The state isn’t pulling its weight!
The anti-viral lockdown is a social-distancing start – but fiscal stinginess and tight monetary policy risk a rebellion born of extreme desperation
The all-out war against the Covid-19 virus which SAFTU supports has just ground to a halt. What we as the masses are being asked to sacrifice, versus what the state is asking South Africa’s rich people and corporations to contribute to the cause, is so far out of proportion that it simply will not work. Collectively, while the rich may run to their safe havens and the middle-classes may escape to well-stocked suburban homes, our society as a whole will be defeated. The South African Federation of Trade Unions demands a much different approach, for the sake of our survival.
In this crisis, not only must the society respect health science and promote emergency mutual aid. Also, it is urgent that we shift the discussion to socialist strategies of healthcare, social welfare, self-reliant economic interventions, ecologically-sound reindustrialization, the socialisation of the commanding heights, and class solidarity among our country’s vast poor and working masses.
The near total lock-down announced from March 26 to April 16 – and probably longer – will be immensely disruptive to our people. We will witness a period of extreme discomfort for poor and working-class South Africans, especially women caregivers responsible for our communities’ and households’ reproduction, and those who are vulnerable to Covid-19 infection, given the apartheid-health system that seems to get progressively worse.
The state is adding to our people’s survival burdens with what public health officials deem a necessary social distancing, with which in principle we agree, so as to limit the spread of the virus in these critical weeks and months. The objective is sound. All of society must respect this, and the working-class people in so many vital sectors who risk their lives servicing our basic needs now, deserve respect and due compensation – instead of being treated as an expendable, outsourced precariat.
However, the tokenistic way in which the state is providing compensation to everyone now teetering on the edge of survival needs an urgent rethinking.
Our calculation based on the President’s March 23 speech is that the state and corporations are only willing to commit R12 billion in explicit programme and project funding above and beyond the existing 2020-21 budget, which was itself brutal to our poorest and hardest-working people. The amounts promised are:
- R8 billion for “a tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6,500” – for only 4 million workers, forgetting that more than 10.5 million are officially unemployed, for which there is nothing;
- R3 bn from the Industrial Development Corporation, R500 mn from the Department of Small Business Development and R200 mn from the Department of Tourism for companies in distress or those making essential contributions to the health sector;
- R1 billion each from the Rupert and Oppenheimer families to help small businesses;
- R150 million into a voluntary Solidarity Fund “to combat the spread of the virus, help us to track the spread, care for those who are ill and support those whose lives are disrupted”; and
- unspecified support from the Unemployment Insurance Fund and Temporary Employee Relief Scheme, for people in formal employment not being paid, and an unspecified “safety net is being developed to support persons in the informal sector.”
This is mere tokenism, when a war footing is required. The emergency taxation of the rich and the corporations, and long-overdue clampdown on corporate crime are not mentioned. The long-standing calls for a Basic Income Grant, and for food parcels in this time of crisis, get no attention. But it is the limited nature of the fiscal stimulus on its own terms, that is so shocking.
The South African ruling classes’ offer of R12 billion (0,23% of GDP) to fight the worst immediate threat our society and economy have faced in living memory is actually trivial. Compare this to what is being offered by countries run by notoriously conservative governments, such as Britain and the U.S.
In the former case, a full 16.3% of GDP was announced last week by Boris Johnson. If we had the equivalent ambition in South Africa, where our vulnerable populations and inequality are far greater than in the UK, our fiscal stimulus would be R830 billion (given SA’s 2019 GDP of R5.1 trillion). If we use the coronavirus-denialist Donald Trump as a measure, our fiscal stimulus would be R434 billion. What our Treasury provides the state to address the crises – R12 billion – is heartbreakingly stingy.
Just before the President’s speech, Business Day columnist Carol Paton put the challenge squarely: “What must not happen is for the Treasury to revert to its catch-all response: the government does not have money. Finance Minister Tito Mboweni must take a red pen to the budget he tabled in February and shift spending into health, welfare and small business support.”
He did nothing of the sort. And so in spite of being Africa’s representative to the G20, where most of the fiscal stimulus is occurring, the South African government is shaming our population. The world fiscal stimulus is anticipated to be in the range of $10 trillion, according to Baron’s estimates. Yet our government and richest families are apparently not willing to offer more than the paltry $700 million (R12 billion) in local fiscal stimulus to the global cause.
