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Shopsteward Volume 27: Special Bulletin

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Media Centre  |  COSATU Speeches

Address by Peter Malepe COSATU 2nd Vice President to the SACP 10th Congress

2 July 1998, COSATU House

Comrade General Secretary and Chairperson of the SACP
Members of the Central Committee
Congress delegates
Comrades and friends

We were asked to deliver a message of solidarity as COSATU. I however do not believe that the SACP need any message of solidarity from COSATU or any organisation of working people. Our solidarity is expressed through the participation in this congress by worker leaders and the general membership as delegates. This more than anything else, demonstrates beyond any doubt COSATU'S support for a strong SACP as well as our commitment to build a strong party.

Your 10th congress takes place against the backdrop of renewed attacks and speculation on the future of the Alliance by those who are opposed to transformation. These are said to be based on COSATU and the SACP's position on macro-economic issues - GEAR in particular, the speech by Comrade Thabo Mbeki, who is supposed to have told COSATU to accept GEAR or leave the Alliance and on the outcome of the COSATU Central Committee. I am sure that on the basis of President Mandela's input at your congress yesterday, another explanation on the eminent decline of the Alliance will be found.

When we announced our positions after the 6th National Congress and the recently -held CC, we were said to be out of touch with reality. This accusation arises out of our public commitment to a socialist South Africa as opposed to a capitalist one. Reality to them means that we should abandon our principles and ideology of socialism in favour of capitalism. This we refuse to do.

The current repeats of the old tired attempt at calling for the Alliance to break came at an opportune time for our detractors. With the SACP holding its 10t congress, they know that the agenda and programme for socialism will be taken further. This they do not want. Furthermore, with the Alliance preparing for an Alliance Summit an opportunity also arises for them to say to the ANC: Stick to GEAR, do not give in to the agenda of the SACP and COSATU regardless of its consequences. This we are told will show that the ANC is independent of its allies.

Finally, with the government having unveiled its proposals for the Jobs Summit it would be naive of us to expect no pressure to be placed on the alliance to accept a so-called labour market flexibility, low wages under the guise of allowing new entrants and women access to jobs as well as the need to amend the LRA to denounce the Alliance's commitment to centralised bargaining. If you add the fact that in a year's time we will be holding the second democratic elections, they are sure that they now have a real script to justify their call. I have no doubt in stating that they will once more be proven wrong. After this congress the Alliance will be more stronger since there will be clarity on the SACP'S agenda for socialism, its role in the current political situation particularly in ensuring that the NDR reflect the aspiration of the working class.

Another context that need to be taken into account, is the turmoil in the market which have seen the Rand drop to its lowest levels ever, coupled with high real interest rates similar to the mid eighties. As the working class we should be aware that rather than see this as a failure of the Reserve Bank policies of low inflation at all cost, high interest rates coupled with the chase for a 3% budget deficit, our detractors will use this to ask for more stringent policies. They are more likely to say that the medicine is the right one, the only thing that is needed is to increase the dose. This as we all know, will be more like adding water to a swimming pool as a response to someone who is drowning. Apart from denouncing the above, we expect of the SACP to emerge with policy proposals that will help move our country to a more prosperous South Africa.

Last week COSATU concluded a successful CC, which focused on socio- economic issues as well as our approach to the 1999 general elections. Its conclusion places a responsibility on the entire democratic movement to lead the revolution in a decisive manner. This is particularly so since political and economic power remained for so long in the hands of the few. Those who amassed the country's wealth through exploitation of our people, starvation wages, cheap labour system, denial of trade union rights, remain opposed to social transformation, which will benefit the majority in our country. We believe that the liberation movement, should continue to assert political and economic power in our country through proper use of our ascendancy to political power. After all this is what the electorate expected of us in giving us a decisive mandate. The SACP can play a decisive role in ensuring that the South Africa of today does not reproduce the South Africa of yesterday. This we should do in support of the ANC and not as an opposition. It means that progressive policies in health, social welfare, land reform, water and electricity should be supported not only through words but visible action.

At the same time, policies such as housing and transport, or where restructuring of state assets is just an attempt to promote privatisation on all fronts should be rejected. Again the rejection should go beyond mere words. How that is done taking into account the fact that we do not want to play into the hands of those who are opposed to transformation.

