The Congress of South African Trade Unions and millions of desperate workers are looking forward to the government’s upcoming Medium Term Budget Policy Statement (MTBPS) to be tabled in Parliament next week. COSATU expects a comprehensive economic strategy and message to assuage workers entice investors and motivate the nation. It must be based upon the progressive Presidential Jobs Summit Agreement, DTI’s Industrial Strategy, the Department of Mineral Resources and Energy’s mining and energy strategies and the ANC’s 2019 elections manifesto.
Our economy is experiencing the worst downturn since 1994, with about 40% of workers unemployed. Thousands more are being retrenched monthly, 400 000 job seekers are entering the economy each year, yet we have an economy that is barely growing above 1% per annum. Our most important SOE, Eskom is on the verge of collapse and threatens to bring down not only the state but the entire economy.
COSATU expects the Minister for Finance to present a serious MTBPS that will tell the nation exactly what government has done, is doing and will do to take us out of these crises. We expect an MTBPS that is coherent with clear reports, objectives, targets and timeframes. The incoherence and timidness that we saw in the February 2019 Budget Speech and the 2018 MTBPS will not do.
Economy
COSATU is pleased that government now recognises the extent of the economic crisis, therefore, we expect the Minister to tell us exactly how far has government come in terms of implementing the October 2018 Presidential Jobs Summit outcomes. We need to know what measures will be taken to ensure that business honours its Jobs Summit responsibilities.
The Department of Trade, Industry and Competition has developed a comprehensive industrial strategy aimed at protecting fragile sectors and growing new ones, in particular, its 14 targeted key sectors. These are being discussed with industry and labour to develop sectoral master plans. There is significant progress because sectoral plans are in place for the clothing and poultry sectors. COSATU expects the Finance Minister to reinforce the critical work being done here with the allocation of additional resources.
We hope that Minister Mboweni will not seek to revive the obnoxious anti-worker attacks in Treasury’s Economic Growth Strategy. COSATU will defeat any attempt by Treasury to collapse the National Minimum Wage, collective agreements and workers’ hard-earned labour rights. The federation is pleased that both the President and the ANC have come out to say the anti-worker proposals in the Tito Manifesto must be deleted.
The Federation expects the Minister to announce when Treasury will release its long-delayed Public Procurement Bill. It has long-delayed been sitting on this critical bill for years. This bill is critical towards ensuring the state is compelled to procure locally produced goods and thus help protect and grow our local manufacturing capacity and save and create thousands of badly needed jobs.
The Minister needs to accept the resolutions of the ANC’s Nasrec Congress which called for the mandate of the Reserve Bank to be amended to include not only combating inflation but also supporting economic growth and job creation. Reducing interest rates for business and consumers is critical to growing the economy and helping workers survive. Equally the SARB must tell us what exactly it is doing to tackle the illicit flow of billions outside our economy?
Expenditure
Government’s credibility has been badly shattered by years of looting, mismanagement and sheer negligence. The minister needs to rise to the challenge and tell the nation what will be done to:
• Stop the bleeding of on average R150 billion per annum to looting and wasteful expenditure.
• Recover the billions that have been looted under state capture.
• Deal with the R50 billion in infrastructure under expenditure.
We agree that we cannot simply print money and spend our way out of this crisis. Equally, Treasury’s attempts to impose brutal austerity measures will make a fragile economy worse. The slashing of expenditure by 5% to 7% each year for the next 3 years, the freezing of critical service delivery posts threatens to collapse public service delivery and throw the economy back into a recession. What is needed is for the government to manage taxpayers’ funds properly. It cannot be acceptable to lose 10% of the budget every year to corruption and wasteful expenditure.
COSATU and its affiliates hope to see positive reports in the MTBPS on the performance of departments, in particular, key service delivery ones such as:
• Basic Education;
• Higher Education and Training;
• Health;
• Agriculture, Rural Development and Land Reform;
• Transport;
• Housing, Water and Sanitation;
• Cogta;
• Mineral Resources and Energy; and
• Public Works.
The days of departments failing to meet their targets, spend the budgets must come to an end. The collapse of the Department of Water and Sanitation must not be allowed to happen again. The days of Ministers spending millions exploring the world as glorified tourists with massive entourages whilst their departments disintegrate must stop. The President must fire those who are beyond redemption.
Taxation
Declining levels of tax compliance, revenue and affordability are gutting the capacity of the state to deliver a better life for the struggling majority. In its ill-guided efforts to plug budget holes caused by looting by politicians and their friends, Treasury has increasingly abused workers and squeezed their meagre wages by a series of anti-poor tax hikes over the past three (3) years. These range from the notorious VAT hike, not adjusting lower and middle tax brackets for inflation, increasing personal tax brackets upon lower and middle tax brackets and allowing Eskom to increase its tariffs by almost 500% over the past decade.
The Minister needs to tell the nation what progress has been made in:
• Restoring the capacity and integrity of SARS.
