The Congress of South African Trade Unions has noted of the latest gross domestic product figures released by Statistics South Africa showing that South Africa’s economy expanded by 1,2% in the second quarter of 2021. The same numbers show that the economy is 1,4% smaller than it was before the outbreak of COVID-19.
Realistically, these deceptive numbers reflect the effects of the reopening and partial stabilisation of the economy after a period of extreme lockdown. This is a reminder that improving vaccination numbers and avoiding another overwhelming fourth wave of coronavirus infections is paramount if the economy is to be properly stabilised.
While these numbers reflect the positive effects of reopening the economy, they hide the frightening reality of an economy that still does not have a reliable and secure electricity supply and an economy that is seriously underperforming in terms of real growth. Economies are about the people, and in South Africa, we have the highest unemployment on record and more than fifteen million people struggle to have three meals a day.
The misguided government austerity programme, including wage freezes and the ongoing privatisation, will worsen unemployment and continue to greatly reduce the purchasing power of many South Africans. This will devastate an economy that derives 60% of its capacity from consumer spending.
We hope that the government’s preoccupation going forward will be on unlocking the domestic investment and the domestic economy. Despite the myriad of incentives given to the domestic capital, there has not been any reciprocal response from the private sector.
The state must promote development by redistributing growth and upgrading and restructuring the economy. It was the general government services, which played a key role in pulling the economy out of the recession in 2009 and in sustaining at least some relatively positive economic results between 2010 and 2016.
It is sad that the government is strangling the economy with its ill-advised austerity strategy in the public service and is pushing for more privatisation of state assets.
The government-led infrastructure development programme should help in strengthening local industries by increasing the local content of the infrastructure development projects. Now more than ever, the government needs to intensify its investments and infrastructure drives in the economy.
Job creation income redistribution is the only way to spur and sustain economic growth and to ensure the redistribution of wealth in a meaningful way. The jobs bloodbath that is continuing in all the sectors of the economy and the rising cost of living are unsustainable.
Government should help small businesses and eradicate barriers to entry to deal with the high administered prices such as electricity, transport costs, and the non-availability of cheap finance.
The government also needs to become serious about tackling corruption as this is at the heart of the weakening and collapse of key SOEs, state organs, and the unavailability of badly needed funds for essential public services.
But the long-term solution to our economic woes is for the government to act decisively to address the neo-colonial structure of the economy. This means acting decisively to counter the private sector strategy of investing less and mechanising and financialising more.
The country needs to explore the viable alternatives of breaking free from this hostage situation and the blackmailing tactics of big business. These include a range of proposals to discipline and regulate capital.
The withdrawal strategy by the private sector as characterised by the ongoing capital flight or investment strike calls for the government to be decisive and bold. The government needs to tax businesses that are refusing to invest their profits in the productive investment, as well as introducing tighter capital controls to discourage continuing capital flight.
Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794