COSATU’s response to Governments’ Economic Reconstruction and Recovery Plan

The Congress of South African Trade Unions has noted the announcement of the economic recovery plan by President Cyril Ramaphosa today. We agree that this current economic crisis will need all social partners to work together to rebuild our economy.

The Federation is pleased that our Eskom Social Compact has been adopted. We expect the government, Eskom, business, and society to move with speed to implement it. Central to our economic recovery is affordable and reliable electricity supply. 

We welcome the infrastructure programme, in particular investments in ports, rail, energy, roads and water. However, the government needs to ensure that corruption does not enter this massive R1 trillion programme.  The private sector must come to the party in releasing capital for infrastructure. 

The mass employment programme is noted but we fear the target of 800 000 jobs is inadequate in an economy with 12 million unemployed people. More work is needed here and in particular as to what the private sector is going to do to prevent retrenchments and to ramp up jobs.

We endorse the government’s extension of the R350 grant. This is the basis for the basic income grant that should be a product of dialogue amongst stakeholders.

The economy’s revival depends upon the successful implementation of the industrial programme, in particular, the local procurement and export support initiatives. Local procurement by the public and private sectors as well as all consumers is central to creating jobs. Fixing and expanding our ports is key to boosting exports. 

COSATU has long argued that specific sector strategies are needed to restructure the economy toward more equitable, job-creating growth. While this is a long-run process, we believe that effective interventions must be geared consistently and systematically toward the new growth path.

These sector strategies need to ensure that every major economic sector protects and creates sustainable employment. A critical task is to identify industries that are both relatively labour intensive and sustainable- that is, able to grow substantially for the foreseeable future. These sectors need considerable state support to make sure that they grow and achieve equitable outcomes.

We also want to see critical structural changes for the industrial policy that focus on a substantial expansion in agriculture and food processing for both the domestic and regional market. To ensure decent work and greater equity in the sector, major land reform and agrarian development based on marketing co-ops would have to form a central part of this sectoral strategy.

The announcement of measures to reduce regulatory obstacles to growth is welcome as is the commitment to roll out internet connectivity and lower data costs. The capacitation of Sars is central to rebuilding the state. It needs to be further reinforced to enable the agency to crack down on tax dodgers. 

We note the initial steps in tackling corruption, but this needs to be the cornerstone of this recovery plan because we cannot afford to have new money injected into a leaking economy. Government has to move with speed and seriousness in dealing with corruption and wasteful expenditure. 

We call for the fast-tracking of the public procurement bill and the introduction of the national online public procurement system. We also demand transparency in the procurement of certain large goods within the state.  

We note that the President has mentioned in passing the call by labour for the banning of all politically exposed persons and their families from doing business with the state. We are unwavering in this call and all those who are opposed to it are welcome to step down from their political positions.

The government’s dragging of its feet on such a simple commitment is shameful. Central to cleansing the state of this cancer of corruption is the overhauling of public procurement which is riddled with looting. 

The biggest Achilles heel to this Economic Recovery Plan is governments attitude towards the state and the capacity of the state. This is still a largely market-driven plan with not even a cautious shift in the direction of a more interventionist state in the economy.

COSATU will only offer its wholesale support to a plan that ensures that our common commitment to shared, rather than inequitable, growth runs through all its programmes. We cannot have proposals that want to reduce the rights of workers, weaken the scope of centralised bargaining, and use regulatory impact assessments to review and attack labour rights. The austerity regime that is targeting workers and fixated with the public service wage reduction is misguided and we will not tolerate it.

The plan fails to acknowledge that the state can play a dynamic developmental role as a key economic agent. The state is the biggest employer, consumer, and investor and through its fiscal and monetary policies, and the composition of its budget, it exerts a tremendous economic influence.

To address the inefficiencies of the state and building the state’s capacity to implement a programme of economic resuscitation means that the state cannot be predetermined but should be informed by the magnitude of the programme the state has to implement.  This plan continues to envision a minimalist state, instead of a developmental state which plays a significant role in the economy.

Our current problems emerged out of a misguided philosophical argument that favours a limited state role in the economy and society. While we appreciate the important contribution this plan could make, it will be measured against the Alliance commitment to a transformative project and also building a developmental state.

The economic recovery plan does not address issues of redistribution and inequality, it lacks any systemic attempts to ensure that growth of whatever percentage does not perpetuate inequality. The critical question is to ensure that the beneficiaries of growth do not continue to be largely the same suspects. The Federation strongly argues that chasing growth and employment targets are not specifically biased towards a deliberate impact on the poor; e, g there is no mention of combating casualisation, etc

COSATU does not want a situation where rising employment figures are accompanied by a growth in the working poor.

The state must absolutely prioritise sustainable employment creation, which combines economic development with an expansion in decent work. Moreover, the state must have structures that can drive development through a combination of discipline and resourcing for capital.

We hope to see the interest and foreign exchange rates designed to support increased investment growth in exports. The targets of the Reserve Bank should include the current employment and growth targets. The state must do more to make development finance institutions, especially IDC, support its initiatives. It is not acceptable that SOEs remain a burden on the state instead of being economic vehicles to fix and transform the economy.

Issued by COSATU

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