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Media Centre  |  COSATU Speeches

Address by Mbhazima Shilowa, COSATU General Secretary, to the Finance Week Business Breakfast

30 July 1998, Johannesburg

The last time I addressed the Finance Week breakfast meeting, outlining COSATU's vision, I spoke about the changes we wanted to see implemented in a democratic South Africa. Now that the future democratic dispensation we always talked about has arrived, we realise that the future isn't what it used to be!

In, order not to disappoint Nigel and those who write editorials for the Finance Week, but also just reverting to type, I should maybe start with a quote from Karl Marx. It was Marx, I think, who said something to the effect of: 'men (sic) change the world, but not under conditions of their own choosing.' (If he didn't say it, he certainly should have! After all he was an authority on such matters!) His statement is true of our own situation. We face a situation where we are attempting to transform our country. Yet we face various constraints, which we did not choose. Neither are they of our own making. They were thrust upon us by history. These include:

The legacy of apartheid, which as we all know is a long catalogue which includes mismanagement of the economy, the debt burden, destruction of our human resources, a deformed public sector, vast unemployment and poverty, concentration of ownership in the hands of a few, marginalisation of the majority from economic activity, massive income and social inequalities, to name but a few.

Secondly, the new world situation into which our democracy was born. Politically, this situation has been characterised as a unipolar one in which there is no serious alternative to the power wielded by the G7 countries, and the international financial and trade institutions. Economically, the process of globalisation has trampled the sovereignty of nation states. Capital has unprecedented mobility, aided by new technology and the new information age. The world economy has been organised into powerf ul trading blocs. We are told that those who don't play by the rules of the new game, will be forever marginalised and fall by the wayside! Under these circumstances - and correctly so - the question therefore arises: Is it possible to achieve equity and growth under the constraints inherited from apartheid and imposed by the new world order? My answer will be in the positive. For us to su cceed though, we will need to do more than we have done as a country up to now. Lenin once said that the outcome of the revolution depends on whether the working class will play the part of a subsidiary to the bourgeoisie, a subsidiary that is powerful in the force of its onslaught against the autocracy, but impotent politically, or whether it will play the part of the leader of the people's revolution."

This is particularly so in the South African context where political and economic power remained for so long in the hands of the few. Some of these disparities remain up to today. Those who amassed the country's wealth through exploitation and oppressi on of our people, starvation wages, cheap labour system, denial of worker rights, remain opposed to redistribution of wealth in our country. As the ANC-led Alliance, we seek to assert political and economic power in our country as mandated by the electo rate.

While we inherited enormous problems, the elements are present for us to perform our own 'social miracle'. In comparative historical terms, the problems we face are not overwhelmingly larger than those faced by other societies, which managed major recon struction efforts, on a scale even larger than ours such as Germany, USA and the UK. Although conditions are not the same, it is a myth to claim, historically, that this epoch is unique, and that no other society has had to face problems on the scale we are confronting.

Just as with other societies facing reconstruction challenges, the critical factor in our situation will be our ability to mobilise the whole country in support of the programme to unleash huge national energies to achieve what would normally not be poss ible. As far as I am concerned, the objective basis has been laid, for this scenario to unfold.

In 1994, South Africans from all walks of life took part in the first ever-democratic elections. The ANC won an overwhelming victory securing 62% of the votes. Despite the propaganda of parties and institutions opposed to the democratic movement, inclu ding the commercial press, and their caricature of the RDP as a wish list, the overwhelming majority gave their mandate to the ANC. In Mpumalanga, Northern Province and the Eastern Cape, which are mainly rural and characterised by high levels of unemplo yment, extreme poverty and a lack of basic infrastructure, the ANC received more than 80 percent. In these areas women constitute a majority. Most of them are unemployed and rely on remittances or pensions for survival. Those who are employed fall int o the category of the working poor. These are the people who gave the ANC the mandate to govern.