In addition, the masses who are in debt now suffer from extremely high interest rates. The economy is screaming in pain from the outflow of financial capital as corporations loot South Africa and similar countries so as to present a “fortress balance sheet,” crashing the Rand’s value even further. Between $10-25 billion (R178-R445 billion) in annual illicit financial flows out of South Africa were estimated by official agencies late last year, with the South African Reserve Bank (SARB) and Treasury unable or unwilling to call out the thieves.
Last week we received only a vague commitment from the SARB to loosen its notoriously pro-bank monetary and financial sector policy, with a 1% cut in the Bank Repo Rate to 5.25%. Yet South Africa pays a higher interest rate than all but two of the 50 countries which issue ten-year state bonds (Turkey and Pakistan are currently higher). That is why our poor and working masses urgently need the kind of debtor holidays that will put a pause on our unpayable debts, the way even some of the commercial banks are voluntarily offering their medium-sized business borrowers. Again, President Ramaphosa had nothing to offer.
President Ramaphosa said in his speech, “The Governor has assured me that the Bank is ready to do ‘whatever it takes’ to ensure the financial sector operates well during this pandemic.” Yet the SARB has not done what it takes to lower interest rates to reasonable levels – for which implementing and tightening exchange controls are a critical step, so as to prevent further capital flight.
The last precedent for such an emergency, requiring tighter exchange controls, was in 1985 when the apartheid system was under attack by our movement’s international comrades through financial sanctions (leading to a default on $13 billion in foreign debt) – but the current outflows and the risk of not having funds to repay the current $180 billion in foreign debt, together put South Africa in an even riskier situation than then.
Many more criticisms could be offered to show how the state is not pulling its weight. The Institute for Economic Justice issued suggestions on March 23 for much more expansive economic strategies. And SAFTU joined a coalition of civil society groups making explicit demands to address the public health and economic crises. The state’s response to most is deafening silence.
The tragic question that must be posed is this: with a massive military and police presence now being prepared to discipline the citizenry, while the Treasury remains stingy with the fiscus and the SARB is still exceedingly tight with monetary policy, doesn’t this set the stage for a political catastrophe, like the one that occurred on the platinum belt just seven and a half years ago?
The South African working class is considered the world’s third most militant (by the World Economic Forum’s 2019-20 Global Competitiveness Report). The South African capitalist class is considered the world’s third most corrupt (PwC 2020 Economic Crime Survey). South African income inequality is the world’s worst (according to current World Bank measures).
So what kind of brutal experiment is South Africa expected to witness starting on Thursday – with our people’s movements for survival to be challenged by state security at every turn, and our government and private sector tossing out only a few crumbs?
From Friday the mother that used to survive by selling goods in the informal sector will have no income and the current measurers of the government doesn’t cover her. The young person who in the spirit of vuk’uzenzele used to cut hair in the corner of the street is being asked to stay at home and earn no income! The waste picker who survives by waking up at 3am to start picking up waste will no longer be able to earn an income. The underclass working scavenging in the dumps are now going to stay at home for three weeks. There are hundreds of thousands of the poorest of the poor who are not going to be catered for by the nonintervention of the government. These workers involved in the survivalist economy, are normally counted as employed and are not even part of the 10.5 million South Africans too discouraged to go search for employment opportunities. South Africa is being asked to risk a revolt led by this layer of the proletariat that the rich has long turned its backs to.
Capitalism has now unveiled all its weaknesses, leading us to the precipice: in the private health sector’s removal of half the industry’s resources from 85% of the society too poor for medical aids; in worsening inequality; in the economic vulnerabilities South Africa and rest of the continent face in global commodity markets and by importing products that we used to make here in South Africa; in the ghastly way our agricultural and ecological crises now intermingle; in the amplification of inherited patriarchy and racism; and in the pollution ‘externalities’ that continue, especially with greenhouse gas emissions that threaten our species and many others this century.
It is exceptionally frustrating that the capitalists’ media control plus State Capture of substantial areas of vital service delivery through corrupt outsourcing arrangements, prevent genuine debate about socialist solutions. We should be the first to demand the roll-back of profit and property privileges when so much of South African capitalism proved unable to reform from its apartheid upbringing over the past three decades. Even in the most reactionary societies, like the United States, men like Donald Trump are forced into acknowledging that industries that are on the verge of closure require state ownership to revive. A proper debate about the need for new ownership relations is required to genuinely defeat the virus and all the other socio-economic and ecological crises our world now faces.
