Treasury to blame for job crisis – COSATU

Federation says Treasury's policies of the past twenty years have failed the unemployed

South Africa’s unemployment is a national emergency created by the failures of the National Treasury

The recent acknowledgement by the Finance Minister, Pravin Gordhan that South Africa's high youth unemployment rate is a national emergency will be a welcome development only if he was prepared to do something about it. The minister cannot continue to lament like a helpless person, when he is the pilot that is flying our economic plane. If our unemployment is a national emergency and our economic plane is floundering, the question that should be asked is what is happening in our economic cockpit and who should be blamed. It is the same National Treasury under Mr Gordhan that continues to insist and treat the Employment Tax Incentive (Youth Wage Subsidy) as a panacea to all our unemployment problems.

Whilst, COSATU supports all the efforts to eradicate barriers to employment, we are opposed to the Employment Tax Incentive because we believe that it has only acted as a lifeline and a profit bonanza for labour brokers. Government led by the National Treasury continues to believe and argue that the ETI has helped create jobs and experience for young people and they are even planning to extend it for two more years.

The federation remains adamant that ETI only serves to displace older workers, subsidise labour brokers and suppress wages ;and that this money can be better used through programmes managed by the Department of Trade and Industry, Economic Development Department and Industrial Development Corporation.

The only research available on the impact of ETI is still limited and only covers the first half of the programme ,and while this research indicates that the ETI appears to have helped create some jobs ,it also appears to have displaced some older or existing workers. Some of the research also indicates that many of the claiming companies would have created those jobs anyway.

COSATU will never support the ETI ,while labour brokers and outsourced contractors are allowed to access it.  We still insist and demand that labour brokers and outsourced contractors should be banned from claiming the ETI.

What Mr Gordhan and the National Treasury also needs to acknowledge is that it’s the policies of the past twenty years that have failed the unemployed. They have failed to challenge the power of conglomerates, and have in fact strengthened their stranglehold through financial and trade liberalization.  They have failed to diversify the economy outside of the heavily concentrated and capital-intensive minerals-energy-complex core, and instead have added financial capital accumulation as another important dimension in this complex.

This has continued to stifle the growth of downstream industries by diverting crucial inputs towards the Minerals-Energy-Complex core; upstream industries continue to lock the economy in mineral export dependence and in a capital intensive growth path.  The lack of access to affordable inputs, combined with the strength of the exchange rate, prices downstream industries out of the global market. 

It is the country’s trade liberalization that has led to the decimation of some sectors, e.g. clothing and textiles including electronics, and this has continued to make it difficult for sophisticated domestic manufacturing sectors such as machinery and equipment and transport equipment to develop.

The package of neoliberal policies that the National Treasury continues to daintily adhere to were never, historically, meant to address the challenges of unemployment or inequality; but were always geared towards resolving the crisis of profitability for companies.  In order to improve their profitability capital had to increase the rate of exploitation of labour, export capital to areas that have lower capital-labour ratios and also channelled capital into financial speculation. Contained in neoliberal policies that Mr Pravin Gordhan and the National Treasury dogmatically champion is an all out onslaught on the working class and the poor.

If the Minister is concerned that unemployment is a national emergency , he cannot continue to adhere to the neo-liberal thinking and the GEAR economic principles and philosophy that insist that growth must occur first, and then employment will follow ;and that once employment increases, the distribution of income will improve.  We need Treasury to start setting employment and income distribution targets instead of growth targets because their policies have spectacularly failed ,and are the source of the unemployment crisis.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 28 September 2016