This was not based on some romantic commitment to the ANC. It was due in part to the ANC's history and track record of struggle against oppression and exploitation as well as its programme for social transformation - the RDP. The RDP is based on progra mmes to rebuild the economy, restructure industries and enterprises, develop the human potential of our people, provide infrastructure -particularly in rural areas - and to create sustainable and better paying jobs. For blacks in general and the workin g class in particular, it was also a vote for a new beginning -economically and politically.

One of the key themes that appealed to our people during the campaign was that of jobs, jobs, jobs. We chose it because we realised that among the many legacies of apartheid faced by our people was poverty, unemployment, low wages, lack of skills and la ck of basic infrastructure. We realised that since 1981 there had been virtually no increase in formal sector employment. The apartheid regime with the active support of business had deliberately scaled down investment in job creating areas in the priva te sector and parastatals. Hundreds of thousands of workers had been retrenched or were facing retrenchment particularly in the manufacturing, agricultural, public utilities, construction and mining.

As I speak to you today, workers still face an all out attack from domestic and international business. Despite the economy growing and most companies posting enormous profits, almost all industries are facing retrenchments, under the guise of restructu ring of industries, outsourcing and contracting out of services. As workers we know, that this is nothing else but a new form of exploitation and oppression. Business' concept of globalisation masks their commitment to a neo-liberal agenda, which seeks , to strip countries of their sovereignty to chart their own social and economic path suited to their conditions of development. This in turn subject us to the dictates of the IMF, World Bank, the G7, multinationals and the market which as we all know i s not neutral. We are all expected to bow in front of these unelected institutions for our salvation. Their spokesmen tell us that we have to conform to their dictatorship or we will be forever marginalised. COSATU reject such assertions, which are ai med at ensuring that we accept the current agenda as inevitable.

This is not to deny the need for integration of our economy with the rest of the world. We do want to trade with the outside world. However, unlike converts of the markets, we do not only want free trade. We also want fair trade. The same goes for th ose who are unemployed, particularly youth and women. They do want jobs. It is however, a fallacy perpetuated by the business community, the World Bank, the IMF and the commercial media, that these people want any type of job irrespective of wages and other basic conditions of employment on offer. COSATU will always assert the right of workers to better quality jobs at a living wage. We want to ensure that workers in South Africa do not become economic slaves in the name of job creation.

During public debates there seems to be consensus that unemployment in our country remains unacceptably high. The unfortunate part is that this is where the consensus begins and ends. There is no agreement on the causes of unemployment as well as steps that should be taken to eliminate unemployment. The bourgeoisie, their representatives inside and outside of parliament and orthodox economists want us to believe that it is employed workers and the ANC-led Alliance that is destroying jobs and causing unemployment. It is as if jobs were plenty during apartheid. The reality is that the majority of those who are unemployed have been job seekers long before the ANC came to power.

In addition, there are claims that if the government was to deregulate the labour market, privatise all state functions, abandon insistence on the need for training of workers and affirmative action, the economy would be able to create jobs. Despite the said propaganda, the working class knows that the problem of unemployment is part of the legacy of apartheid, its economy and capitalism that we inherited. Profit motive and capitalist greed is what leads to unemployment. Instead of resources being us ed for investment in the productive sector of our economy, they are used to pay obscenely high wages to management. When industries face problems, the immediate response and solution is to retrench, contract out and to outsource services. This is what those who call for labour market flexibility mean when they assert lies that labour is expensive in South Africa. This lie is asserted despite the fact that the Economist Intelligence Unit found that out of 27 Countries, South Africa was the cheapest pl ace to do business. South Africa beat most countries from emerging markets such as Indonesia, Chile, India, Russia and Brazil. In addition, we were ranked the seventh most competitive country in Africa by the World Economic Forum and Harvard University early this year.