Since the end of apartheid, we have suffered numerous crises and, through intense struggles waged from civil society, identified socialist solutions: by ignoring Big Pharma’s murderous Intellectual Property on AIDS medicines and ensuring public-sector treatment rollout, thus raising life expectancy from 52 in 2005 to 65 today; by winning free tertiary education for 90% of students and insourcing low-paid university workers; by rolling back multinational corporate water and electricity privatisation to gain even a modicum of Free Basic Services; and even by liberating our Gauteng roads from an Austrian firm’s toll gantries. South Africans are genuinely socialist at heart because we fought so long and hard against racism, sexism, environmental destruction and economic injustice, using the principle of Ubuntu: we are who we are through each other.
The period ahead will not dampen these yearnings and our spirit of mutual aid.
However, unless there is an urgent, radical rethink of fiscal and monetary policy, and unless socialist strategies are up for discussion – and implementation – among all of us, this militarist lockdown mitigated only by tokenistic state handouts cannot end well.
A Programme of Action in the time of COVID-19
A call for social solidarity in South Africa
23 March 2020
We, as civic organisations, trade unions, organisations of informal workers, faith-based organisations and community structures in South Africa, call on all people, every stakeholder and sector, to contain infection, reduce transmission and mitigate the social and political impacts of the COVID-19 virus.
Government retains a critical role in coordinating actions and distributing resources, yet its efforts will not be enough if we do not hold it to account and commit to a broad, bottom-up, public effort at this time. In a society as unequal as ours, we must work together to ensure that all safety measures are shared equitably.
We have a particular duty to safeguard those who are most vulnerable, those who are already living with hunger, weakened immune systems and poor access to health care. Greater restrictions and shutdowns are coming, but they will only work if full support is provided to working class and poor communities. Drastic measures are needed if we are to avoid disaster. Each of us must act now.
Acknowledging other statements coming from fellow movements and organisations, we put forward the following Programme of Action for all of us to work towards in the coming days.
- Income security for all
In order for people to remain at home there must be income security for all. Employers must continue to pay salaries or grant sick leave while employees are restricted to their homes, and where continued salaries are impossible government must provide workers with income protection for wages lost during the pandemic. There must be a moratorium on retrenchments during this time. Self-employed, casual workers and those whose income is suspended at this time must be supported by government to prevent job-seeking movement and provide income security. The social grant system must be extended to ensure the direct transfer of cash to households during this precarious time. All defaults on mortgage and debt repayments during this time must be non-consequential. All evictions and removals must be banned. As Labour has proposed, a bold stimulus package will be required in the coming period. These measures must be developed in consultation with poor and working-class formations.
- All households, residential institutions, the homeless and the informally housed must have easy access to sanitation, especially water and safe ablution facilities.
There must be an immediate opening of restricted water meters, mass-provision of safe water access points with unconstrained flow in areas where there is limited household access to water, and mass-distribution of safe ablution facilities to informal settlements. All of these sanitation points must have access to soap and/or sanitizer and information on the prevention of the virus.
- All households, residential institutions, the homeless and the informally housed must have access to food
If we are to stay at home during this time, access to nutritious food is fundamental. The absence of the School Nutrition Programme is devastating. A coordinated and safe roll-out of food packages directly to distribution points in food-stressed neighbourhoods must be implemented. Failing that, the child support grant must be augmented. Support for locally-organised food systems must be strengthened.
- Essential private facilities must be appropriated for public use to provide a unified and fair distribution of essential goods and services to all
National resources need to be focused and deployed in order to combat the epidemic. Essential services – health centres, food services, water and sanitation etc. – should be identified for urgent support and extension. This may require the conversion of factories and other places of production to produce sanitiser, protective clothing, water tanks, soap, food parcels, ventilators and other essential medical equipment. Essential private facilities must be made available for public use to provide a unified and fair distribution of essential goods and services to all. It requires that the public and private health systems need to be regarded as one national health system and coordinated in the national and public interest, also through state appropriation if necessary, as Spain recently demonstrated. Finances may have to be mobilised through unconventional means such as compulsory national bonds or loans, reforms to tax structures and others. Exported food might need to be redistributed locally. Regulations on price hikes should be implemented.
