SAFTU calls for extraordinary interventions to stop South African reaching the rock bottom and a point of no return!

1 August 2019

South Africa is fast approaching a point of no return, which threatens to place it on the precipice of an explosion, the risk of which we have warned for years. A ring of fire is already surrounding all our cities as thousands of communities embark on daily service delivery protests. 

A completely new mind-set is now urgent! SAFTU calls on the country’s leaders to accept the reality that we as the country are standing on a cliff. The starting point is to accept that everything that the country has tried for a quarter of a century has not produced results. The quadruple crisis of poverty, unemployment, inequality and corruption is getting worse by the day. 

All the previous policy interventions have not helped. They have not changed anything but worsened the crisis we inherited from apartheid, colonialism and capitalism. 

Its time to think out of the box, to adopt a real “business is unusual” approach before it is too late. Increasing the dose of a failed medicine is not an option. 

Neoliberalism has been tried for 25 years and has proven not to be a solution. Austerity programmes and other self-imposed Structural Adjustment Programmes have been tried in response to the world economic crisis of 2008 but the situation is getting worse than even the apartheid times. 

The rich are getting richer and the poor poorer! The poor has been squeezed to death already and they have absolutely nothing more to contribute. 

It is time for a change of the direction! 

The latest outrageous unemployment statistics released yesterday prove just how hollow were President Ramaphosa’s assurances in his SONA address just over a month ago that he had secured R840bn in funding to create 155 000 jobs over the next five years and that he wanted to see this expanded to two million jobs by 2020. 

The first employment figures since he made that speech shatter any such optimism. SA’s official jobless rate jumped to 29% in the second quarter of 2019, the highest rate since 2008, and an increase of 1.4% over the already massive 27.6% in the first quarter.

The expanded unemployment rate, which includes those who have given up looking for jobs, rose by 0,5 %, from 38,0% to 2019 to 38,5%.

The youth unemployment rate for 15-24 year-olds is now up to 56.4%, the highest level in the world by an even bigger margin than it was already. 

Even worse is that in this age group, the number who were not in employment, education or training increased from 31,6% in the second quarter of 2018 to 32,3% in 2019. That means out of a total of 10.3 million young people almost of a third of them - 3.3 million - are playing no part whatsoever in the economic life of the country today, nor gaining any skills to do so in the future.

As a consequence of this haemorrhaging of jobs, thousands of workers and their families are joining the now over 60% of South Africans who are living in poverty. This, in turn, swells the number of people who have only enough income to survive, which cuts the market for goods and will lead to further retrenchments as a result. We are in a vicious circle, which we demand must be broken!

The social ills are there for anyone to see. The levels of crime have reached frightening proportions. On average, 57 people die violently in our country. The justice system is dysfunctional and records only a 15% conviction rate. We are seeing a rise of drug epidemic with more and more of young people trapped in a vicious circle. More young people are finding it attractive to join gangsters and wars that maim hundreds of innocent lives. 

We are in a crisis!

The county can no longer afford dilly-dallying, procrastination, vacillations and indecisions. We demand decisive leadership now!

All counties that in their history found themselves in similar circumstances never only prayed and hoped that the situation would address itself. They never employed the policies that the IMF/World Bank and rating agencies are demanding we implement. 

For example, the USA in response to the crisis of the destruction of the infrastructure after the Second World War embarked on what they called the Marshall Plan! The Marshall Plan was an American initiative passed in 1948 to aid Western Europe, in which the United States gave over $12 billion in economic assistance to help rebuild Western European economies after the end of World War.

a) Where is our plan to address the property and land poverty of the black majority? 

b) Where is the plan to rebuild black residential areas and end apartheid spatial development? 

c) Where is an education programme to build infrastructure and improve the quality of our dysfunctional education system so that we can compete with our neighbours and the rest of the world while preparing for the Fourth Industrial Revolution? 

d) Where a plan to save our planet from the degradation that threatens to wipe out the very mother earth? 

e) Where is our just transition that will ensure that we move in tandem to a greener economy without worsening the current levels of unemployment, poverty and inequalities? 

f) Where is the plan to end poverty, including amongst workers? 

g) Where is the plan to ensure the current inequalities are addressed as part of building a more cohesive society?

SAFTU, in its response, to the StatsSA second labour force survey, made 15 proposals that we believe should form part of the South African response to the crisis:

1. 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.Introduce a wealth tax and solidarity tax, 

3. Implement 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. Review the corporate taxes that were around 45% during the apartheid era but driven down to 28% after 1994. 

5. Review personal income tax to ensure that those who can pay more make more contributions to the fiscus. 

6. Cap 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. Find creative ways of effectively taxing incomes gained in the financial markets. 

8. Raise government revenue to 33% of the GDP. 

9. Scrap the Labour Bills that have been introduced to undermine the right of workers to strike. 

10. 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 and minerals under the democratic control of workers as called for in the Freedom Charter. 

16. Unless something is done at this level the economy will never grow when the overwhelming majority are trapped in squalor and poverty.

Issued on behalf of SAFTU, 1 August 2019