We aware and accept the historic role a progressive trade union Federation such as ours should play in the transformation of our country. It is in this regard that we have combined our role as a defender of worker rights and interests with that of the b roader liberation movement. We reject with contempt the views that we are only concerned with the interest of employed workers. As our submission to the TRC has shown, we dedicated ourselves to the liberation of our country while business spent their l ives defending apartheid and reaping the fruits of its economy. We are not peacetime heroes. We were in the trenches when it was not fashionable to do so. That is why the NP leadership decided to bomb our headquarters followed by spates of bombings ac ross the country. It was for this reason that employers together with the regime set up Stratcom to deal with us. This was the reason for the setting up of sweetheart unions such as UWUSA to counter us. Indeed it was the reason why employers asked the NP to table the LRA amendments making it impossible for workers to go on strike.

As a country, we are today in danger of digging ourselves into a trap, which will almost be impossible to escape from. That is, to abandon the path of transformation, which we have set ourselves, by relinquishing our national sovereignty in the sphere of economic decision-making, and sacrifice them in the altar of profits. Where we are failing, in areas such as housing, human resource development, and others, it is because we are attempting to build on the basis of past, failed policies, or vested inter ests are blocking real change. We are succumbing to blackmail of the "market". It has become widely accepted that the implementation of the economic policy prescriptions of Thatcher, Reagan, the World Bank and the IMF, have had devastating consequences on countries where they have been imposed. These harsh facts are acknowledged, if not by all economists, then certainly by the vast majority of people living in these countries!

Yet there is enormous pressure on South Africa, not least by 'the market', to adopt precisely these policies which failed elsewhere. This neo-liberal framework has by now become familiar. It includes, wholesale privatisation, slashing state spending, d eregulation of the labour, trade, and financial markets, contractionary monetary policies and export orientation. While these prescriptions are ideologically driven, and applied regardless of conditions which countries are facing, we do not reject them only on ideological grounds. We rather reject this package because of its disastrous consequences.

We do not reject the opening up our economy, if this is done in away which promotes our industries. We do not reject fiscal discipline, if it is subsumed to the task of economic development and wiping the social deficit. The attempt by powerful domesti c and international interests, to force us to accept laissez-faire, unfettered capitalism, flies in the face of the entire developmental experience of the 20th century. All successful examples of reconstruction and development in Europe, America, Japan or East Asia have entailed massive involvement by the state, the creation of domestic demand, huge investment in human development, and policies to direct investment and industrial activity. None have relied exclusively on the market or attempted to rem ove the state completely from leading the development process.

There is a view expounded by powerful economic interests at home and internationally that South Africa has no alternative but to embark on a package of conservative macro-economic measures. To the extent that GEAR is seen as a step towards restrictive f iscal and monetary policies, it is welcomed by these forces as being 'in line' with the new global thinking. According to this view, GEAR is succeeding because the deficit reduction programme is on target. Exchange controls have been partially lifted d espite the fact that more and more money is now being invested abroad, interest rates have gone even higher and tariffs are continuously reduced. At the same time the failure to create jobs as well as the social deficit is being ignored.

On the other hand for the majority of South Africans, particularly the working class, the implementation of certain key elements of GEAR continues to have profound negative impact in the following areas:

  • Contractionary fiscal and monetary policy, which stifles economic growth and employment creation;
  • High real interest rates encourage financial speculation, outflow of capital and chokes the economy;
  • Rigid deficit cuts which are undermining massive public works and a direct state role in public housing, public transport, health and infrastructure development;
  • Pledges on the reduction of the public service combined with overemphasis on private-sector driven development encourage privatisation and contracting out of public economic activities. This may lead to the running down of the public service and furth er job losses coupled with excessive reliance on the private sector to create jobs, despite its dismal record in this regard.

Most South Africans - particularly the working class - are agreed that the South African economy has performed poorly since 1996. It has even failed to sustain the beginnings of the economic turn-around experienced in 1994 and 1995. The economic situat ion is characterised by very low growth rates, substantial job losses, and restrictive macroeconomic policies. Despite increases in the growth rate of the economy following the democratic elections of 1994, this trend has reversed itself since 1996. In 1996, the average growth rate was 3,2 percent, falling to 1,7 percent in 1997 dropping to an annual growth rate of 0,7 percent in the first quarter of 1998.