- Community self-organisation and local action is critical, as it our representation in national coordination
Civic organisations, community structures, trade unions and faith-based organisations will be extremely important in organising on the ground during this emergency. We must all take action where we are. Civic structures must be engaged, supported and given representation on the National Command Council. The distribution of reliable information, essential services and care for our people will require a massive coordinated effort from community leaders and structures. Volunteers must be trained and organised for safe, coordinated, campaigns at street-level and for those living in institutions. Middle-class and wealthy communities and organisations have an obligation to make resources available to poor and working-class communities.
- Community Health Workers must be insourced, trained and supported and, along with other frontline health and emergency services workers, must have access to the resources necessary to safely and effectively contain the virus
The 70 000 Community Health Workers are the outreach arms of our health. If they and other frontline health workers and emergency services workers are to provide the community services required during this time, they must all have access to reliable information, safety and protective gear, and the testing and other resources for effective containment of the virus. All workers must also receive safety and protective gear.
- We must identify strategies to calm tensions and divert violence in our homes
Home-based quarantine will escalate family and relationship tensions, and will likely lead to more violence against women, children and others most marginalized in our families and communities including LGBTI people and foreign nationals. We need to identify strategies to calm tensions and divert violence in our homes and communities over this time. We need a strong education campaign against all forms of violence, especially domestic violence. We need to strengthen safe responses from existing neighbourhood, regional and national organisations supporting women and children. This includes extending access to helplines for domestic violence, mental health, easing referral systems to shelters, and resourcing shelters to keep them open, functional and safe in the time of the virus.
- Communication must be free, open and democratised
There must be an immediate distribution of free data to all, so that people are able to receive good information, contact loved ones during isolation and quarantine, and understand the measures that are in place to create safety. Access to the best international research should be free and public. There must be daily national press conferences from government leaders alongside scientists and professionals who can keep all of our people informed about the emerging situation.
- The inequalities within our educational services need to be carefully considered, and mitigated, when moving to remote learning
Data and free website content must be made widely available to educational institutions for continued learning. However, there is massive inequality of access to resources such as computers, electricity, WiFi and learning space, as well difficult home situations that disproportionately affect poor and working-class learners, students and educators. The move to online learning should be made carefully, and as a temporary measure. We should not extend the inequalities in the education system by affording remote education to the few. Schools and universities should consider their collective role as community educators and developers facing an unprecedented shared experience. Schools, residences and dormitories should be understood as a public resource during this time, including for the safe distribution of food and other essential services interrupted by school closures.
- We must prevent a nationalist, authoritarian and security-focused approach in containing the virus
We must guard against the easy deployment of military and police to create security in our communities. We must also prevent against creating scapegoats to blame for the current crisis. Instead we must ensure that care and resources are provided for the safety and protection of all who live in our country and in our communities.
How each of us responds to the COVID-19 pandemic will determine who we are as a society. The better we respond now, the better we will be after the pandemic. We must follow international best practice and the science that we have available to us to build an assertive response that works for the context of our own history and society. Our response must be just, equitable, and redistributive if we are to meet the needs of all our people. In times of physical distancing, social solidarity is key.
For media contact:
General Secretary, Equal Education Campaign
Cell: 079 170 4656
Deputy Director, Tshisimani Centre for Activist Education
Cell: 083 987 9633
- List below is that of the 105 endorsements to date, to be updated as additional endorsements continue to come in.
