The challenges ahead in 2002

  As 2002 begins we need to reflect on the key challenges we confronted in 2001, so we can redouble our efforts in the struggle for a better life for all.

Last year was an intense one for COSATU as we implemented resolutions of the 7^th National Congress on many fronts. COSATU thanks its members, supporters and allies for their invaluable support during a busy year.

COSATU enters 2002 proud of our history and confident of the role we have played in the defeat of apartheid. COSATU continues to be a highly active organ of people’s power in post apartheid society, with a growing membership we hope will soon reach two million.

Contrary to myths about its lack of leadership COSATU has produced many leaders at local, regional, national and affiliate level who have seen the organisation through many difficult challenges. COSATU is one of the strongest components of civil society, playing a critical role in championing the interests of its members and the broader working class.

The political context

Ushering in democracy in 1994 was a qualitative leap in the struggle against apartheid. The changes spearheaded by the ANC-led democratic government have firmly placed South Africa on a sound democratic footing. South Africa’s democracy flourishes and deepens with every transformative intervention made by the government and the ANC. 

The key achievements of our young democracy include: a progressive constitution, the ending of racial discrimination in state policy, progressive labour laws and the provision of basic services such as water to communities that previously lacked them.

The democratic movement has been given an overwhelming mandate to unravel the legacy of apartheid and construct a non-racial, non-sexist and democratic society. 

Yet there are forces who seek to maintain white privileges, and capital which waged a relentless campaign to resist radical transformation, opposing progressive policies in areas such as health policy and labour policy and trying to force government to adopt conservative economic policies.

The COSATU Central Committee reaffirmed the centrality of the Tripartite Alliance between the ANC, COSATU and the SACP as the principal driver of transformation. It committed COSATU to work tirelessly to resolve the disagreements within the alliance and called for a summit meeting at the beginning of 2002. 

At the beginning of 2001 there were fresh attempts to get the alliance to work but unfortunately, towards the end the year disagreements - around economic policy, the role of the alliance and its relationship to governance and HIV/AIDS - remained unresolved.

This is not going to be an overnight process but we must repair our damaged relationships because deepening divisions in our ranks can only comfort those opposing transformation. It is important to keep vigorously debating the issues of vital concern to our common constituency and strive to reach agreement. Building a vibrant and working alliance is a key priority for 2002.

Transformation in South Africa takes places in a hostile international environment dominated by capitalist globalisation. Capital’s has a monopoly of power with which to impose its agenda on democratically elected governments, particularly in weak developing societies. A powerful coalition of industrialised countries, international financial institutions and trans-national corporations work together to impose a neo-liberal agenda on many states.

On the surface, capitalism seems unassailable and its dominance complete but the reality is far more complex, indicating an unstable economic system. The world economy is in a recession and globalisation has brought benefits only to a few. 

The gap between the rich and the poor within and between nations is widening. Social mobilisation against the effects of globalisation has grown. Every major gathering of government and business attracts social protest. 

The neo-liberal consensus is gradually giving way to state intervention to prop up the economies in countries such as Japan and even the US. This global economic crisis mean that the balance of power is beginning to open up space to search for alternatives to the one-size-fits-all neo-liberal dogma of tight fiscal and monetary policies, liberalised trade and privatisation of state assets.

Against this background, the international labour movement marked 9 November as the first-ever Global Day of Action and Solidarity. Hopefully this historic action has laid the foundation for an active global workers movement.

The socio-economic context

Millions of South Africans live in desperate poverty, despairing of finding a job and living in communities wracked by crime, violence, alcohol and drug abuse and addictive gambling. On top of all these is the terrifying rise in HIV/AIDS which is devastating the population.

South Africa’s economy is to all intents and purposes stagnant. Formal employment has fallen rapidly since 1990. The growth in the labour force, as the population grows, has led to a dramatic rise in unemployment. Between 1995 and 2000, it rose from 16% to over 25%, using the narrow definition that does not include people too discouraged to keep looking for work.

Job losses have been accompanied, particularly after 1997, by the growth of informal and atypical forms of work which do not generate adequate income and are merely survivalist.

Economic growth slowed markedly after 1997. In the past year, some recovery emerged, although less than the government initially hoped for. Per person, the economy has shrunk slightly since 1994, with the gains in 1994-96 and 2000 wiped out by the downturn in 1997-99. In 2000 investment relative to GDP fell to the lowest level since 1993.

Investment has declined sharply in the past two years, although some signs of a recovery emerged in the first half of 2001. At the same time, foreign investment in South Africa dropped sharply, as reflected in the 20% decline in the rand against the dollar throughout 2001.

Of growing concern is the continued high level of foreign investment overseas by South African companies and individuals. Between 1994 and 2000, some R54 billion left the country in direct investment, while only R45 billion came in. The Anglo American/De Beers transaction alone saw investment repatriation worth more than the total investment into South Africa over this period, though the inflow was offset by portfolio outflows.

This lack of productive investment in our economy, disinvestment by SA conglomerates and continued reliance on short-term speculative capital are the fundamental reasons for the rand’s instability. The lack of controls to regulate the activities of speculative capital and the relaxation of exchange controls has made South Africa a prime target for those wanting to make a quick buck by destabilising our currency.

The available evidence suggests very little improvement in income distribution since 1994. The substantial and welcome improvement in government services to the poor has been offset by the massive loss in formal jobs and rising unemployment. These severe inequalities form a critical blockage to economic growth. Half the population lives in poverty without adequate basic services.

The latest survey, showing that wage inequalities in South Africa are the highest in the world, confirms what COSATU has been saying for years.

Under these circumstances gambling and the lotto are the only hope for many of the poor. Surveys have shown that poor people often use their last rand to play the lotto or some form of gambling. But they represent a false hope to the poor and are the worst forms of regressive taxation.

They entrench a corrupt national culture, which does not address the causes of poverty, but if anything make things worse.

COSATU has therefore called for a new deal for the economy to address the fundamental problem of unemployment, poverty and inequality. To accelerate growth and development, the state must intervene more decisively to restructure the economy. The private sector should play a key role in the rejuvenation of South Africa’s economy but under the leadership of the state.

Appropriate macroeconomic policies to unlock resources for investment in the economy and human development should replace the stringent GEAR strategy, combined with a clear industrial strategy and social protection measures to provide a safety net for the poor. 

This is why COSATU has called for a People’s Summit on the Economy to lay the ground for an Economic CODESA between the owners of the economy and those who produce the wealth of our country. The government’s commitment to a Growth Summit is a welcome move, which could be the launching pad for the economic CODESA.