While economic growth was extremely low, it still occurred. This stands in contrast to the employment situation in which jobs have been continually shed over the same period. Over the past year and a half, an estimated 120 000 jobs have been lost. In July 1997, exchange controls were relaxed yet again permitting individuals, corporations, and institutional investors to take an increasing portion of their investments offshore. According to the Reserve Bank, inflows of foreign direct investment have b een matched by outflows of foreign direct investment. Not only has the removal 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 off-shore, push es outflows to higher levels. This excludes the loss we are likely to suffer due to the bank's forward cover policy. Furthermore, economic conditions are preventing the attraction of much higher levels of long-term foreign direct investment. In such a situation, the Reserve Bank relies on the blunt instrument of higher interest rates - which choke off economic growth and prevent effective job creation - as a strategy to deal with inflation and to defend the value of the rand by attempting to influenc e short-term and speculative flows of capital.

At the same as there is an intensified call for the state to move out of production and service delivery, the 1997 World Development Report pointed to an important role for the state in stabilising and managing the economy. The said report argues that:

  • The state must provide a macroeconomic and microeconomic environment, which promotes efficient economic activity;
  • The state must provide an effective institutional infrastructure -such as a good legal system and mechanisms for maintaining social peace - which encourage a stable social environment;
  • The state must ensure that basic needs are met, in terms of education, health care, public investment necessary for economic production and protection for the environment.

This vindicates our position that the state must actively be involved in the management of the economy. Our call has been accompanied by a call by Joseph Stiglitz, Chief Economist and Vice President of the World Bank who recently called for a revision o f macroeconomic policies internationally, which inform structural adjustment programmes and many macroeconomic stabilisation packages. Stiglitz questioned the wisdom of the "Washington Consensus" arguing that they are neither necessary nor sufficient to bring about economic development. He went further and pointed out that:

  • 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;
  • Moreover, liberalisation of markets can actually lead to a less stable, and not necessarily better, financial system.

Without going into the complexities of fiscal policy, it worries us that fiscal discipline appears to becoming an end in itself, rather than a tool for development. Enormous pressure has been brought to force government to rapidly cut back the fiscal de ficit, irrespective of the role which deficit financing could play in development.

This approach could have several detrimental consequences including - cut backs in social services, cuts in public sector employment (particularly low paid workers); limitation of public sector infrastructural investment; and greater pressure to privatis e and commercialise public enterprises. This would seriously undermine the developmental role of the state, retard economic growth and undermine delivery of the RDP. The current policy of keeping interest rates high stifles growth, raises the level of debt, frustrates the housin g programme, and hits small business and the person in the street. The only beneficiaries appear to be the booming finance industry, financial speculators, and the 'hot' short-term foreign investors.

Instead of going this route we believe that government should explore more creative approaches to the debt problem; introduce a pay as you go system for public pensions (which could immediately reduce the deficit by half); and deal with the problem of hi gh interest rates, which are inflating our debt repayments.

Furthermore, a carefully targeted programme of expanded public expenditure, particularly on capital investment, can play an important role in promoting faster growth, broadening our tax base, and thereby creating a virtuous cycle. The opposite, restrictive approach, on the other hand, threatens to choke off growth and ironically, worsen the squeeze on our budget.

A contrast to the gloomy picture of job losses and jobless growth is that profitability has been improving particularly since the democratic elections. In 1994, the operating surplus of incorporated businesses was 12,6% of GDP and the total income of in corporated businesses was 28,7 % of GDP. By 1997, the operating surplus had risen to 14,2 % of GDP and total income to 34,3%. This increase in profitability was made possible by the fact that the productivity of workers has increased faster than wages during this period. What is clear though is that these productivity increases have not translated into substantially higher levels of investment and new jobs at a living wage, but have simply supported the recent jobless growth in the economy. In fact, if one takes account of the extent of retrenchments, the increase in productivity is much higher than the figures reflect. President Mandela in his state of the nation address to parliament characterised the forthcoming Presidential Jobs Summit as the biggest challenge since the 1994 general elections. Most of us in various fora have also promoted this idea of a jobs summit as indicative of our commitment to the reduction of unemployment. This has created high expectations from the country for tangible results from this summit.