- 021 Cape Town
- 360 Degrees Environmental Movement
- Academic and Staff
- Academics for Free Education
- ActionAid South Africa
- Active Citizens Movement
- African Centre for Biodiversity
- African Water Commons Collective
- AIDS Foundation of South Africa
- AIDS Free Living
- Alternative Information and Development Centre (AIDC)
- Ashes to Purpose
- Assembly of the Unemployed
- ASSITEJ South Africa
- Auwal Socio-economic Research Institute
- Black Sash;
- Bench Marks Foundation
- Bertha’s Cape Town
- Bonteheuwel Development Forum
- Centre for Applied Legal Studies
- Centre for Faith and Community, University of Pretoria
- Centre for Social Change, University of Johannesburg
- Centre for the Study of Violence and Reconciliation
- Civic Action for Public Participation
- Community Development Foundation, Western Cape
- Community Development Foundation, Western Cape
- Community Healing Network
- Corruption Watch
- Denis Hurley Centre
- Development Works
- Documentary Filmmakers Association
- Economic Justice Network of
- Equal Education
- Extinction Rebellion South Africa
- Fellowship of Christian Councils in Southern Africa
- Gender Equity Unit, University of the Western Cape
- Grace Family Church
- Gun Free South Africa
- Heinrich Böll Foundation Cape Town Office
- Housing Assembly
- Inclusive and Affirming Ministries
- Inequality Alliance South Africa
- Initiative for Community Advancement
- Institute for Economic Justice
- Institute for Economic Research on Innovation, Tshwane University of Technology
- Isandla Institute
- Ithuba Lethu Recycling Cooperative
- Just Associates (JASS) Southern Africa
- Keep Left
- Lawyers for Human Rights
- Makause Community Development Forum
- Marikana Youth Movement
- Medecins Sans Frontières
- Middleburg Environmental Justice Network
- Mining Affected Communities United in Action
- My Vote Counts
- Natural Justice
- National Union of Care Workers of SA (NUCWOSA)
- Ndifuna Ukwazi
- New World Foundation
- Observatory Civic Association
- One Voice for All Hawkers
- Open Secrets
- Open Society Foundation South Africa
- Palestine Solidarity Campaign, Gauteng
- People’s Health Movement South Africa
- Popular Education Programme
- Public Affairs Research Institute
- Public Service Accountability Monitor
- Public Services International
- Refugee Social Services
- Rehana Khan Parker and Associates
- Rural Health Advocacy Project
- SA Domestic Services and Allied Workers Union
- SA Lawyers for Change
- Salt River Heritage Society
- Sex Workers Education and Advocacy Taskforce (SWEAT)
- Sexual and Reproductive Justice Coalition
- Sharp# movement for ecosocialism
- Social Justice Advocacy Campaign
- Social Justice Coalition
- Social Law Project, University of the Western Cape
- Society Work and Politics Institute, University of the Witwatersrand
- Sonke Gender Justice
- South Africa Mining Affected Communities
- South African Federation of Trade Unions (SAFTU)
- South African Green Revolutionary Council
- South African Green Revolutionary Council
- South African Jews for a Just Peace
- Southern African Faith Communities Environment Institute
- Support Programme for Industrial Innovation
- Surplus People’s Project
- The Climate Justice Charter
- The Commercial, Stevedoring, Agricultural and Allied Workers Union (CSAAWU)
- The Cooperative and Policy Alternative Centre
- The Independent Producers Organisation
- The Institute for the Healing of Memories
- The Interim People’s Library
- The Mbegu Platform
- The South African Food Sovereignty Campaign
- Treasured Gems Cancer Support
- Treatment Action Campaign
- Triangle Project
- Tshisimani Centre for Activist Education
- Tshwane Leadership Foundation
- Westdene Sophiatown Residents Association
- Women in Informal Employment Globalising and Organising
- Workers World Media Collective
- Woza Women in Leadership
STATEMENT: Bold action required in the face of COVID-19 economic fallout
23 March 2020
PHYSICAL DISTANCING – SOCIAL SOLIDARITY
The Institute for Economic Justice’s initial public response
The COVID-19 pandemic has delivered a massive blow to the global economy and will plunge South Africa’s economy deeper into recession. Every South African citizen must do their part in physical distancing, but we must also take bold, decisive action to mitigate the social and economic effects of the pandemic; social solidarity must guide us.
It is widely predicted that the virus will trigger a global recession, due to collapsing demand and the supply shocks this crisis will entail. It is estimated that South Africa’s GDP could contract by between 1.8 and 7%.
A set of economic interventions must be introduced to complement the public health measures announced by the government and endorsed by experts – measures we fully support.
Economic stimulus typically aims to expand production in the economy in order to increase employment. What makes this response different from previous attempts to resuscitate ailing economies, is that it must: 1. support households and communities, 2. protect workers, 3. sustain businesses, and 4. lay the foundation for economic recovery, while simultaneously acknowledging the slowdown in economic activity that physical distancing will entail.
