Address by Zwelinzima Vavi, COSATU General Secretary, to the NEDLAC Labour Sector School, 25 January 2010
Thank you very much for giving me the opportunity to address this important gathering of workers' leaders. Let me begin by congratulating you all on the great work, largely unrecognised, that you do week-in, week-out, in NEDLAC's chambers and committees.
Over the last year - especially since the election of our new government in April 2009 - NEDLAC has had a new lease of life, a reflection of the greater openness and transparency in society, in which we can debate policy issues and involve civil society in policy formulation and implementation.
Much of the credit must go to you, the NEDLAC labour representatives, for sticking to your task of advancing the workers' interests. I wish you all the best for 2010, which is sure to be a year of many difficult challenges for NEDLAC and the country.
Comrades and friends
Academic ‘experts' and media commentators are telling us that we are now on our way out of the recession, with the economy starting to grow again. We hope they are right, but workers have yet to see any proof of such a recovery. On the contrary, they are still stuck in a catastrophic recession, marked by rising unemployment, poverty and inequality. If there is any growth, it is certainly jobless growth.
When we predicted at the beginning of last year that a million jobs could be lost in 2009, we were accused of exaggerating. But, tragically our forecast was if anything modest, as there were nearly a million retrenchments in the first three quarters of the year alone. When the 2009 final quarter's figures are released, it could be well over a million lost jobs.
When you take into account that an average of five people depend on the wages brought home by one worker that means that five million South African were plunged into poverty in the course of last year.
Unemployment has shot up, from 23.6% of the labour force in the second quarter, to 24.5% in the third quarter of 2009. The more realistic expanded definition of unemployment, which includes those who have given up looking for work, climbed from 32.5% to 34.4% in the same period. This means that a staggering 4.702 million South Africans are now without work, way above the levels in any comparable country.
For the first three quarters of 2009, we estimate that at least R17 billion worth of income per year was lost by 716 000 workers who lost their jobs, putting their families in poverty. This has serious financial implications for government, because it shrinks the tax base and puts greater burden on social spending. This income loss implies that government will have to support such families with income grants, school fees, access to health care, and other social services.
Between the first and the third quarters of 2009, earnings fell across all sectors, except for the finance and business services. The sectors with the largest income losses were energy and water, manufacturing, construction and logistics. Workers in the manufacturing sector lost R6 billion, in wholesale and retail trade they lost R6.6 billion, in construction they lost R2.6 billion per annum.
The capitalists now say that the effects of the global crisis on South Africa have been muted. They may have been muted for the capitalist class, whose profits have been rising more than the economy throughout the lifespan of our democracy.
But for the workers it is a different story. The previous administration's ‘sound and prudent' policies - their name for anti-worker, free-market, neoliberal policies - were celebrated by bourgeois ideologues precisely because they boosted profits while cutting the working class's share in the revenue from economic growth.
Because the purchasing power of the working class is shrinking, it will be harder for the economy to create new jobs. Despite rising profits, the incentive to invest is blunted by falling sales, due to the fall in working class incomes.
So production shrinks and jobs continue to be lost. This process assumes a life of its own, and becomes self-reinforcing unless measures are put in place to arrest the decline in workers' incomes and to pave a way for a recovery through stimulation of aggregate demand.
Comrades and friends
The global economic crisis reflected the deep structural problems of the capitalist system. It had especially serious socio-economic ramifications for countries, particularly in Sub-Saharan Africa, that still rely on exports of raw materials for their revenues.
The crisis has devastated the manufacturing industry and has raised the spectre of the complete deindustrialisation of the economy, with no escape from the colonial economic status as a source of raw materials and cheap labour.
With the advent of the global collapse in industrial production, speculators rapidly adjusted their expectations of future commodity prices, and in the process, drastically under-value the commodities that they were importing from countries like ours, thus generating violent fluctuations in the growth rate of economies whose industrial structure is not diversified.
This can overnight, transform an economy that had bright growth prospects and favourable ratings for global investment, into a country in deep recession. It hampers the ability of governments to embark on systematic programs of social expenditure and generates high unemployment, worsening poverty and increased risk of political instability.
This danger will be even greater if the WTO's current trade deregulation proposals are adopted, which will further erode the economies of developing countries.
While the current slowdown in the South African economy is partly a result of the global slowdown, it is also however a result of mismanagement of the economy by the previous administration and the monetary authorities, particularly the Reserve Bank (SARB), with its overriding concern over inflation to the detriment of growth and employment.
By the fourth quarter of 2007, it was obvious that the economy's growth rate was declining. By then it was now official that there was a global financial crisis, which is how every crisis of capitalism first appears. Yet the Reserve bank continued to increase interest rates, putting further strain on the growth rate.
The logic of the policy was to protect the interest of finance capital from a rising inflation rate, despite falling economic growth. Defenders of inflation targeting always argue that they are also concerned about growth and employment, but in reality narrow concern over inflation has generated a precipitous collapse in economic growth, which has massive employment implications.
Rising interest rates squeeze industrialists by decreasing profit margins, and slow down the rate of real capital accumulation. Meanwhile the working class is squeezed from below by the rising inflation rate on food items and from above by rising interest rates. The purchasing power of the working class therefore decreases, which adds further downward pressure on aggregate demand. Hence ultimately, the growth rate of the economy slows down.
Comrades and friends
COSATU warmly welcomed the framework agreement, as South Africa's response to the international economic crisis, drawn up by government, business, labour and community organisations at the Joint Presidential Working Group nearly a year ago. It was a unique example of social partners coming together jointly to produce a strategy to deal with the impact of the crisis and protect jobs and livelihoods.
But we are increasingly getting nervous at the slow implementation of this ambitious plan. While we are encouraged by repeated assurances from the ANC and government that it is the cornerstone of their economic strategies, we need action, and NEDLAC has a central role to play in getting all the stakeholders, but especially government, to turn fine words into deeds and start to create quality jobs.
The same applies to government's promise to create 500 000 employment opportunities, which is faltering. Much more needs to be done to make sure we achieve and preferably surpass this target. The fact that 73% of those currently unemployed are under 35, and the recent entry of over a million school leavers without any matric or other qualifications and virtually no possibility of a proper job, make it absolutely imperative that we take them off the streets and give them opportunities to work and train.
Another key issue facing NEDLAC and the country in 2010 is the continuing decline in the quality of employment, with the persistent casualisation of labour, driven particularly by the labour brokers. More and more permanent, secure and at least relatively well-paid jobs are being replaced by temporary, insecure and generally low-paid jobs, where workers' rights are flouted.
This super-exploitation of workers through casualisation must stop. The key measure of the performance of any economy is the extent to which it produces decent work, which is the basis for the systematic reduction of poverty.
We eagerly await the government's bill on labour broking and urge NEDLAC to discuss it thoroughly to make sure that it is watertight, with no loopholes for the labour traffickers to continue their businesses of eroding workers rights and living standards.
Have a good conference. Keep up the good work in NEDLAC. Let us hope that by the time of the NEDLAC Labour Conference 2011, we can report some really significant improvements as a result of your endeavours.
Issued by COSATU, January 25 2010
Click here to sign up to receive our free daily headline email newsletter
