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COSATU Today  |  COSATU Speeches

Speech to the NEDLC Annual Summit Meeting by Bheki Ntshalintshali, representing the Labour Constituency

12 September 2009

The world economic crisis and its impact on growth and development.

This Nedlac summit comes at a time when the world faces multiple crises. It is an extraordinary and perhaps unprecedented period. Never before in recorded history has there been such a convergence of crises and forces that threatened our future.

The financial crisis has triggered a global economic crisis, with spiralling unemployment and poverty. This, in turn is occurring in the midst of global climate change – the global warming crisis - that is heating the planet with unimaginable consequences. At the same time, the convergence of these crises is further compounded by the prospect of a worldwide food crisis and mass hunger and starvation. For us, in addition, is the energy or electricity crisis.

All these crises have their origins in a socially unjust and environmentally unsustainable model which endangers the capacity of our society to provide decent lives to the world’s people.

This model has translated wealth creation into environmental degradation and concentration of income into the hands of a few. It has prompted a system where citizens have been turned into unsustainable consumers, and where unsustainable production models are taken as necessary “collateral damages” for achieving growth and development.

In many ways, the driving forces behind these convergent multiple crises can be traced not only to the global economy and prevailing system of industrial capitalism, but also to its governing institutions and their neo-liberal model of economic globalisation.

These institutions and a few powerful industrial countries have managed and governed the global economy primary in the interest of economically powerful. Their agenda of maximising profits through uneven and unlimited economic growth has benefited the multinational corporations at the enormous expense of both the people and environment.

Eminent persons including Professor Stiglitz have noted that the current financial and economic crises, which are now commonly compared to the great depression, are however in many ways more complex. They point to the fact that decoupling theory was proving itself to be a myth, as different markets worldwide were being affected.

The economic crisis is neither a natural catastrophe nor a problem created by the rotten United States housing market. The crisis is a necessary effect of 30 years of neoliberal policies. It is a result of internal contradictions in the existing economic values. The deregulation of the economy, privatisation of public services, the redistribution of wealth from the bottom to the top and financialisation of the economy have all contributed to creating the current crisis.

The neo-liberal credo told us that deregulation and privatisation would vitalise the economy and make it more efficient. It would regain growth and create increased prosperity and welfare for all. This now has been exposed as an ideological smokescreen covering the interest of the rich and wealthy. Neo-liberalism has therefore been completely discredited. Any measures to correct the crisis must therefore not only address the symptoms but its root causes. What we need is a widespread re-regulation and democratisation of the economy.

This leads me to the question of food crisis. We all know that food security exists when all people at all times have physical or economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and health life. To achieve food security, all four of its components must be adequate. These are availability, stability, accessibility and utilisation. In our case our primary challenge lies on the accessibility or affordability among others affected by the high prices created by collusive behaviour by some in the food chain which the Competition Commission is probing.

At the heels of this, is the energy crisis, put simply the electricity or ESKOM crisis with which we are grappling to find a lasting solution. We know the origin of the problem and what is required. However we disagree with ESKOM’s approach, especially on the tariff increases and its burden to the working class and the poor. Where on earth have you seen tariff increases of such magnitude at such a short intervals? Very soon access to electricity will be a thing of the past to the overwhelming majority.

Economic, food and electricity crises converge with the climate change crisis. South Africa, like the rest of the world, is vulnerable to the impacts of climate change. At the same time South Africa emits high quantities of greenhouse gasses. In fact we are rated the highest in Africa and 12th at the global level. This means are both a victim and polluter. This climate change crisis poses a notable threat to our country’s ideal for sustainable development growth path and poverty alleviation efforts.

In all the above-mentioned cases of crisis, the root causes are the same – lack of commitment to regulation, a push towards free-market economics and an international system that has underperformed, sometimes very badly, in exercising governance of globalisation. All these crises punish the worse-off and most vulnerable, those that did nothing or very little to cause the problem.

You may be wondering why I am raising these issues that almost all of us know about and agree on, as the information is based on evidence. It is because we all know that these crises are the results of human behaviour mostly driven by greed. We know what needs to be done to address them, know the choices we have, are and already addressing some of them, and finally we know the costs or consequences of doing nothing or acting slowly on them.

World society has at its disposal eminent persons lecturing us on what we should not do. We are warned that in responding to economic crises, wage deflation in not an option. Professor Stiglitz said that it would create a lack of aggregate demand. It would lead to mounting inequalities, as result of implementing policies that favour a weakening of trade unions rights, greater flexibility of the labour market and stagnant or declining real wages.

He warned against measures that go against the Decent Work agenda. Lowering wages and shedding jobs would only make matters worse. Strengthening the Decent Work agenda is therefore at heart of a successful recovery.

There is media frenzy about wage strikes, as either a rejection of the call made in the Global economic framework response, or a demand by workers on the Zuma government for pay-back. The Minister of Labour was spot on when responding to this. This is a collective bargaining season. In the process of negotiations, at times agreements are reached without industrial action but at other times strike or lockout comes to fore. Nothing is new and nothing unusual about that. Many agreements have been reached without invoking a strike action. We are aware that some business people take Minister Manuel’s comments very seriously about being cowards and not standing up against unions.

What concerns us though, is the police brutality in dealing with strikes or protest action. This is not a new matter; COSATU had numerous discussions with former Minister of Police, Charles Nqakula, on the matter. The problem is the lack of skills in handling marches and strikes, the use of brutal force, and the lack appropriate gear to deal with strikes etc. Urgent discussion is needed so that we do not place or project the protectors of the society as enemies of the same people that they suppose to protect.

In our response to the economic crisis we should never compromise health and safety in our industries, especially the mining sector. It is a grave concern that there are so many fatalities in the mines. In fact one miner dies very second day.

We are confident that Nedlac has a bigger role to play in addressing these issues. We have the capacity and the political will, despite our different backgrounds. Government commitment to engage, and respect the Nedlac processes, is a huge encouragement to all.

In fact, the current global and investment system is at the centre of the storm of multiple crises converging upon the world today. No lasting solutions to these crises can be found without changing the neoliberal model.

Yet, instead of calling for fundamental change, most governments around the world are promoting false solutions. Liberalising and deregulating financial services will not secure people credit. Lowering tariffs further will not help feed the people who are hungry simply because it will destroy the livelihood of many farmers in the South. Lowering industrial tariffs and eliminating technical standards will not lead to job creation but instead it will enhance downwards spiral of social and labour conditions especially for women and poor communities.

In order to resolve these crises of our times, governments must have the policy space and flexibility needed to regulate, and in many instances re-regulate, the economy to serve the common good of the people and the environment.

In so doing we must avoid reinstating the same imperfect market system that has failed the working class and the poor. We must work hard towards a low-carbon economy. We must create decent green jobs. Let us engage the minister of Police to deal with police brutality when dealing with strikers or protesters. Jabu and Cynthia (remember them?) would find comfort to know that their plight at the hands of the labour brokers is being seriously addressed to ensure that they like many other vulnerable workers are part and parcel of the decent work agenda.

Patrick Craven (National Spokesperson)
Congress of South African Trade Unions
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