Comrade chairperson, as you meet here today, workers in almost all sectors of the economy are facing retrenchments, through restructuring of industries, outsourcing - sometimes under the guise of black economic empowerment - and contracting out of both private and public services which are carried out in the name of globalisation and international competition which we are expected to accept as gospel. The bourgeoisie's concept of globalisation masks their commitment to a neo-liberal agenda, which seeks, to strip countries of their sovereignty and right to chart their own social and economic path suited to their conditions of development.

This in turn subjects such countries to the dictates of the Bretton Woods institutions, the multinationals and the market which, as we all know, is not capable of ensuring effective redistribution of wealth in our country. While the bourgeoisie claim to be committed to democracy, in reality they are only committed to the dictates of the market. They are opposed to a strong state playing a role in the productive sector of the economy. This does not mean that they do not want a strong state. They want a strong state that can pass laws that suppress trade unions, bring wages down, privatise services, etc. I may go on to add that indeed they want a state which in their view will preserve capitalism.

Everyday we are told that we have to conform to the dictatorship of the market or we will forever fall by the wayside. The SACP as vanguard party of the working class, should reject these assertions. Accepting their assertions as inevitable is tantamount to accepting that capitalism is capable of solving the problems of faced by society. The reality is that most of the problems that we find ourselves in stem from the ills of capitalism the world over. The majority of countries facing high unemployment, growing poverty and inequality are not socialist. In fact many of them have for many years been following the dictates of the IMF and the World Bank.

Last month marked the second anniversary of the release of the GEAR strategy - commonly known in COSATU as the reverse gear of our society. There has been no celebration from those who backed it in the first place - government, local and international business and the media. The reason is not hard to find. While there are no celebration, we are daily told by its proponents that GEAR is succeeding because the deficit reduction programme is on target. Exchange controls have been lifted despite the fact that more and more money is now being invested abroad, interest rates remain high and tariffs are continuously reduced. At the same time, as they sing praises to GEAR, the failure to create jobs is being ignored. The same goes for the absence thus far of a coherent industrial policy capable of reconstruction and development. Where mention of its failure to create jobs is made, it is in order to ask workers to accept low wages, and deregulation of the labour market.

On the other hand, for the working class, the implementation of GEAR has had profound negative effects. Examples of these will be:

  • contractionary fiscal and monetary policy, which stifles economic growth and employment creation and continues to undermine the RDP's commitment to growth through redistribution of wealth and income;
  • high real interest rates and phasing out of exchange controls encourage financial speculation and outflow of capital;
  • current tariff and trade policy, which is undermining significant sections of our industry, leading to massive job losses including factory closures;
  • ideologically driven deficit cuts which are undermining massive public works and a direct state role in housing, transport, health and infrastructure development;
  • pledges on the reduction of the public service combined with overemphasis on private-sector driven development encourages privatisation and contracting out of public economic activities. This may in turn lead to us running down the public service and further job losses coupled with excessive reliance on the private sector to create jobs, despite its dismal record in this regard.

The country is experiencing low economic growth. This extremely low economic growth stands in contrast to the employment situation in which jobs have been continually shed over the past two years. At the end of 1997, the Reserve Bank declared that employment levels were at their lowest point in 16 years. (Sunday Times 1997-07-12). Over the past year and a half, an estimated 116 000 jobs have been lost in the South African economy which is currently experiencing unemployment rates of 30 percent. This does not include the eminent retrenchments which have bee announced in the public sector or private sector.

The relaxation of exchange controls permits individuals, corporations, and institutional investors to take an increasing portion of their investments offshore at a time when more capital is needed in our country. Not only has the relaxation of exchange controls encouraged additional outflows of investment, but deals struck with the Reserve Bank, such as Gencor taking R25 billion of its asset base offshore, will also push outflows to higher levels. The same goes for OLD Mutual's intention to list in the London Stock Exchange. During the month of May 1998, the Reserve Bank squandered R26 billion in defence of its policy of high interest rates and low inflation. These being resources which could have been put to such productive use as job creation. This shows what will happen were the state to completely move out of the productive sector of the economy followed by freeing of the markets and the Reserve Bank to do as they wish.

