The Chickens have come back home to roost! Neoliberalism and Austerity programmes have dismally failed the poor and the economy! Government has committed itself to a budget deficit reduction from 4.1% in 2014 to 2.4% by 2019. The 2017/18 budget targets a deficit of 3.1%. This can only be achieved through real spending cuts that are especially hard on the poor, which in turn can only cause the economy to stagnate further. The extent of the cuts is seen in the MTBPS:
The decline in ‘real growth’ of spending to 1.3% in 2015 (from 10.8% in 2009), is lower than the level of population growth, and therefore represents a real cut in per capita spending. This is occurring at a time when we have a desperate need to stimulate the economy, deliver services in underserviced areas, tackle worsening poverty and inequality, and invest in employment creation.
This austerity mentality is a disaster! We are following European/ IMF-type policies, which have only plunged Europe deeper into crisis. We should be following a stimulus approach, based on meeting the needs of our people.
Is in this context that SAFTU is not shocked by the latest report of Statistics South Africa second quarter Labour Force Survey for 2019. In the first quarter of 2019, we learnt that the GDP has shrunk by a massive 3.2%. Over 200 000 jobs were lost in the first quarter of the economy.
Today we learnt that 10,2 million South Africans are unemployed. The unemployment figure for Black Africans is 43%, and Black African females are 47%, and the Eastern Cape has an unemployment rate of 47%.
Government operation of pleasing the rating agencies and the IMF/ World Bank has succeeded, but unfortunately, the patient (the economy) has died.
We are facing a job loss blood bath bigger than any other time in our democracy. We have used all manner words before to try to define this catastrophe, and we have run out of words now.
What is also not shocking is the government that refuses to admit that the current policy mix has dismally failed the black working class, which has been its key constituency. For 25 years the ANC alliance led government has refused to accept the reality that its economic programmes is reproducing unemployment, poverty and inequalities.
Albert Einstein is widely credited with saying, “The definition of insanity is doing the same thing over and over again, but expecting different results.”
This is exactly what the ANC government has been doing since 1994.
Little has been done to change the structure of the economy. We remain a neo-colonial post for extraction of minerals, most of which get sent overseas without being beneficiated only for them to return to the country as finished products. We have allowed our economy to be dominated by the financial sector, which despite much talk of transformation has transformed itself into being the local policeman of neoliberalism. Some of their activities, including their lending policies, have helped choked the economy and redlined SMMEs in particular from the black residential areas.
The economy has been destroyed by embracing neoliberal policies in particular through conservative and inappropriate macroeconomic policies that have robbed the economy of billions of rands that we so desperately need to build our industrial base. We are currently deindustrialising at an alarming rate.
Corruption, mainly of the private sector but also in the public sector, has worsened the situation. Our state-owned enterprises are in such a deep crisis. It came as no surprise that Eskom announced that it had lost an R20.7 billion rands in the financial year. It is not surprising that workers at Denel and SABC do not know if they will get their salaries at the end of the month.
As if this unemployment crisis is not enough, the government is driving a programme slaughter 30 000 jobs in the public service. A government More jobs will be lost at Eskom through the introduction of the IPPs. Government is blackmailing SABC and forcing it to shed thousands of more jobs.
Of course, the private sector has jumped into the bandwagon and is announcing even bigger numbers of job losses.
SAFTU calls on the government to:
1. To announce a real stimulus package at least to the region of R500 billion rands to save the situation from getting worse in the third and fourth quarter.
2. The introduction of a wealth tax and solidarity tax,
3. Implementation of legislation such as a general anti-avoidance tax act to halt base erosion, profit shifting and the loss of the country’s resources to illicit financial flows, that not only reduces the tax base but more significantly perpetuates wage inequality.
4. A review of the corporate taxes that were around 45% during the apartheid era but driven down to 28% after 1994.
5. The review of personal income tax to ensure that those who can pay more make more contributions to the fiscus.
6. Capping the salaries of those earning gruesome amounts and introduce a meaningful National Minimum Wage that could close the worsening income inequalities and address the crisis of poverty amongst the employed workers.
7. Finding creative ways of effectively taxing incomes gained in the financial markets.
8. Raising government revenue to 33% of the GDP.
9. The scrapping of the Labour Bills that have been introduced to undermine the right of workers to strike.
10. We call for an end to the private sector investment strike. The private sector is hoarding a R2 trillion rands investable cash
11. Adopt industrial policy aimed at import substitution, sectoral re-balancing, social needs, eco-sustainability
12. Increase state social spending paid for by higher corporate taxes, cross-subsidisation and more domestic borrowing (& loose-money ‘Quantitative Easing’, too, if necessary)
13. Reorient infrastructure to meet unmet basic needs, and expand/maintain/improve energy grid, sanitation, public transport, clinics, schools, recreational facilities, internet
14. Adopt ‘Million Climate Jobs’ strategies to generate employment for a genuinely green ‘Just Transition.’
15. Address the land and property poverty of the majority by nationalising land, the minerals under the democratic control of workers as called for in the Freedom Charter.
Unless something is done at this level, the economy will never grow when the overwhelming majority are trapped in squalor and poverty.
Summary of the StatsSA Labour Force Survey
The working-age population increased by 150 000 or 0,4% in the second quarter of 2019 compared to the first quarter of the same year. Compared to Q2: 2018, the working-age population increased by 601 000 or 1,6%. The number of employed persons increased by 21 000 to 16,3 million in Q2: 2019, and the number of unemployed persons also increased by 455 000 to 6,7 million compared to Q1: 2019, resulting in an increase of 476 000 (up by 2,1%) in the number of people in the labour force. The absorption rate decreased by 0,2 of a percentage point to 42,4% and the unemployment rate increased by 1,4 percentage points to 29,0% compared to the first quarter of 2019.
Employment increased in two of the four sectors in Q2: 2019; with the informal sector recording the largest employment gains of 114 000 followed by the Agriculture sector with 5 000. The formal sector and Private households declined by 49 000 each resulting in the net increase of 21 000 in total employment. The number of discouraged work-seekers and the number of people who were not economically active for reasons other than discouragement decreased by 248 000 and 77 000, respectively, between the first and the second quarters of 2019, resulting in a net decrease of 326 000 in the not economically active population.
Compared to a year ago, employment increased by 0,2% (25 000), unemployment increased by 9,4% (573 000) and the number of persons who were not economically active increased by 3 000.
The formal sector quarterly employment loss of 49 000 jobs was mainly driven by Mining (36 000), Transport (24 000), Construction (20 000), Trade (11 000) and Finance and other business services (8 000) in Q2: 2019. Community and social services recorded the largest employment gains of 28 000, followed by Manufacturing (18 000) and Utilities (6 000) in the same period.
In the second quarter of 2019, the informal sector employment increased by 114 000 persons compared to the first quarter of 2019. The gains in the informal sector employment was mainly driven by the Trade (95 000), Construction (44 000) and Community and social services (20 000) industries. Employment losses were recorded in Transport (18 000), Finance and other business services (13 000), Manufacturing (9 000) and Utilities (4 000), while informal sector employment in Mining remained unchanged.
The percentage of young persons aged 15–24 years who were not in employment, education or training (NEET) increased from 31,6% in Q2: 2018 to 32,3% in Q2: 2019. In this age group, the NEET rate for males increased by 1,6 percentage points, while the rate for females decreased by 0,2 of a percentage point. The NEET rate for females was higher than that of their male counterparts in both years (Figure 9a).