In this context, the economic interventions proposed below can buffer against the immediate economic fallout, while deepening social solidarity and laying the basis for a more equitable and sustainable economy. Policy measures may evolve with time, but focusing on the four objectives below should help to steer our responses.
ACHIEVING FOUR OBJECTIVES
Objective 1: Support households and communities
Hundreds of thousands of people will see their sources of income decline or evaporate. High poverty rates, low incomes, and high unemployment, will be compounded by many being forced to stay home and lose out on vital employment opportunities.
Universal income transfers, ideally an emergency universal basic income (UBI) grant, is needed. Versions of the UBI have been introduced in inter alia Australia, Canada and Hong Kong, and are being introduced in the United States. We acknowledge the complexities of this in the context of physical distancing and incomplete tax and bank account databases. Engagement on the modalities and vehicles of implementation, including via existing social grant mechanisms, bank accounts and cellphone banking, airtime transfers, and mobile cash-payment services, must be explored. This should remain an entitlement even if not immediately claimed. High-income households should “reimburse” their benefits to the fiscus via taxation, and cross-subsidise the rolling out of this measure.
Additional measures to support household incomes must be implemented. These include expanding the list of zero-rated items, targeted at products consumed by poor and low-income households. South Africa should also consider freezing payments and interest on certain loans, mortgages, utilities, rents, and student loans for a limited period, as has been done in various countries such as Italy, Egypt, Malaysia and the United States, particularly for those are struggling to keep up with payments due to a loss in income. The announcement of a payment holiday by Standard Bank, FNB and Nedbank on various loans is welcome in this regard. Coherence and clarity on these measures can best be ensured through a regulated, sector-wide approach that applies to all lenders. At the same time, many fall outside of the formal financial sector. Exploitative lending practices must be cracked down on, statutory maximum interest rates lowered, and a portion of bank lending prescribed towards lower-income households.
Free basic services must be extended in vulnerable communities, in particular access to safe water and the expansion of healthcare. Private and public sector health-care must pool resources. This may mean converting private hospitals into public healthcare facilities and closer state regulation of private laboratories to ensure they service the public as a whole. Targeted tax measures may be needed to reduce the price of medical products and services, such as cutting of VAT on a limited list of COVID-related essential medicines when advised by medical experts.
Austerity cuts to public services, and the public sector wage bill, must be reversed. Austerity budgets have significantly undermined service delivery and state capacity, and will reduce demand in the economy. For example, in May 2018, there were 38 217 vacant posts in the public health-care sector. The 2020 Budget must be revised. A fiscal stimulus must be directed towards building state capacity, particularly in health, to ensure that there are sufficient resources to contain, test and treat for the coronavirus.
Free mobile data and public internet access to support those no longer at their workplaces, keep the public informed and curb the spread of fake news, should be rolled out.
Where testing has been deemed necessary by a healthcare professional, it should be free.
Particular attention must be paid to those who will bear the burden of additional unpaid care work that arises due to the closure of schools and creches, stay at home requirements, and potentially caring for the ill. This work is distinctly gendered with women primarily shouldering such unpaid work and thus subsidising the functions of the state. Proposed measures include:
- Increasing the value of the child support grant.
- Assistance for the development of volunteer-based systems of caring for vulnerable members as has happened in the United Kingdom.
- Specialist community health care workers for the house-bound elderly with appropriate health and safety precautions.
- Improving the ease of access to safe water in the context of the increased need for the washing of hands and surfaces, and the fact that the burden for securing water often falls to women and girls.
- Commandeer, as needed, facilities to care for the sick, including public facilities such as community halls and universities, and private facilities like churches, and where necessary facilities such as hotels, which have the needed beds, cooking facilities and other amenities.
- Feeding schemes to ensure nutritious food to the most vulnerable, and the provision of supplements to build people’s immune systems, should be established. These and caring for the elderly and young children can be undertaken by a mix of volunteer and Department of Social Development support.
- Safe childcare facilities for people who are sick, or in quarantine, as is currently being undertaken by Japan’s trade unions.
Male relatives must be encouraged to step-up and shoulder a greater share of caring responsibilities, including through a programme of public education.
We need to ensure that basic goods and services are still accessible to the public. Government has already gazetted new regulations that compel retailers and wholesalers to ensure adequate and equitable stock and distribution of essential goods and services, and keep goods and services affordable. Penalties are proposed for those who raise prices in order to profiteer. These measures, and the list of goods and services identified, should be regularly reviewed, and frequent reports should be issued on the monitoring of consumer protection.
