities – as well as climate crisis and a shrinking GDP. Even though government has adopted a New Growth Path and the Industrial Policy Action Plan III which have a few useful interventions, those are prisoners of the neoliberals’ overall economic ideology. So anything useful is smothered by fiscal, monetary and international economic policies which are anti-growth, anti-development, anti-environment, anti-job creation, anti-poverty reduction and anti-inequality reduction.

To make the situation even worse than it was, the government has embarked on an austerity programme since 2009. This has seen reduction of government expenditure which resulted in government investment in the economy plummeting. With the private sector engaged in a perpetual draconian investment strike that is so inhumane, as shown by the hoarding of R1.4 trillion in cash, the economy stands no chance of growing.
SAFTU has repeatedly called for:
1. The change of the economic framework that informs government action! We calling on the government to abandon neoliberalism and austerity programme.
2. SAFTU in particular calls for a complete change of fiscal and monetary policies that are mainly responsible for the mess we find ourselves in today. Government must nationalise the Reserve Bank as directed by the ruling party conference resolutions. It must change the mandate of the SARB to be explicit in promoting sustainable growth, wealth and income redistribution and employment generation.
3. We have called on the government to embark on a real stimulus package of at least R500 billion. Government must learn from its own history! It was the investment in infrastructure when preparing to host the 2010 World Cup, plus exchange controls, that by all accounts at least partially saved South Africa from the 2008-09 world financial meltdown.
4. SAFTU calls for the introduction of a wealth and solidarity tax in order to get resources that we so desperately need to put the economy on a different footing than the one in which, today, we suffer falling rates of investment in the economy.
5. SAFTU calls on the government to fight corruption in the true meaning of that word. We cannot grow the economy with such high levels of corruption; today PwC announced that after India and China, the corporate elites in Sandton and Stellenbosch are third highest in their “economic crime” rankings. The leading official at Treasury admitted that we lose between 35-40% of our procurement budget to tender fraud. Government is wholly inefficient and cannot crowd in private investment until it addresses this elephant in the room. SAFTU and our 800 000 members know that there will be no change simply because Cyril Ramaphosa replaced Jacob Zuma, like the shifting of the deckchairs on the tripartite Alliance Titanic. There was no accountability and no consequences for mismanagement under President Jacob Zuma and the same is true under President Cyril Ramaphosa. Both leaders are a product of the ANC today one whose historic mission of freeing our country from racism was suddenly forgotten when it came to economic justice.
6. SAFTU calls on government to fix the dysfunctional public education and health system. There will be no sustainable growth until our students and therefore our graduates can service our society and compete with their counterparts in the world on critical subjects such as mathematics and science. The current rates of drop out in our school continue to create an army of what others called unemployable youths. These youths are roaming the streets and have become the face of the drugs epidemic and gang wars. Yet could be full of energy, passion and social commitment if we give them a chance, for example in a massively expanded public works programme.
7. Government must fix Eskom, SAA, PRASA, Transnet, DENEL, PetroSA and all other state-owned enterprises it has killed through corruption and inefficiency. There will be no sustainable growth when such critical institutions that used to play such an important role in the economy are all in the ICU.
8. An inefficient government must play a much more direct and progressive role in our economy, as envisaged by the historic demands of the Freedom Charter which called for the land, wealth and commanding heights of the economy to be shared. There will be no growth if these remain in the hands of a tiny minority, when the great majority of poor and working people, women, youth and elderly South Africans are mired in joblessness, propertyless and landlessness.
SAFTU reiterate our call for the maximum unity within the working class. Petty squabbles and point-scoring politics have only helped the ruling class to deepen the levels of exploitation and thievery. The government is still advancing the interests of these ruling elites, and is trying helplessly to resolve the crises of capitalism on the backs of workers and poor people: those of us who have absolutely nothing to do with the world economic crisis, the climate catastrophe, the breakdown of public health and the worsening state capture whether by Guptas, Watsons, credit ratings agencies or other venal corporations who care nothing about the general welfare.
We call on our members to intensify the mobilisation programmes and to continue to implement programmes to liberate the working class and the poor from the devastating impact of the austerity programmes that have caused the recession announced today, and so much more unnecessary suffering.