Despite calls for the government to postpone the summit from the business community and the commercial press, preparations and negotiations on a series of issues are going ahead in NEDLAC.

We believe that however the agenda is structured, it must in the end deal with among others the following:

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

A report to the NEDLAC Executive Council meeting described the South African economy as "fundamentally not a labour absorbing one", and asserted that "an ambitious and coordinated policy programme will be required to address key constraints and pursue op portunities".

It is our view therefore that;

  • To ultimately address the on-going crisis of unemployment, current economic power relationships must be challenged and transformed;
  • The economy must be developed to reach and sustain full employment. Where unemployment does occur a guaranteed living income must be in place. However, the principal objective must be full employment;
  • Every job must pay a basic living wage. There should no longer be households classified as "working poor";
  • Appropriate social support provisions should be in place to support the performance of household and caring labour;
  • Discrimination and structural barriers in the labour market must be eliminated;
  • Standards of living and quality of work must improve over time. Jobs must not simply be created, but also enhanced;
  • Employment creation must support the provision of public services and basic needs;
  • Wage differentials between different employees, particularly management and production workers, must be limited and efforts to narrow the wage gap put in place;
  • Macroeconomic policies must 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 stra tegies 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 and ensure that the parameters of fiscal policy are consistent with employment creation and retention strategies and to avoid imposing rigid and rapid deficit reduction targets which limit public expenditure and infrastructure development.

In relation to industrial policy, we seek to assert the following:

  • Industries, which can serve as an engine for job creation in South Africa, must be identified. Such an analysis must extend beyond identifying labour intensive industries. In addition, the down- stream and up-stream linkages (e.g. between companies th at supply components to the sector or distribute the product manufactured) must be identified and actively promoted.
  • We need to develop the capacity to produce intermediate goods (inputs used in the production of final goods) and capital goods (e.g. machinery), and reduce imported goods and services.
  • Supply side measures, which are currently in place (e.g. those linked to export promotion or technological innovation), 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. Procurement policy can also be used to guarantee no job losses in a pa rticular company during the period of its government contract.
  • Employment subsidies, which lower the cost of hiring labour while maintaining real wages and benefits, can be used as a tool for promoting labour intensive development. However, such subsidies would need to be strategically and selectively used to pre vent windfall profits accruing to employers.
  • Development financial institutions (DFIs) such as the IDC and the DBSA must play a much more significant role in job creation, and be incorporated into job creation strategies. Their investments need to be in labour intensive production processes with high employment multipliers.

The public service also needs to be fundamentally restructured. Creating the conditions for a sustainable public service will pave the way for public sector job creation and retention. In this regard we propose 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. Employment equity policies within the public service should serve as a model for the rest of the economy. Training and building a stronger skills base should be on going for public service employees. Hierarchies within the public service should be collapsed and the wage gap should continue to be narrowed substantially. Equal access to employment opportunities must be ensured and the degre e of employment security increased. A solid system of management accountability must be put into place to assure an efficient delivery of resources.
  • Resources need to be re-deployed to decrease the number of those employed in unproductive functions, and increase the number of those involved in service delivery.
  • The evolution, development, and extension of the public service requires the creation of effective planning instruments and budget processes. The need for a multi-year planning tool to ensure the effective development of the public service must be reco gnised, and an alternative medium-term budget framework developed in which employment creation is directly incorporated.
  • The roots of the financial crisis in local government must be investigated and addressed to prevent further erosion of the situation.

In addition, in the short to medium term many unemployed people will continue to need assistance. A number of support measures must be urgently introduced to prevent unemployed people from becoming destitute, and assisting in integrating them into the pr oductive economy. Such measures should be seen as complementary to employment, since the most effective way to support the unemployed is through sustainable employment creation. These measures include:

  • Extension of unemployment insurance to those who have been unable to find work, or the introduction of a basic income grant to those living in poverty;
  • Introduction of special rates and concessions for the unemployed in all areas of society, whether transport, public amenities etc and to encourage the private sector to do likewise;
  • Introduction of Social Plan measures to assist those who have been retrenched as a result of crises in particular sectors;
  • Training measures and support measures for the setting up of co-operatives and self-employment.
  • Land reform, support measures for women and youth, and food security measures to deal with the crisis of poverty, particularly in the rural areas.

