COSATU condemns IMF report
The Congress of South Africa Trade Unions, representing 2.2 million workers, is flabbergasted by the International Monetary Fund's Annual Article IV Country Report on South Africa.
It lays the blame for the poorly performing economy of South Africa, on "the government's poor record in controlling the wage bill and potential spill-overs from high wage demands in other sectors represent downside risks".
It is thus blaming the world capitalist crisis - brought about by the IMF's own neoliberal ‘free-market' capitalist policies, and the shocking levels of unemployment, poverty and inequality which this has caused in South Africa and elsewhere - on the main victims of that crisis - the workers and the poor.
The report calls for a social bargain between labour and business, where labour will make "commitments to wage restraint". This in essence, means a "egg and bacon" agreement, where the business ‘chicken' commits to lay eggs for breakfast and calls on the worker ‘pig' to lay down its life to supply the bacon.
Apart from the obvious injustice in such an arrangement, this will lead to a downward spiral of the already meagre living standards of most workers and the families that they support, increase poverty and inequality, and lead to an even lower level of demand for goods and services, which will inevitably lead to even more jobs being lost and take us even further away from achieving the government's aim of full employment.
The IMF view is also completely at odds with research done by the International Labour Organisation (ILO) which argues in favour of a wage-led growth strategy, which is likely to generate a much more stable growth regime for the future.
It is a myth that South African workers are high earners, as the report suggests. 40% of workers and their families live on less than $2.50 (about R25) a day. These are the poverty wage that the IMF not only wants to maintain, but to reduce.
It is also a myth, regurgitated once again by the IMF that South Africa's ‘inflexible' labour laws contribute to our economic woes. The ILO South African director Vic van Vuuren has disputed the view that South Africa's labour regulations are "excessively rigid" and contributed to youth unemployment. "When we look at our labour laws and we analyse them and compare them to other best-practice countries," he said, "I don't think we have a rigid labour market that is preventing youth employment or employment in general".
The IMF report urges the government to "resist" a proposal to restrict the use of labour brokers. It says that "temporary employment was responsible for a large share of employment growth in recent years." This is disingenuous! Labour brokers do not create any form of employment. The only thing they create is a triangular relationship where a labour broker employs workers on behalf of a company to fill vacancies that would have been there anyway, and thus shields the company from its responsibility to provide the workers with basic benefits that they are eligible for under the Labour Relations Act.
The report also recommends - echoing the Free Market Foundation - that bargaining councils' collective wage agreements should not be extended to non-parties. This would mean that workers could no longer practice solidarity with poorly organized workers, even when a union represents the majority in that sector.
It would inevitably render such agreements worthless and leave workers at the mercy of their greedy employers who would offer them the lowest wages they could get away with. COSATU believes that this would widen the wage gap while employers make even more ridiculous profits.
We are worried that the IMF is trying to reintroduce another of its disastrous ‘Structural Adjustment Programmes', which they imposed, as a precondition for access to loans, on countries that had gained their independence from Western colonisers.
These Structural Adjustment Programs in the 1990s forced governments to open up their markets to the developed world monopoly companies, scrap measures to protect local industry and apply budget cuts, which had devastating results on the lives of the poor, who depended on the free basic services that were being provided through such policies as SA's Reconstruction and Development Programme.
How could we expect an honest report from a body that gave us such poisonous advice? Is it not ironic that the IMF presents naked-capitalism as the solution to problems caused by capitalism itself?
The IMF fails to acknowledge that the real cause of the current economic situation is:
- the large scale disinvestment by domestic capital since the late 1970s, and the damaging tendency for financial speculation to be favoured over real productive investment, and
- The one-sided focus on economic liberalisation, deregulation, competitiveness and export orientation, rather than economic transformation and industrialisation, which, on their advice, guided much of economic policy since 1996. It is their advice which has led to deindustrialisation in South Africa and other countries.
Instead of dealing with such root causes, the IMF report argues that the "National Development Plan is a blueprint for the structural reforms that will facilitate high and inclusive private sector-led growth, and a consensus around the plan and its implementation would be crucial to achieve the needed higher growth rates"
The endorsement of the NDP by this rabidly pro-capitalist, neoliberal organisation, confirms all COSATU's concerns about it. The NDP fails to fundamentally transform the structure of the South African economy; it fails to take forward the promotion of a new growth path to industrialise the economy; it fails to place job creation at the centre of the country's economic policy; and fails to make redistribution and the combating of inequality and poverty a pillar of economic development.
The NDP does none of these things and, in particular, its jobs plan is problematic and unsustainable, based on creating low-quality precarious jobs outside the core productive sectors of the economy.
We call on the government of South Africa not be misled by the IMF's failed neo-liberal policies, but rather stick with the ANC's proposal for a radical economic programme for the 2ndPhase of the Transition; and engage with the economic proposals tabled at the recent Alliance Summit, on which there was considerable agreement between COSATU, the ANC and SACP.
Capitalism, and particularly free market capitalism, cannot be a solution to high unemployment rates and slow growth. Only through industrialisation, more state intervention and strategic nationalisation of the commanding heights of the economy will we be able to meet our job creation targets.
Monday 7 October is the World Day for Decent Work. COSATU urges the South African government to celebrate that day by decisively rejecting the IMF's crude attempt to blackmail it into adopting policies which will destroy decent work and lead to even higher levels of poverty, unemployment and inequality than we have already.
Statement issued by Patrick Craven, COSATU national spokesperson, October 2 2013
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