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Shopsteward Volume 27: Special Bulletin

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Campaigns  |  Memorandum


COSATU Memorandum on Job Creation, 10 May 2000

Crush Poverty! Create Quality Jobs!





150 000 COSATU members march in Johannesburg, 10 May 2000 - Photo courtesy of News24.co.za

Graphic courtesy of News24.co.za.

The working class is striking today because we have been left with no other choice.

For almost a year now COSATU has been calling on Business and government to seriously address the issue of unemployment.

In July last year we served a Section 77 notice to Nedlac. The aim of the notice was to highlight our concerns around the increasing number of job losses in our country.

According to the Reserve Bank, Employment in South Africa is now at “a level broadly similar to that of the late 1970s.” (SARB, Quarterly Economic Review, March 2000) That means that the million jobs lost since the mid-80s have wiped out all the gains in employment creation in the 1970s and early `80s.

Even when the economy has grown, as in mid-90s and past six months, job losses have persisted.

According to the October Household Survey, unemployment under the expanded definition (which includes those who have given up looking for work) stood at 38 per cent in 1996, compared to 32 per cent in 1994. Between March 1997 and March 1999, Statistics South Africa reported a further 6 per cent decline in employment. After 1997, the largest job losses were in gold mining, manufacturing and the public sector.

These levels of unemployment constitute a crisis for our country. Unemployment is already far higher than it was in the United States during the Great Depression.

The business community has been on an investment strike since 1984. This has resulted in hundreds of thousands of workers losing their jobs. Retrenchments have taken place even when the economy has grown – and Economists predict more job losses in 2000. Nationally up to 37% of workers (four and a half million) are unemployed. Black, women and young workers are the hardest hit.

What is the Investment Strike?

An investment strike is when business decides it does not need to invest in the economy. Low levels of investment undermine job creation and the restructuring of the economy needed to ensure sustainable growth.

Give our children a future  -  save our jobs, 10 May 2000 - Photo courtesy of News24.co.za

Graphic courtesy of News24.co.za.

In South Africa, the investment strike appears in historically low levels of investment and a huge capital outflow.

  • Although investment has grown since 1994, at just under 7 per cent a year on average, it remains too low to bring about high and sustainable growth. It is currently around 18 per cent of GDP – compared to the 25 per cent required for rapid economic expansion.

  • In the four years from 1994 to 1998, South African companies exported R80 billion in capital, about three quarters in the form of portfolio investment in other countries. If they had invested those funds in South Africa, national investment would have risen to over 20 per cent of the GDP.

In addition, the bosses have replaced quality jobs with temporary and sweatshop work through subcontracting and outsourcing. In this way, they undercut the higher salaries, benefits and job security we won over many years of struggle.

There is a direct relationship between joblessness, poverty, crime, violence, HIV/AIDS and other health hazards. The loss of jobs takes place without adequate plans being put in place to look after the needs of the unemployed. Government relieves this for an extremely limited period through UIF payments. Business plays little - if any - role.

We are striking because our demands have not been met. These are: Employers should not be able to retrench workers with such ease The principle on negotiations should replace consultation. There should be compulsory third-party intervention prior to retrenchment taking place should the union and the employer fail to reach consensus during their retrenchment negotiations and if the union requires this intervention. Employers should not be allowed to retrench until this process is complete. This process will hopefully prevent unfair and unnecessary retrenchments.

The insolvency laws

must be tightened to alleviate the effects of liquidations upon workers and their financial security Unions and workers must be informed timeously of any financial difficulties being faced by the business and any possible liquidation at the time that it is contemplated or threatened.

How safe is your job?  Smash profits - not jobs!  10 May 2000 - Photo courtesy of News24.co.za

Graphic courtesy of News24.co.za.

Any application for provisional liquidation must be served upon the union and the workers.

This application must prove that there are no alternatives to the liquidation which would keep the business going and would save jobs. Also, the employer must negotiate with the unions.

If the company is indeed forced to liquidate, the workers` and employers` contributions to medical aid and retirement funds should not form part of the liquidated businesses` estate. In respect of wages and other benefits, workers should be ranked above the secured creditors.

Government should halt its accelerated reduction of import tariffs

In terms of international agreements the government has to reduce import tariffs within stipulated and agreed to time periods. The government has decided to accelerate the reduction of these import tariffs below WTO levels despite the fact that South Africa is not obliged to do so. The effect of this upon certain industries, like the textile industry, is that job losses are increased and accelerated. Government should adhere to the time periods that South Africa is obliged to keep by virtue of its international commitments. It should furthermore institute policies that compel employers to meet South Africa`s obligations without unnecessarily increasing and accelerating job losses.

There is a lot of corruption at our border posts and harbours, allowing goods to enter the country illegally. This not only robs the government of the income from the tariffs, but adds to the destruction of our industries. There should be more effective monitoring of the borders to prevent goods from entering South Africa illegally and threatening our jobs.

Government must remain committed to the NFA

We remain opposed to any form of restructuring, including privatisation, which will result in job losses and an increase in the cost of service delivery. International experience has shown that privatisation of basic services has always resulted in an increase in cost to the poor. We believe service delivery should remain in the hands of the state. Moreover, we will oppose any restructuring of government departments which results in workers losing their jobs.

Government must remain committed to the spirit and practice of the National Framework Agreement. There should be no unilateral restructuring and all local government development programmes should take place within the ambit of negotiating with the unions concerned.


COSATU has consistently affirmed our commitment to negotiations on the above issues. We have at the same time emphasised that time is a key factor and we cannot afford a situation where workers continued to be retrenched while long drawn out negotiations are taking place. We have stated that the onus is on business and government to find solutions to this crisis. To date we have had no feedback and therefore are left with no choice but to continue with our programme.

CEPPWAWU members march to protest job losses,  10 May 2000 - Photo courtesy of News24.co.za

Graphic courtesy of News24.co.za.

It must be stated that the strike today does not signal the end of our programme.

We will continue to protest, in various forms, until our members stop being thrown into the abyss of poverty and unemployment. We have been told that this is “not a good time” to exercise our constitutional right to demonstrate.

We would like to inform all our critics that it is also “not a good time” for our members to have their jobs threatened and destroyed!

We will await feedback from business and government to our demands. Should there be no positive feedback by the date of our Central Executive Committee meeting on 16 May 2000 we will discuss further action at that meeting – which could include pickets, marches, protests and another national strike. We trust that finally our demands will be taken seriously and that business and government will endeavour to find meaningful, workable solutions to the jobs crisis facing us all.

Crush Poverty! Create Quality Jobs!