COSATU Response to the State of the Nation Address

The Congress of South African Trade Unions notes President Cyril Ramaphosa’s State of the Nation Address today,11 February 2021. We congratulate the President and his government for their decisive interventions in response to the outbreak of the COVID-19 virus last year. Indeed, many families and workers were given some relief that allowed them to put food on the table, and despite some mistakes and bureaucratic inefficiencies, this indeed remains the most aggressive and comprehensive intervention by the government since 1994.

 The federation commends the President for spending a portion of his SONA speech giving us an update on the progress made from the previous SONA commitments and also acknowledging some shortcomings.

 COVID-19 Relief -We welcome the President’s assent to the Federation’s demand that the UIF’s Covid-19 Temporary Employment Relief Scheme be extended. We also welcome the President’s agreement to its call for the extension of the R350 Covid-19 grant for the long term unemployed. 

While there were some encouraging updates on the progress being made to implement the Economic Recovery and Reconstruction Plan, there are some huge gaps that need to be closed.

 COVID-19 and health -We welcome an update on the progress with regards to securing the Johnson & Johnson vaccines, however, the continued lack of progress and clarity with regards to the timeframes, procurement, logistics and other critical details of the vaccine programme remains a major concern.  We cannot afford to end 2021 without having reached 70% population immunity level because the economy cannot sustain periodical shutdowns. 

The government needs to undertake a mass public education programme to explain to members of the public why it is important for all persons to vaccinate.  Health care workers are overstretched and need to be reinforced, so we call on the government to continue to fill vacancies in the health sector.  

NHI– Parliament needs to move with speed to pass the National Health Insurance (NHI) Bill and the government to roll-out the NHI.  COVID-19 has shown why we need a modern healthcare system that is accessible to all.

Employment -On creation of decent work and sustainable livelihoods, we welcome an update on the work of the Presidential Employment Programme, but we are alarmed at reports that many workers employed under the Presidential Employment Programme have not received wages due to them for months.  This is an unacceptable abuse that needs to be resolved fast.

While the SONA attempted to place emphasis on job-creation and reduction of inequalities rather than narrowly focusing on a growth target; it was unable to set definite employment targets. All government departments, SOEs and municipalities must be set job creation targets if we are to address unemployment.

 While there was a general commitment to restructuring and transforming the economy, the President failed to explicitly redefine the role of the state in the economy.  No update was given on the research being conducted on the establishment of a state-owned bank.

 SOEs-The establishment of the SOE Presidential Council and the commitment to establish a central framework and legislation is noted.  What is not clear is the vision and road map for key SOEs that are collapsing or have already collapsed.  The current models are not working, and drastic action is needed if these SOEs are too survive and cease being a burden on the fiscus.

We look forward to hearing from State-Owned Enterprise Council on what are its proposals for revamping and reimagining the SOEs. The SOEs and Development Finance Institutions need to be reoriented in terms of the planned investment targets and development objectives.

Monetary Policy-There was still no attempt to commit to an alignment of the macroeconomic policies, in particular, the monetary policy with the industrial policy and other objectives. We were hoping for the President to announce a radical shift in the government’s and Reserve Bank’s hitherto conservative fiscal and monetary policy, to bring it in line with ANC policy to promote the manufacturing industry and job creation, rather than its rigid obsession with inflation-targeting.

 On ERRP Funding -The ERRP will only be successful if the private sector, in particular the banks and investment funds come off the fence and release funds to inject into productive investments.  The government will never have enough funds on its own.  The leadership of business has agreed to increase impact investments from a paltry 2% up to the 10% allowed under Regulation 28 of the Pensions Act.  This needs to happen if we are to rebuild the economy. 

Loan Guarantee Scheme– We look forward to hearing from Treasury and the banks on how they will revamp the Loan Guarantee Scheme.  This is something that they have failed to do since July hence its dispersal of only 9% of R200 billion.  A revamped LGS needs to include lower interest rates and easier repayment conditions to make it more affordable for struggling businesses.  It also needs to include grants to incentivise job retention and creation.