There exists a misconception, promoted in the main by South African business and the commercial press as well as a lunatic fringe outside of the country, that one of the key problems facing the South African economy is the alleged inflexibility of the la bour market. The battle cry of those who want to demonise the trade union movement as a destructive economic force, and remove any role for the state in enacting legislation which protects workers, particularly the vulnerable and the unorganised is: "we need greater labour market flexibility".

This coded attempt to turn the clock back, and remove basic rights and protection of workers will precisely lead to the exploitation of workers, as well as entrench the notion that global competitiveness can only be achieved through the use of child labo ur and suppression of worker rights. This type of "flexibility" (licence to exploit), will lead, not to dynamism, innovation, and the unleashing of the productive potential, but to stagnation, and destruction of human and natural resources.

This claim of a rigid labour market flies in the face of studies by among others the ILO, which found that in many respects the labour market is too flexible, and that millions of workers remain vulnerable and unprotected.

The ILO study referred above argues that, for the majority of South African workers, particularly the low paid black workers particularly women, the labour market is far too flexible. Rigidity in so far as wages is concerned tends to be concentrated at the upper echelons of the labour market, especial the managerial and professional strata, who use their access to scarce skills and historically accumulated privileges to entrench their positions in a way which has led to huge disparities in incomes which are virtually unparalleled in other parts of the world.

What also emerges, is that the concept of flexibility/rigidity needs to be closely scrutinised to ensure that it is not achieving the opposite of what is intended. For example, employers in South Africa often tend to confuse government intervention and r egulation with rigidities, and deregulation with flexibility. The reality is that, effective targeted intervention is needed in South Africa to overcome many of the inherited rigidities, which retard the economic development and introduce dynamism where there is now stagnation. Failure to do this will lead to an economy being trapped within the same structural constraints.

It is also important to note that labour market flexibility has become discredited among workers. We see it as a euphemism for very little or no regulations at all, make it easy for employers to hire and fire, pay whatever level of wages, make no investm ent in people, deny workers a say in decision making and have no protection for workers.

Successive Nationalist Party governments spent decades attempting to 'perfect' this route. For the majority, it meant abject poverty and degradation. If the cheap labour route became an economic cul de sac from the 1970's to the 1990's, there is little chance that it will miraculously open up a highway of economic opportunities going into the 21st century!

We need to bury once and for all the myth that the road to economic development is paved with low wages and the destruction of labour standards. In a world where virtual slave labour conditions exist in Asian and other countries, it is unthinkable that some elements in South African business should seek to make this our 'competitive advantage'. This is a prescription to take us backwards from apartheid to feudalism.

One other issue, which is raised from time to time, is that of affirmative action and its consequences. COSATU has for long maintained the view that the discussion around affirmative action in South Africa runs the risk of focussing narrowly on the prom otion of a small number of individuals, leaving the pattern of apartheid labour market discrimination and inequality fundamentally undisturbed.

What we need is an approach which:

  • Advances the need for a comprehensive approach to redressing the legacy of discrimination and inequality.
  • Accept that the mere repeal of past discriminatory laws is insufficient to tackle this legacy.
  • Is based on a programme of positive measures to overcome the inequities in the labour market. Far from acting as a barrier to economic growth, such measures are a necessary condition for sustainable economic development, to unleash the potential suppressed by apartheid underdevelopment, particularly of our human resources.

Within this context we need to also address the apartheid wage gap which is characterised by a concentration of low wage, low skill employment, particularly amongst African and women workers on the one end. At the other end of the spectrum are the high paying managerial and executive positions monopolised disproportionately by white men. It is estimated that the difference between a manager's salary and that of a worker is 15-20 times in South Africa. When it comes to top executives, the disparity is even greater: it is estimated that the average ratio in South Africa of the Managing Director to the lowest paid worker is about 100:1, while in Japan it is on average 7:1.