At the same time as there is an intensified call for the state to move out of production and service delivery, the 1997 World Development Report has pointed to an important role for the state in stabilising and managing the economy. This recent push for a strong, effective state has been accompanied by a call to revisit the neo-liberal economic policies, which inform structural adjustment programmes and many macro-economic stabilisation packages world-wide. Those who view these calls as coming only from the trade unions and socialist parties, should take note of the views of Joseph Stiglitz, Chief Economist and Vice President of the World Bank who recently called for a revision of macro-economic policies internationally. He questioned the wisdom of the so-called "Washington Consensus" arguing that they are neither necessary nor sufficient to bring about economic development. He went further and pointed out the following facts:

Moderate inflation is not necessarily harmful; Budget deficits can encourage spending with high rates of social return; Advocates of privatisation have overestimated the supposed benefits; Liberalisation of markets can actually lead to a less stable, and not necessarily better, financial system.

The above vindicates our position that in order to guarantee that the South African government, at all levels, is able to play these critical roles, it must actively be involved in the management of the economy. We call on the SACP to on the basis of its own analyses to make a clarion call to workers and society as to what should be done to take advantage of these views which while acceptable should not be mistaken for a rejection of capitalism by these forces. If anything, their main aim is to give a human face to capitalism as well as redirect the agenda to develop alternative approaches to transformation.

During public debates between the democratic forces and those opposed to transformation, there seems to be consensus that unemployment in our country remains unacceptably high. Unfortunately this is where the consensus begins and ends. There is no agreement on the causes of unemployment or on the steps that should be taken to eliminate unemployment, particularly from those who for years benefited from the twin evils of apartheid and capitalism. The bourgeoisie, their representatives inside and outside of parliament and orthodox economists claim that it is employed workers and the ANC-led Alliance that is destroying jobs and causing unemployment. This implies that jobs were plenty during apartheid rule. The truth is that the majority of those who are unemployed have been job seekers long before the ANC came to power. Some of them are victims of retrenchment by employers and the apartheid government as part of their strategy to undermine the unions.

Business and their spokesmen further claim that, if there was no regulation of the labour market, if the government was to privatise all public sector functions, if the state was to abandon its insistence on the need for training of workers and affirmative action, if the state was to allow for workers to be hired and fired at the whim of the employer, the economy would be able to create jobs. They would want the government to lift all tariff protections regardless of the impact of this on jobs. While they are opposed to a living wage for workers, they are determined to preserve and defend the obscenely high wages of senior management. These self- proclaimed "concerned citizens for the unemployed" present no evidence to back their call for workers to finance their opulence.

Despite the said propaganda, we know that the problem of unemployment is part of the legacy of apartheid, its economy and capitalism that we inherited. The profit motive and capitalist greed by employers is what leads to unemployment in our country. Instead of resources being used for investment, they are used to pay obscenely high wages to management as well as profits to shareholders to the detriment of those whose labour power produced such profits. When industries face problems, their immediate response and solution is to retrench, contract out and outsource services. At the same time, they want to employ workers as temporary workers or casuals to avoid paying better wages as well as other benefits workers should be entitled to. This is the root cause of their opposition to the LRA and the Basic Conditions of Employment Act. This is what those who call for labour market flexibility mean when they assert without and conclusive proof that labour is expensive in South Africa.

The SACP in particular and society generally, should send a clear message to business that central to the challenge facing our country, is the transformation of the economy, the creation of jobs and the elimination of poverty and inequalities. Comrade Thabo Mbeki said as much in parliament that unless we want to continue as a nation of the haves and the have nots we have to go for radical transformation which should include a solidarity tax/fund to finance construction and development. This is further backed by surveys that indicate that, despite the Alliance government strategies to uplift and improve the standard of living of all South Africans, poverty and inequality remain widespread in South Africa. In this supposedly united "rainbow nation", jobs continue to be lost at an alarming rate. Rural communities, youth and women continue to be the worst hit victims of this stagnation. This was also confirmed by the recent report on poverty released by Comrade Thabo Mbeki. We think the main reason is because of the fact that employers in our country have yet to embrace the spirit of the new South Africa in its totality. The only part of the new South Africa that they seem to have embraced is the opportunity that comes with it to be able to do business with the outside world.