Infrastructure roll-out- The progress being made with regards to the infrastructure programme is welcome.  These need to be drastically accelerated, including the modernisation of our ports, the moving of freight to rail, the rebuilding of a decimated Metrorail,etc.

These will not only ensure immediate creation of jobs but will increase our agricultural and manufacturing capacity, boost exports, ensure affordable and reliable energy. 

Sectoral Master Plans- The progress in the auto-manufacturing, poultry, agricultural, sugar, clothing and textile master plans is welcome.  Interventions are needed to unlock the obstacles to other key master plans in particular mining, renewable energy, defence and aviation, hemp, chemicals and plastics, and health.

Government sadly said nothing about government increasing employment using activities in the social economy, especially cooperatives and other activities in the not-for-profit sector.

 Local Procurement- More work needs to be done to ensure the local procurement targets are met.  We have seen all too often government and the private sector paying lip service to buying local.   Proudly SA, GCIS, media institutions and marketing companies need to play their role in mobilising consumers to buy local.

SARS needs to be capacitated to crackdown on illegal goods coming into the economy.  The lack of enforcement of customs duties not only robs the state of billions of Rands due to it but decimates local jobs and manufacturing capacity and undermines the billions spent boosting local industries.

Eskom- The adoption of the COSATU drafted Eskom Social Compact and Implementation Plan is positive.  Its implementation needs to be fast-tracked, in particular, its anti-corruption and wasteful expenditure proposals. Unaffordable and corrupt contracts must be reviewed and cancelled. 

 Eskom needs to enter the renewable energy generation space as an owner.  A just transition plan must be put in place for aging power stations and mines, to protect workers, and communities.  We still reject the idea of municipalities generating their own electricity because many municipalities are poor, and it will undermine the basic principle of cross-subsidisation that is critical to reduce inequality.

On New State Agencies– There was an inadequate attempt to develop the capacity for state-led coordination between the productive economy, education and skills training, infrastructure development and environmental sustainability. COSATU strongly rejects the attempt to create more state agencies. The establishment of a Water Agency and the Land and Agrarian Agency does not have the support of the Federation.

Local government – We welcome the commitment to appoint untainted and qualified professionals at a local government level to fix the mess of corruption that has undermined service delivery. Far too many township, rural villages and informal settlement still lack sanitation, running water, electricity, tarred roads, etc.  Yet some of these municipalities are not even able to spend the money allocated in their budgets for service delivery.

About 90% of municipalities are in serious financial distress and dozens of municipalities are struggling to pay their workers. It is not clear what COGTA, SALGA and Treasury are meant to be doing to address these problems from SONA.

The fight against corruption- Government needs to cease being timid and hypocritical in the fight against corruption.  Decisive and bold action is needed to defeat corruption. This needs to include showing the courage to extend the ban on public servants doing business with the state to the national and provincial leaders of political parties occupying executive office and their spouses and children. 

 It requires an overhaul of a corrupted public procurement system and the creation of a single transparent, online public procurement system for the entire state, including departments, entities, SOEs and municipalities.  The resourcing of commercial crimes courts and the prioritization of corruption cases must happen.  Workers cannot be expected to take government seriously so long as government preside over the loss of an average R160 billion or 10% of the budget to corruption and wasteful expenditure annually.

COSATU reiterates its view that all public representatives must be forced to choose whether they are servants of the public or in business to make profits. They cannot be both at the same time.

Education – Schools are still facing serious problems, with far too many schools under-funded and under-staffed. There is very little coming from the government on investing in education.

 Lastly, it is concerning that there was no clear statement from the SONA affirming that government will respect workers’ Constitutional right to collective bargaining.  The ERRP and the commitments of the SONA will not materialise with a public service that feels its rights are being trampled upon with no remorse from the employer.

Issued by COSATU

 Sizwe Pamla (COSATU National Spokesperson)

Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 679