The Congress of South African Trade Unions has noted the report that shows that South Africa’s economy, as measured by the GDP has shrunk by a further 7% in the year 2020. To put this figure in perspective, the analysis of Statistics South Africa emphatically underscores the fact that this is the biggest annual fall in output since 1946. In addition, the economy is still below the 2019 baseline (pre-COVID-19 GDP) and in fact in terms of per capita GDP is still well below the 2014 peak.
The federation is not shocked by these numbers because they reflect a paralysis in SA economic policy trajectory, the severe impact of COVID-19 notwithstanding. This is another reminder that our National Treasury is an overhyped and glorified department that has failed the people of this country by stunningly mishandling the economy.
The government’s decision to suffocate the economy by implementing a framework of economic policies that do not place employment creation as a priority but geared at reducing the budget-deficit and containing the debt-burden has backfired.
The 6,3% growth in the fourth quarter is defocusing us because the economy was being reopened and it distracts us from sorting out our intractable economic problems and confronting the tremendous inbuilt economic crisis based on the government’s obsession with austerity.
Whilst we share the concern about the rapidly rising debt-service costs in terms of the budget, we have nonetheless consistently argued that using growth-enhancing fiscal and monetary measures are the most sustainable way of reducing the budget deficit and drawing down the public debt.
We, therefore, hope that the Treasury would seize this opportunity created by the better-than-expected GDP indicators of the 4th Quarter 2020, to positively adjust its deficit and debt containment targets. In other words, we call upon the Treasury to abandon its current austerity approach of subordinating all the socio-economic challenges that the country is facing the narrow focus on its primary budget-surplus and debt-containment targets.
This must include abandoning its austerity war against public servants, amongst whom are the brave and hardworking frontline health and care workers that have seen the country through the most catastrophic year in terms of public health emergency in the democratic South Africa.
COSATU has repeatedly argued that the source of the macroeconomic quagmire is stagnation and not debt, therefore, rather than choking the economy with austerity measures, the government needs to implement policies that support economic growth.
The ANC Manifesto committed to promoting a developmental growth path through the building of core industries of manufacturing, promoting investments to diversify the economy in sectors like mining, telecommunications, transport, and repositioning Eskom to play an active role in the renewable energy sector and promote public ownership in renewable energy infrastructure. There is very little that has been done to make this a reality.
Eskom is still failing to ensure a reliable electricity supply. Sadly, the last budget failed to address many of the economic challenges facing the country, including fixing the broken systems inside the state. Statics SA numbers are supposed to inform government planning, but evidence shows that the National Treasury is indifferent to these statistics.
Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794