Objective 2: Protect workers
Workers should be able to not attend workplaces, without penalties, in order to protect themselves and their families. Where attending work is unavoidable, these workers must be protected.
Workers are advised that the CCMA is still open, but has scaled down to non-contact operations.
All workers should receive these protections, including ‘atypical workers’ . The Council of Global Unions, for example, has called for “income support for all workers, including for part-time, migrant, non-resident, precarious, ‘gig’ and informal workers”.
Workers must be protected when they travel. This includes strict regulations put in place to govern conditions in all forms of public transport to mitigate the spread of the virus and the provision of preventive health equipment, such as sanitisers and hand washing facilities. It also means decongesting public transport. This can only be done by expanding commuter transport, including taking the necessary steps to address the crisis in Prasa. Regulations may be needed to limit further the number of passengers who can be transported in each transport mode (taxi’s buses etc.).
Workers must be protected if they cannot work. This includes instituting emergency paid sick pay, including for precarious and temporary workers, for those unable to safely travel, in self-quarantine, or caring for the sick; as has been implemented in Australia. Similar responses by countries like Singapore, South Korea, Japan and the Philippines are listed by the International Labour Organisation. Wherever possible, employers should allow for work-from-home arrangements.
Workers must be granted protection from loss of employment. Governments from other countries, such as in Spain and Italy, have encouraged businesses to temporarily suspend employment or reduce working hours but retain all benefits for employees and prohibit laying off of employees.
Where job loss is unavoidable, workers must be protected during periods of unemployment. UIF provisions should be amended to increase the level and length of payments, particularly for low-paid workers, and include atypical workers.
Workers must be protected from the spread of the virus. Occupational health and safety protections must be tailored and rigorously enforced. This should include inspections and whistleblower protections, to protect workers who are being forced to work in unsafe unsanitary or exploitative conditions. Particular attention should be paid to mine workers, who are at an increased risk of respiratory health problems. All workers should be given access to free preventative equipment, suitable training, medical testing and treatment.
Workers on the frontline of the pandemic deserve special attention. Safe childcare facilities for healthcare workers with children must be established and increased financial and training support for community health workers must be given.
Objective 3: Sustain businesses
There is a danger that as physical distancing increases, businesses will be driven into bankruptcy. This will have immediate impacts on people’s livelihoods but also make it more difficult to recover from the pandemic. Some businesses require life-lines but these must follow two sets of principles.
First, to the greatest possible extent public funds should be spent on supporting people. Second, any assistance given to businesses needs to be tied to strict conditions to ensure that they assist the intended beneficiaries. Proposals by the United States Congress, for example, have set strict conditions for businesses qualifying for assistance. Businesses in South Africa that qualify for relief, including plans for a SMME debt relief fund announced by the Department of Small Business Development, should face similar conditions. These should include: ensuring that established wage agreements and the national minimum wage are honoured; there are no layoffs; wage inequality is reduced to an agreed ratio over an agreed time period; and executive bonuses and dividend payouts for the period of relief, and for a designated period thereafter, are prohibited.
Low-cost loans will be needed, particularly for small businesses. Government has said it will utilise the Temporary Employer/Employee Relief Scheme (TERS) but more information about this must be swiftly shared. Quasi-state financing institutions, such as the Industrial Development Bank (IDC), have a leading role to play and must be capitalised to achieve this. Targeted credit at below market rates by the South African Reserve Bank (SARB) to support SMMEs and other vulnerable sectors must be provided. The introduction of bank lending requirements which promote lending to vulnerable businesses must also be put in place.
Tax relief measures, such as targeted deferred tax breaks for businesses in distress, or assistance towards paying part of the wages of workers whose jobs are threatened, as is currently being introduced in Denmark and the United Kingdom, should be considered as a last resort.
Special attention must be paid to assisting sectors which will be worst hit by the pandemic, including transport, tourism, hospitality, and the performing arts.
