SAFTU rejects Digital-Economy false ‘solutions’ offered by President Ramaphosa which won’t even dent the unemployment crisis

13 April 2021

The South African Federation of Trade Unions (SAFTU) has read with utter shock the letter penned by President Cyril Ramaphosa to the people of our beautiful but economically-injured country. The letter makes a shameless claim that government’s “economic recovery plan is not about a return to what was, but about transformation to what is next… we have to recover the ground that we have lost due to the coronavirus pandemic, and to gain new ground by placing our economy on a fundamentally different growth trajectory”.

In past Presidential statements since May 2020, we were under the impression that such a growth trajectory would follow principles South Africa desperately needs to adopt: reindustrialisation, localisation, an ecologically-sensitive Just Transition that leaves no worker behind, and much greater equality.

President Ramaphosa is misleading us, however, because in his statement on April 12, he mainly refers to the 4th Industrial Revolution, or "Digital Economy," especially business process outsourcing (BPO). Ramaphosa believes in "harnessing the job creating potential of the digital economy, whose growth has only been accelerated by the coronavirus pandemic”.

He means “call centres, technical support and back and front office services for major multinationals and South African firms.” He hopes that this sector will create 100 000 jobs by 2023 and 500 000 by 2030.

But this won't be easy, nor is it necessarily desirable. As explained by University of California Professor Chris Benner, once a researcher with South African trade unions and now one of the world’s leading BPO experts,  

“The important thing is not just job creation but quality of jobs;
all these digital jobs are incredibly vulnerable – to technological change, changing global competition, shifting consumer demands, etc. – and are here today, gone tomorrow;

one implication is the need to not just pursue a market attraction strategy, but a broader industrial strategy focused on diversification and upgrading over time;

another implication is that many of the people employed in this sector often fall through the cracks (chasms) of employment protection, because rapid turnover makes it hard to unionise;

high levels of short-contract employment makes it hard to enforce minimum employment standards, to the extent that other benefits (e.g. health care) are linked with jobs they are very vulnerable.”

While at present, South Africa’s corporate access to good technology for BPO work may be impressive, the digital divide in this country – due partly to ongoing Bantu education and partly to private sector oligopolies and local monopolies – will lead to ever worsening inequality and exploitation.

The country’s digital canyon is now apparent to the World Economic Forum, because in its 2020 Global Competitiveness Survey, it ranked South Africa – out of 140 countries polled (through the WEF’s 14 000 business leaders) – 126th from the top for the population’s digital skills; 119th for the quality of vocational training; 109th for pupil to teacher ratio in primary education; and 104th for fixed broadband internet subscriptions per person.

Equality of opportunity is everyone’s central objective in the new South Africa, but with Eskom engaged in “load reduction” in poor municipalities and townships where arrears are high, electricity disconnections automatically limit our children’s ability to learn online or acquire 4th Industrial Revolution skills.

In the larger scheme of things, President Ramaphosa yet again demonstrates how completely out of touch he is with the realities facing our people. He conveniently forgets that the country was already in a recession before we were hit by the corona virus in March 2020. In fact, the economy has been in and out of recession for years under the ANC government, and especially under his leadership both as deputy president from 2014 and president the last three years.

The President also seems to have developed amnesia when it comes to the global economy. He does not remember that a million workers lost their jobs between 2008 and 2009 when the impact of the world capitalist crisis reached our shores. Those jobs have not been replaced. In 2015, as the end of the commodity super-cycle hit South African exports, yet again we suffered, this time a damaging mining industry downturn which rippled through the rest of the economy, due to our continued over-reliance on exporting raw, unprocessed minerals.

Just before that crash, South Africa hit the maximum “absorption rate” – 45% – of the working-age population who could find what StatsSA terms “employment” (itself very misleading since so much is informal sector survivalism).

Then in 2020, the economy lost another 1.5 million jobs , which Ramaphosa neglects to mention in his misleading letter. So the absorption rate fell to 36% and notwithstanding the recovery, it only bounced back to 38% at the end of 2020. What that means is 12 million people who wish they could be gainfully employed, are not, thanks to South African capitalism’s incapacities.

For youth below the age of 24, unemployment under Ramaphosa’s leadership has increased to 63%. Overall, counting people who have given up looking for work, a staggering 42% of the South African population is unemployed. In the poorest province, the Eastern Cape, 52% of the people are in dehumanising unemployment. A shameful 47% of black African women are unemployed.

A conscious President of a country facing this crisis in the first 27 years of democracy should have resigned in humiliation. But our current President clearly resides on another planet and dares not glance at this society as it implodes with desperation and frustration. Because he is steering the South African ship from a long distance away, he will not allow people with ideas and the political will to take us in a different direction.

It is now clear from former Trade and Industry Minister Rob Davies’ recent autobiography, Towards a New Deal, that South African economic policy making has long been drifting towards the rocks of hard-core neoliberalism. The industrial policy Davies claims he authored during the 2010s was obviously incapable of even stabilising, much less reversing, the deindustrialising policy of Treasury, the SA Reserve Bank and the rest of the neoliberal clique in the Presidencies of Jacob Zuma and Ramaphosa.

We are in agreement with the President on one matter, in which he aims to place the economy “on a fundamentally different growth trajectory”.

But what an insult to the noble idea of a different trajectory, that he means precarious jobs created in call centres. Our working class is sick and tired of the ‘gig economy’ in which these sorts of dead-end opportunities to sit at a desk, tightly monitored by surveillance systems, passes for real careers.  
SAFTU is campaigning to genuinely place the economy on a fundamentally different trajectory. By that we mean, in summary:

1.     Nationalisation of the mineral wealth of the country to be placed under the democratic control of the working class, so that we do not continue to lose these resources to multinational corporations with inadequate compensation for the depleted materials, and so that instead we can use this vast wealth to create jobs and rebuild our industrial sector.

2.     Overhaul the economy to end the domination of what is now often termed the minerals-energy-finance  complex, and instead direct the country’s highly liquid capital into environmentally-conscious industrialisation and creation of decent work.

3.     Nationalisation of the Reserve Bank and the oligopolistic banks, so that exchange controls and tighter regulations halt the criminal levels of Illicit Financial Flows, and allow us to have a much lower interest rate without fear of capital flight.

4.     Taking back the arable land, as part of a deliberate strategy not only to reverse colonisation but to ensure that the black majority has property and food sovereignty, and hence can become active participants in the new economy, not as slave labourers or migrant workers, but as the owners and community leaders they once were.

So we are yet again rejecting the President’s so-called recovery plan, because yet again, it does not go anywhere close to offering a real shift in our fortunes, based on the fundamentally different economic value system we so desperately need.

Issued by SAFTU, 13 April 2021