Within those extremes, even the gradations between unskilled, semi- skilled and artisans, blue collar, production and technical/professional reflect disparities in incomes which are huge by international standards. This has resulted in a hierarchy, which drains economic resources into the higher occupation layers, often, the least productive strata of the economy. Bloated management, administrative, supervisory and other layers take the lion's share of the wage and salary bill. This picture is further confirmed by the NPI study, which showed that about 60% of the national wage and salary bill went to salaried staff, i.e. white collar and above.

Closing the wage gap does not necessarily mean on balance a massive increase in the wage bill above aggregate levels of productivity. There is considerable room, because of the current diversion of resources to the upper strata, for re-organisation and redistribution within the current overall levels of remuneration.

The public sector seems to be leading the way in closing the wage gap. Modest but significant gains have been made in closing the wage gap. According to the ILO, public sector differentials in South Africa were about 25:1 from top to bottom in 1994. A s a result of negotiation these were reduced to 20:1 in 1995. Government has now set a target of bringing the ratio down to 12:1 by 1999. Redressing past imbalances is therefore not only a moral imperative, but also a precondition for sustainable devel opment.

One of the mystery issues to the business community and the press is Alliance between COSATU and the ANC. Let me once more state categorically that we will defeat all efforts, which seek to divide and weaken the Alliance. Such an outcome would never be nefit the masses of our people and our common cause to achieve the fundamental transformation of our society. It is precisely for this reason that our opponents are so fond of calling for its dissolution. They do so because they understand very well th at such a dissolution of the Alliance would serve their interests of ensuring that there is no force in our country strong enough to bring about the fundamental changes for which the masses of our people are crying out.

They know that there is no movement in our country except the Alliance that can bring about the changes to which we are all committed. It is for this reason that we are going to ensure that, we return the ANC to power with an overwhelming majority. Any other result would only serve further to slow down the process of change and strengthen those who do not want change but are fighting as hard as they can to preserve as much of the apartheid status quo as possible.

While there may be valuable and sometimes even understandable reasons for disillusionment with the ANC government, it will be suicidal to gamble with our future and return the National Party. They are likely to reverse most if not all of the gains that we have made over the past four years. The same applies to the DP, IFP and UDM. These are no friends of the working class. There is no doubt that if any one of them or all were to win political power, they will move the country back to where it was be fore the 1994 elections. We will continue to assert the following as part of our transformation agenda:

  • Continued movement from apartheid tyranny to a non racial, non sexist, democratic and accountable constitutional state which entrenches the fundamental political, social and economic rights of all citizens, with special emphasis on the working class in general and workers in particular.
  • Creation of an unfragmented state which enables national government to effectively implement measures to overcome the apartheid legacy of division, economic deprivation, poverty and inequality, and to set national norms and standards in all strategic a reas of transformation.
  • Consolidation of the Alliance and its constituent members as the key social force to drive the process of social and political transformation;
  • Implementation of the RDP's five key areas: democratisation of the state and society; extension of basic needs; developing a new growth path based on improvement of living standards and respect for workers rights; human resource development; and the re direction of resources and investment.

While it may be true that there are differing opinions on certain aspect of macro-economic policies, on areas such as health, welfare, aspect of the labour market, infrastructure, land, and water, we are on the same wavelength. On all labour legislation the ANC has been a lone voice sometimes with tacit support from the IFP and the PAC. The process of drafting a new constitution was successfully completed, with significant advances in some areas of socio-economic rights, worker rights, and deepening o f democracy because of the ANC.

It can not be denied that, most communities in rural areas now have access to water and electricity. Some communities have had their land returned to them. Most South Africans now have access to better health care, particularly pregnant women, children under 6 years of age and the unemployed. Important policy and legislative breakthroughs were made, and implemented, in certain areas, particularly health, labour, water, land, education and training. There are institutional mechanisms for workers and society to influence policy formulation and legislation. These are gains worthy of defence by us.

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