NEWS & ANALYSIS

President should deal with investment strike by local investors – COSATU

Federation says our difficult economic situation flows from system of capitalism

COSATU statement on the government’s newly announced international investment drive

17 April 2018

The Congress of South African Trade Unions has noted the announcement of an investment drive by government and the subsequent announcement of a team discharged with the responsibility to lobby for new investment in our economy. The federation agrees and acknowledges the fact that we need more investment in productive sectors of the economy in order to create much needed jobs and grow the economy.

A developing economy like ours can do with some cash injection into our economy. We call on the the president to also deal with the ongoing investment strike by local investors. The South African big business sector confessed last year that they were sitting on top of R600 billion that there were not prepared to invest into our economy because of political and policy uncertainty. In 2014, the South African Reserve Bank actually puts this figure at over R1,4 trillion.    

COSATU appreciates Foreign Direct Investment but has also consistently argued that it is not a panacea to all of our economic problems. Foreign Direct Investment reinforces external dependency because investors are unable or not interested in transforming the domestic economies. We hope that government is not going to attract this foreign direct investment by embarking on privatisation. We still need to be told what were the benefits of selling Iscor ,Telkom, Sasol and other companies to the country and the poor people in particular. These companies have decimated jobs since they were privatised.

As workers, we have heard before the argument about the need to grow our economy to at least 3% mark ,where the economy can at least start absorbing some unemployed people in the economy. This unfortunately did not happen between 2005 and 2007 when the economy was growing. We have also heard many promises from the NDP document about employment creation but actually the we have seen the opposite of what was promised.

We have also seen tax breaks for corporations failing to deliver the promised salary increases, increased investment and new jobs. In 2012, the Company Income Tax was reduced from 34% to 28% but since then we have lost 480 000 jobs and salaries have stagnated.

COSATU is also deeply worried by the continued retreat by successive ANC administrations from some on the Polokwane, Mangaung and Nasrec mandates, especially on the budget and interest rates. It is obviously clear that Cde Cyril Ramaphosa’s administration will also continue to apply the same macroeconomic policy framework that was applied before, despite the rhetoric about the centrality of job creation and the transformation of the economy. It is obvious that our government continues to believe the narrative of the mainstream economists that neoliberal policies based on market forces and international competitiveness is the only way we will be able to solve our problems.

The difficult economic situation that we are trying to address as a country and the poverty that has trapped many of our compatriots is not some inescapable phenomenon, but rather something which flows from the logic of the system of capitalism that the ANC government under President Ramaphosa has so warmly embraced. It is not helpful to pretend that our current economic challenges have nothing to do with the Neoliberal policies that have created few billionaires in a sea of poverty.

The latest analysis by the World Bank has recently confirmed that South Africa is not only the world’s most unequal country, but that extreme inequality has become a major constraint to higher levels of economic growth, because it is undermining policy certainty and depressing investment.

The bank’s latest South Africa Economic Update, which focuses on the theme of jobs and inequality, notes that, at 0.63, South Africa’s 2015 Gini coefficient was the highest internationally and that inequality had worsened since 1994, despite a decline in poverty.

COSATU has consistently argued that South Africa needs an alternative development strategy because pursuing economic growth for its own sake is not enough. Economic growth is only a means to an end and in itself; it is not enough to solve the triple crisis of unemployment, deepening poverty and inequality.

What matters to the workers is the quality of growth and not necessarily the quantity. We have experienced jobless growth before that increased inequality and poverty. Even the World Bank’s program leader Sebastien Dessus has argued that what South Africa needs is to focus on the quality of growth and that for this growth to be faster, it needs to be far more inclusive.

Our message to President Cyril Ramaphosa is that workers want to see bold transformation measures and not marginal programmes that will not change the lives of the poor majority. The state must take the lead to transform the legacy of underdevelopment and we want a developmental state to implement a developmental agenda.We need to work on developing an alternative production system that is based on domestic demand and human needs.

Workers want growth that will optimally harness our resources and increase absorption of the labour force into productive employment and income generating activities. We continue to call for a politically governed redistribution of wealth and opportunities from the formal to the non formal sectors of the economy. We will not address the deepening poverty , growing inequality and endemic unemployment , unless we have a government that is bold enough to intervene on behalf of the poor and pushback against the tyranny of the market.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 17 April 2018