Objective 4: Manage and transform the economy
Other aspects of the economy need to be managed in order to support households, protect workers and sustain businesses. Monetary policy is one such example. Further interest rate cuts can sustain spending. But policies to support the rand and mitigate against capital flight are equally important. Capital management techniques, including targeted capital controls, are necessary (the Institute for International Finance has estimated capital outflows to be about $67.5 billion from developing countries, larger than at the time of the 2008 global financial crisis). Ways to sustainably reduce the 3.5% spread that commercial banks charge above the SARB repo rate must be explored, as should targeted measures for the SARB to lower government borrowing costs. The monetary policy committee should meet regularly, and on an emergency basis, to consider these actions as the economic situation unfolds.
Interventions in response to the crisis have the potential to support the long-run transformation of the economy to make it more resilient, equitable and economically and environmentally sustainable. This requires integrated macroeconomic, sectoral and labour policies to advance a just transition. Examples range from:
- Investing in the local production of emergency equipment and supplies that can be bought by the state locally and exported. A state-led initiative could spur the production of ventilators, masks, and medicines. This can lay the basis for expanding manufacturing in these areas after the crisis.
- Putting more people to work if conditions allow. This would involve a massive public works programme that would see workers focusing on supportive social welfare and health-care functions, and preventative measures from cleaning playground equipment in parks to disinfecting taxis. This lays the basis for a job guarantee scheme.
- Investing in a high quality, decongested public transport, that prioritises low-cost travel for the poor and thus tackles the legacy of apartheid spatial geographies.
- Shortening work hours, which gives expression to intentions long-stated in the Basic Employment of Conditions Act.
- The planning and careful sequencing of fiscal stimulus measures that advance environmentally-sustainable structural transformation. Following, the 2007/2008 global financial crisis, for example, Asian nations, particularly China and the Republic of Korea, surged ahead with ‘green’ investments as a major part of their economic and employment recovery packages. We must consider how this crisis, combined with existing proposals on the table, can be the start of a South African Green New Deal.
Global solidarity will be equally important. The IMF has already endorsed the need for “coordinated and synchronized global” measures, as has the G7.This needs to include fiscal transfers by rich countries to poorer countries via international financial institutions, without conditionalities attached. Coordinated monetary policy, such as dollar liquidity lines from the US Fed, also need to be implemented, in particular to stem the fall in developing country currencies.
FINANCING THESE MEASURES
Many of these measures will require resources, financial and human. While we are encouraged by President Ramaphosa’s announcement of the intention to introduce a stimulus package, we are concerned that initial indications suggest that resources will be appropriated from other programmes through reductions in allocations. This reprioritisation of spending leaves cutbacks intact, as with the 2018 ‘fiscal stimulus’. This will not have a meaningful impact and will undermine access to other crucial social services, and will exacerbate existing socio-economic fragilities and inequities. While spending measures to tackle this crisis may be specific, it cannot be business-as-usual for overall fiscal management.
The United States has proposed around $1 trillion for emergency economic aid and the United Kingdom is proposing a $39 billion spending package. Hard hit countries such as Italy and South Korea have put forward stimulus packages of $27 billion and $9.8 billion respectively. We need to follow suit.
Financing the measures will require solidarity taxation; introducing prescribed assets; greater borrowing; crowding in private-sector funds; leveraging non-state public-funds, such as within the IDC; and the wealthy contributing significantly. This is a time to build a public finance system that prioritises social solidarity and centres the needs of the majority.
Aggressive, coordinated emergency measures are needed to save lives and reduce the health risks to the most vulnerable in our society. Several civil society organisations have made recommendations, including using community halls, private hospitals, and other facilities, to meet increased healthcare sector needs. They have stressed that public and private resources – including for testing and treatment – must prioritise the most vulnerable, and that measures to mitigate the spread of the virus must be put in place. To this we have added critical economic interventions that must be undertaken.
While many of these recommendations require strong, decisive action by the state, we cannot rely on the government alone. We need to practice physical distancing to curb the spread of COVID-19. But we also need to ensure a response based on social solidarity and supporting the most vulnerable.
Recovering from the social and economic impacts of the pandemic will be a slow and painful process, made more difficult by the structural conditions of the South African economy. It requires boldness, determination, and joint action by all stakeholders, led by the government. These actions must begin immediately to mitigate against lasting harm to the economy, people and livelihoods. It is an immediate imperative but also an opportunity for us to make far-reaching systemic change, to address the inherent vulnerabilities and inequities of our society and economy and to change the way in which we relate to one another.