• Halting declining tax revenues.
• Cracking down on tax evasion and dealing with those who fail to pay what is due to the state.
• Tackling customs fraud where billions of Rands is lost in customs duties by SARS criminally negligent failure to inspect 95% of containers arriving at our ports.
o This equally costs the state additional billions in expenditure that DTI provides to boost our manufacturing sector only to see it decimated by a flood of cheap illegal imports.
• Holding business to account for their very generous reduced company tax levels and various subsidies and incentives in order to ensure that in the exchange business creates new jobs and investments and not simply automate, retrench and shift funds offshore.
• The tabling of the long-delayed and committed to tax on the export of scrap metals.
o This is critical towards boosting beneficiation and growing our local industrial capacity.
The government must overhaul the tax regime to make it more progressive, ensure the rich pay their fair share and to protect the poor. This must include such wealth taxes on estates, land, inheritance, dividends, luxury goods and imports.
Public Service Wage Bill
Treasury has continuously sought to shift the blame for government’s mind-boggling levels of incompetence to nurses, teachers, cleaners, police and prisons officers. These workers are only trying to earn a living wage and be able to feed their families and clothe their children.
The public service wage bill has not been increasing nor is it out of control. It has consistently averaged between 32% and 35% of the budget. In 1994 with 34 million citizens, we had 1 million public servants. Today with 57 million South Africans, we have 1.1 million employed public servants. This excludes the 128 000 vacancies currently in the public service. In essence, the population has doubled and the civil service has not. In many key service delivery departments, the freeze on posts is threatening to collapse the ability of nurses and doctors to provide decent health care, teachers’ quality education and police safe communities.
Treasury and the DPSA have in fact not been honest with the public. They fail to mention that 37% of the wage bill is in fact earned by management and that is where the fat is. If the government is serious then it will slash the exorbitant wages and perks that Cabinet, Premiers, MECs, Mayors, DGs, CEOs of SOEs earn. It is impossible to take government seriously when it provides 50 free plane tickets per annum for life for former MPs or spends millions on flying Ministers’ spouses on overseas junkets. This government spends millions on the legal fees of corrupt politicians, it allows the management of SOEs to pay CEOs R8 million at the very same time when it pays police officers, nurses, teachers poverty wages.
If the government really wants to address the wage gap and stop the ballooning of management perks, then it must place all public sector entities, management and public representatives under one collective bargaining process under the Public Service Collective Bargaining Council.
State-Owned Enterprises
The threat posed by the possible collapse of various SOEs; in particular Eskom, to workers, the state and the economy is well known. It is extremely disconcerting that 18 months down the road, the government is determined to continue to play Russian Roulette with workers’ jobs, pensions and taxes. To date, we do not have clear plans to stabilise and save Eskom, Prasa, RAF, SAA, SABC and Denel. If the government has a plan, then it must share this with all social partners.
COSATU and workers are determined to play their part and ensure that these critical SOEs are saved. Not only do our members working at the SOEs depend upon them, but equally so do their families, communities and in fact the entire economy. We are simply running out of time because bailouts are not sustainable.
Clear turn around plans are needed that include:
• Comprehensive forensic public audits of all these SOEs’ expenditure and contracts;
• Slashing the exorbitant wages and perks of management;
• Cost-cutting measures that will not threaten their capacity to operate;
• Commitments not to retrench any workers;
• The reskilling and redeployment of workers within the SOEs and public service if needed and in consultation with labour at the relevant collective bargaining fora;
• Clear economic models and turn around plans for the short, medium and long term for each SOE that takes into account economic structural changes in their sectors; and
The absolute and relative deterioration of the living conditions of the majority in cities and rural areas, the growing unemployment, and the inevitable attempts to shift more and more of the burden of the crisis onto the shoulders of the workers will continue to fuel the anger of the people.
The plight facing our people cries out for thorough economic transformation. There are many signs that the objective and subjective conditions which make possible a major uprising are beginning to mature. What is becoming clear is that even if there were to be an upswing in economic activity the absolute shortage of skilled and semi-skilled labour would stand in the way of a major leap forward.
The people of South Africa demand nothing less than the redistribution of the country’s wealth and the dismantling of the entire apartheid economic framework. The country’s levels of unemployment have reached horrendous proportions. Retrenchment and unemployment for many people mean more than just a loss of income and consequent economic deprivation but it also means the complete destruction of family life. South Africa’s over-dependence on foreign capital weakens the country’s capacity to cope with the present crisis. The economy and the entire nation’s hopes rest upon what government presents in the MTBPS. COSATU hopes that government will rise to the occasion and present an MTBPS that shows how it is turning the economy, state and SOEs around and will ensure that our 40% unemployment level falls drastically and soon.
Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794
Or
Matthew Parks
COSATU Parliamentary Coordinator
Cell: 082 785 0687 Email: matthew@cosatu.org.za