COSATU statement on the latest National Planning Commission’s report on the economy

The Congress of South African Trade Unions has noted the National Planning Commission’s latest report on the economy that says a 6% unemployment rate by 2030 is an impossible goal. The Commission has reviewed its jobless rate projections to 14% by the year 2030. It is telling though that government and the NPC are yet to explain why the NDP has failed to reduce unemployment.  They have not said what will they do differently to fix the economy nor how will the new 14% unemployment target be achieved within 12 years.

This report validates COSATU’s long held contention that the National Development Plan {NDP} in its current form cannot provide solutions to the country’s triple crisis of unemployment, poverty and inequality. South Africa is currently struggling with the real unemployment rate of 38%, with close to 10 million people struggling to get jobs and 17 million people on welfare.

The recent data by Statistics South Africa report shows that out of a population of 56 million, around 13,8 million people are now living below the food poverty line of R17.38 per person per day .It also shows that more than 30 million people out of 56 million are by and large poor.

Since the adoption of the NDP by the ANC led government in 2013, the country’s fifth administration as led by the ANC has and continues to preside over economic contraction and job-losses, despite the fact that the mandate from the ANC 53rd Mangaung Conference was for urgency and determination in turning around this trajectory in pursuance of the radical second phase of our transition. All we see from government is business as usual approach and an ever increasing reduction in service delivery and infrastructure expenditure and freezing of critical posts.  We have not heard from the big supporters of NDP , big business, especially those making huge profits in the banking sector, what will they bring to the table to turn the economy around and invest the billions they have made.

Five years ago , when the NDP was adopted by the ANC led government, COSATU argued that there was a need to review the economic and labour chapters of the NDP because they were punting the failed neo-liberal economic trajectory and also pushing for labour flexibility and the weakening of labour laws. The National Development Plan (NDP) was presented as a framework that “lays the foundation for long-term planning for this radical socio-economic agenda over the next 20 years” , with the aim of eradicating poverty, increasing employment and reducing inequality by 2030.

In its 2014 manifesto the ANC stated that the NGP, National Infrastructure Plan and Industrial Policy Action Plan would “continue to drive government’s policy agenda”. However, the advent of the NDP meant an end to the attempt to forge an alignment of the macroeconomic policies, in particular the monetary policy, with the industrial policy and job-creation as proposed in the NGP. Basically, with its chapters on macroeconomic and labour market policies, the NDP meant a return to the same old conservative policies inherited from GEAR. Hence, this provoked rejection and critique from COSATU.

It is clear now that the engagements that took place on these matters within the Alliance were nothing but a way to manage objections by Alliance partners, as they have yielded no results. The Treasury continues with its restrictive fiscal policy which is obsessively focused on achieving the target of 3% budget-deficit and the Reserve bank continues to pursue its inflation target of 3-6%, thus excessively restricting the economy on a low-growth path.

The current economic trends have unleashed very harsh conditions especially for the working class and the poor, on top of the already severe triple-crises of unemployment, poverty and inequality.

As workers, we continue to argue that the NDP does not represent a necessary radical economic shift that will help the country towards a new growth trajectory.  It has become obvious now that the NDP has not only failed to advance a radical economic shift, but is actually threatening to reverse certain progressive advances that have been made by the ANC and government. South Africa’s unemployment rate is currently at its highest level since 2003, according to Statistics SA.

The NDP contradicts, or fails to take forward, key progressive policies that have already been adopted by government in order to help us create large numbers of decent, sustainable jobs. The Mangaung Conference of the ANC resolved that the New Growth Path {NGP} would be “the defining framework” for the medium-term policy imperatives. It went further to say that the industrial policy action plan would guide the reindustrialization and decent work would be the primary focus of economic policy.

Furthermore, it said that the state mining company would be strengthened to capture a share of mineral resource rents and equity; and more importantly from our point view as a federation of workers, Mangaung resolved that “critical services such as cleaning services, security services, food services and laundry services and linen supply must be provided in-house and not be outsourced”. Unlike the NDP the NGP placed emphasis on creation of decent jobs and reduction of inequalities rather than narrowly focusing on a growth target.

The NDP has a one- sided focus on economic growth. There is consensus within the Alliance that economic growth is not the panacea to all of our economic problems, but rather there is a need for a new trajectory of growth, which addresses rather than reproduces our triple crisis of unemployment, poverty and inequality. However the primary focus of the NDP is on economic growth, and the rate of growth, not on its composition, or the role of redistribution in determining the impact of growth. It contradicts the NGP, and a range of ANC economic policy resolutions on this, including the Economic Transformation Commission resolution from Mangaung which states “structural problems require structural solution that transform the trajectory of economic growth, reindustrialise the South African economy and accelerate social development”.

The NDP proposes cosmetic reforms to the economic structure, aimed at best to deracialise ownership, rather than transform the structure of the economy. Monopolies are only seen as a problem to the extent that they distort the market, and block black ownership. Despite, its massive emphasis on raising the ‘competitiveness’ of the South African economy, amazingly the entire NDP makes very little reference to competition policy and only references to the competition commission under health.

The Plan focuses all its proposals for greater competition in areas where state owned enterprise operate for example on infrastructure, which has numerous proposals to increase competition. In other words its focus is on introducing private sector competition where there is state ownership; and has a blind spot when it comes to acting against monopoly ownership and control in the private sector. The NDPs solution to problems of concentrated ownership lies in economic growth and new opportunities, which will ultimately see deracialisation of the economy. It go on to say; “A rapidly growing economy that is diversifying into new sectors will open up opportunities for black-owned firms and smaller businesses, promoting inclusive growth.” This is faith in market forces at its best and is not different to the DA’s “equal opportunities” dogma.

COSATU argues that we can expect nothing from a plan that does not even attempt to fundamentally transform the structure of our economy and promote a new growth path that will help us to industrialise our economy. Nothing will be achieved with a plan that does not place the creation of decent work for all, at the centre of economic policy; and also fails to place redistribution and combating of economic inequality and poverty as fundamental pillars of economic development. Instead the NDP’s jobs plan is problematic and unsustainable, based on creating low quality precarious jobs outside the core productive sectors of the economy.

COSATU remains fully in support of a planned economy and a strong interventionist state and will continue to reject the overreliance on the market economy.

This view has been powerfully validated and reinforced by the latest statistics that show that since the adoption of the NDP by the fifth administration, we are going backwards instead of going forward in addressing the socio-economic challenges facing the country. The current economic crisis is as a direct result of unregulated capitalism being allowed to dictate economic strategies, with disastrous consequences for the majority of the country’s population, the workers and the poor.

We hope that this state of callous lethargy from government will be abandoned at the Presidential Jobs Summit this week.

Issued by COSATU

Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794