It also demonstrates beyond any measure of doubt that business and those who have resources, including the new elite, merely pay lip service to transformation. It is more a case of 'everyone for him/herself and God for us all'!

In a few months time we will be holding a Jobs Summit. The Alliance needs to finalise its position as a matter of urgency. We expect the SACP to put forward proposals which are guided by its approach to race, class and gender in employment. While it should not be a blue print for socialism, it must not compromise the struggle for socialism. COSATU has proposed that the agenda for the Jobs Summit be based on measures:

  • for job creation;
  • to support the unemployed;
  • to put a hold to job losses;
  • to formalise the informal sector.

In our view; to ultimately address the ongoing crisis of unemployment, current economic power relationships must be challenged and transformed; the economy must be developed to reach and sustain full employment. Standards of living and quality of work must improve over time. Jobs must not simply be created, but also enhanced. Furthermore, employment creation must support the provision of public services and basic needs.

It is also important to ensure that macro-economic policies encourage employment growth by, among others, facilitating the implementation of the appropriate industrial, investment, labour market, and public sector policies. This may entail the need to maintain and expand demand for domestically produced goods and services; meet increased demand through an expansion of production, which in turn would generate new jobs; stimulate demand by lowering interest rates, pursuing redistributive fiscal policies and developing effective strategies to boost exports; create an environment conducive to boosting the productive capacity in the economy, increase investment to ensure that increased demand can be met through domestic production, and not through greater levels of imported goods; ensure that the parameters of fiscal policy are consistent with employment creation and retention strategies; and avoid imposing rigid and rapid deficit reduction targets which limit public expenditure and infrastructure development.

We agree with the SACP that we need an industrial policy as a matter of urgency. Such industrial policy should ensure that industries which can serve as an engine for job creation in South Africa are identified. In addition, the down-stream and up-stream linkages must be identified and actively promoted. We need to develop the capacity to produce intermediate goods and capital goods, and reduce imported goods and services. Supply-side measures, which are currently in place should be evaluated and implemented taking into account their employment- generating effects. We should use the impact on employment creation and the ability to maintain labour intensity and good labour standards, along with other criteria, to award public sector contracts.

At the same time we cannot afford to discount the role of the public service in developing an employment strategy. We need to restructure the public service in a way that create the conditions for a sustainable public service and pave the way for public sector job creation and retention. In this regard we believe that, lower interest rates, restructuring the taxation system and reducing the burden of the apartheid debt are all policy measures, which can dramatically increase the sustainability of the public service. The structure of the South African public service must be changed to improve the quality of public employment. A solid system of management accountability must be put into place to assure an efficient delivery of services. Resources need to be redeployed to decrease the number of those employed in unproductive functions, and increase the number of those involved in service delivery.

Comrade chairperson, one of the critical issues worth exploring by the SACP is how we can finalise the approach on the use of social capital for reconstruction and development. This should be developed taking into account that while that which currently should be part of the social capital, in the main operates as if it is part of the private sector. This should alert us o the fact that this agenda and the use and development of social capital can be hijacked in a way that strengthens capitalism.

Another area that should be dealt with is how under South African conditions do we build socialism. The COSATU congress spoke about building blocks for socialism. What in the SACP'S view are these blocks, which ones are the priority and what is the role of the masses, those who are in government and the public sector. The congress will later be discussing the state and social transformation, its role in the productive sector of the economy, redistribution of wealth and services and ensuring effective governance.

COSATU has announced a programme of mass mobilisation, which we have distributed o delegates. Its main focus is on the issue of jobs, poverty and inequality, the need to put pressure on the private sector to invest in job creation and people development. We are calling into question their commitment to the country. Our programme also seeks to support transformation. We will be placing the programme in the Alliance, to seek support. This should be linked to our programme to build organisation and to fight an effective election.

Let me conclude by saying that as workers we will always support the SACP. We value its role as an independent political force locating its struggle for socialism within that of the national democratic revolution. Let us together join hands for a better South Africa, free of exploitation of the working class.