COSATU welcomes the Presidential Job Summit 

2 October 2018

The Congress of South African Trade Unions welcomes the convening of a Presidential Job Summit in response to the economic crisis that we find ourselves in.  We hope that government and the private sector will take this summit seriously because our economic crisis requires all social partners to come to the table with honest proposals and real commitment.  COSATU has been worried about the commitment of some government departments and officials and business leaders to providing meaningful contributions.

The latest job figures and economic projections paint a dire picture of the pending gloom and also suggest that in the coming months more and more people will be plunged into poverty.  This is very alarming considering that of the 36 million people in the working-age population, 27.5% are officially unemployed according to the latest Quarterly Labour Survey. This is calamitous for the country because it means that for a whole generation, the habit of working is being lost, and millions of young people will be dependent on the state for their well being and that of their families.This is worsened by the fact that the cost of living is rising on a daily basis.

There is a drastic need for a change in attitudes, all-round, if we are to deal with unemployment and stop the ongoing retrenchments and also get out of this economic quagmire. We are already seeing the government struggling with pressure from a population that has seen deepening poverty, rising inequality and the growing unemployment.

This crisis period demands that all social partners and stakeholders break with the past, and calls for a bold and decisive leadership that will chart a new developmental path. The key to finding a solution is for everyone to leave their bunkers and collectively participate to a process of finding a solution to the crisis by coming up with a uniquely South African developmental path that will understand and address the legacy of our past.   

We need an economic developmental model that will have the full appreciation of the fact that our economy remains trapped into a colonial and apartheid economic and social policy paradigm and that is unsustainable. The time has arrived for a developmental model that will change the colonial economic trajectory and ensure that there is a proper redistribution of income and more people are allowed to participate in the economy.

It is now recognized that the main problem is not only the level of economic growth, but rather the type of growth. We do not need a growth path that continues to reproduce the structural economic distortions of our apartheid colonial legacy.

We expect the summit to come out with detailed interventions to deal with the already identified challenges facing our economy that include the following:

- Persistent high levels of unemployment, inequality and poverty

- Insufficient finance for investment in productive sectors and job creation

- Low investment in research and development and limited contribution of technology based or knowledge factors

- Uncompetitive and volatile exchange rate

- Low savings rate

- Long-term decline in agricultural and mining employment

- Lack of economic diversification, by sector and by location

- Limited progress in broadening participation

- Abuse of dominance and uncompetitive behavior in key input industries

- Bottlenecks in logistics and energy infrastructure with often high and rising costs

- Skills shortages to support growth

This economic crisis should see government hopefully abandoning its pattern of responding to an economic down-turn by going back to the old logic of neoliberal economic responses that advocates for growth first and distribution later. This unfortunately has proved time and again that it is it not the solution to our economic challenges

We do not believe that the only role of the state is to facilitate the creation of employment opportunities, and while we agree that it cannot legislate a reduction in unemployment, inequalities or poverty; it can play a role the acceleration of employment creation, employment growth and productivity on a sustainable basis

Adopting regressive and contractionary policies that only focus on cutting social expenditure has not worked but what is needed is a decisive state intervention in strategic sectors of the economy.  The state does have the power to regulate and channel investment in the job intensive areas of the economy. Our macroeconomic policies need to be radically overhauled in line with the radical economic shift that is needed at this time of crisis. The future is in promoting investment in rural areas and the township economies because economies are made up of people.

COSATU hopes that corporate leaders can unite with their workforces to focus their enterprises toward common goals, jointly contribute to productivity and enterprise growth, and consequently contribute to job creation. The federation hopes that all economic social partners’ need to adopt a unified approach towards achieving a national economic development vision.

COSATU hopes that the summit will deliver a plan to turn the economy around. 

·   A commitment by industry, government and SOEs to halt all retrenchments;

·   An economic stimulus plan by both government and industry to kick starts the economy;

·   Clear funding programmes for public infrastructure;

·   The filling of critical public service vacancies;

·    A comprehensive programme to localise government and private sector procurement;

·    Dramatic and urgent action at our harbours, airports and other ports of entry to stop illegal imports and prosecute those involved in this type of economic corruption;

·    A halt to the flood of low skilled undocumented migration into South Africa;

·    A plan to protect and grow fragile economic sectors e.g clothing and textiles, agriculture, steel, motor manufacturing, poultry, emerging farmers etc;

·    A plan to grow new economic sectors e.g. aquaculture, electric vehicles, water conservation and recycling, industrial and commercial recycling, agricultural land rehabilitation; renewable state owned electricity;

·    A plan with clear sector based, time linked and intervention identified targets.

Our own perspective of a South African economic growth path includes issues of social equity, redistribution and environmental sustainability and moves beyond the narrow definition of economic growth, which is based on the GDP growth rate and per capita income growth.

As workers, we favour an approach by the South African Reserve Bank that incorporates both the developmental imperatives and also protects the currency. These should be seen as mutually reinforcing rather than contradictory.

We acknowledge that price stability is important even from a point of view of radical socioeconomic transformation – as long as we currently depend on capitalists for job-creation and growth.

In the current reality that is dominated by finance capital, higher inflation rate suggest structural imbalance and it becomes an impediment for investors in productive sectors, including our own companies as they become hesitant to invest if they are sure that the value of that investment is going to plummet.  The mandate of the American Federal Reserve Bank and other global-north countries includes employment creation.     

We need a central bank that will pursue an inclusive monetary policy and that will regulate the finance sector with a view to ensuring that there is redistribution of income and wealth to all South Africans as mandated by the Freedom Charter.

In addition to targeting employment the reserve bank should align its policy to industrial development, introduce foreign exchange controls, and impose quantitative controls on commercial banks to ensure that a quarter of their loans go to priority sectors that drive the growth path and create jobs on a larger scale.

COSATU wants a state bank and more regional and provincial banks. A country like Germany has about 70% of bank deposits held by regional and local-not-for-profit banks. These banks focus on productive lending for productive purposes, helping small businesses to expand and create jobs.

Our big banks are not held accountable and they make decisions that are not developmental and they abuse their hegemony and monopoly. Large banks want to deal with large customers so that they can make large deals. Small businesses are sidelined and they are the ones that will help us with unemployment. We also want to Competition Commission to stop big banks to buy small banks as a way of killing competition.

We hope that the other social partners are not going to the Job Summit to defend and maintain the status quo. The time has come for the state, labour and big business to discuss strategies that are not motivated by the short-term view of profitability, but by the long-term perspective of development

COSATU believes we need economic and industrial restructuring and that can only be achieved if there is buy-in from capital and a political will from government.

The country needs to move to an entirely new terrain of negotiations by engaging and tackling the long overdue topic of orientating the economy to meet the needs of the people.  The economic forces of this crisis and stagnation are deep-rooted and only profound economic restructuring and the forging of new strategies for growth and development will bring about a solution to these problems.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 2 October 2018