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Media Centre  |  COSATU Speeches

Address by Mbhazima Shilowa, COSATU General Secretary at Investment Conference in Bonn, Germany

5 June 1997

Chairperson, comrade Nzo, delegates, comrades and friends. It is my pleasure to present to you the COSATU perspective on the restructuring of state assets and the labour market. At. least you will have the opportunity to raise questions and to engage in discussions. I always prefer to have an open and frank debate rather than have a false consensus.

The debate about the our country's macro-economic policies has largely been characterised more by what the private sector and governments elsewhere think we should be doing, and less by what the needs of our country are. This is also true of the debate on the restructuring of state assets and the labour market.

COSATU's approach is informed by the fact that the new South Africa has inherited the apartheid legacy of low economic growth, extreme inequalities in wealth and incomes by international standards, high levels of poverty and unemployment, unequal development between provinces, lack of infrastructure in most black areas, racially skewed land distribution, low levels of skills among black workers, a deformed public sector with low levels of investment particularly in the mid to late 80's, denial of rights to black workers, starvation wages which are paid to most workers as well as under performance by most of our industries.

This apartheid legacy will not disappear on its own but will require massive efforts by all south Africans if we are to succeed. Nor will the market left on its own correct them. In this regard we see the role of the state as being to ensure that we adopt policies that move us away from this path to a new one where the needs of South Africans are supreme.

Restructuring of state assets Let me briefly deal with the COSATU position on the restructuring of state assets. Our approach and outlook is informed by our overall commitment to the restructuring of the South African economy. This includes redefining the role of the civil service, police service and the army and better deployment of our resources. We need to shift spending patterns away from apartheid wastage expenditure to one aimed at meeting RDP goals and objectives- At the same time, we should ensure that there is meaningful delivery on areas such as Education, Health, Public transport, social welfare and basic infrastructure.

We believe that the role of parastatals and public utilities should be looked at so as to determine their new role in transformation and development of our country. This should be guided by the National Framework Agreement reached between Labour and government in 1996. This places emphasis on the objectives of restructuring,

principles underpinning the process, structures and approach, the need to create employment, training and retraining of workers, role of the state in the productive sector of the economy, provision of infrastructure, protection of consumers, etc.

Labour Market There exists a misconception, ruffled in the main by South African business and the commercial press as well as a lunatic fringe outside of the country, that one of the key problems facing the South African economy is the alleged inflexibility of the labour market. Or put differently, that wages are too high by international standards, in relation to the level of productivity of the economy. This claim flies in the face of recent studies by among others the ILO, which found that in many respects the labour market is too flexible, and that millions of workers remain vulnerable and unprotected.

The battle cry of those who want to demonise the trade union movement as a destructive economic force, and return us to the days of the apartheid cheap labour. system, is: "we need greater labour market flexibility". This coded attempt to turn the clock back, and remove basic rights and protection of workers (in the name of "flexibility') will precisely lead to the entrenchment of apartheid's economic rigidities which have acted as a fetter on the development of our country - the suppression of the creativity and potential of the majority of South Africans. This type of "flexibility" ( license to exploit), has led, not to dynamism, innovation, and the unleashing of our productive potential, but to stagnation, and destruction of our human and natural resources.

The in depth study by the ILO on the South African labour market referred above argues that, for the majority of South African workers, particularly the low paid black workers particularly women, the labour market is far too flexible. Rigidity in so far as wages is concerned tends to be concentrated at the upper echelons of the labour market, especial the managerial and professional strata, who use their access to scarce skills and historically accumulated privileges to entrench their positions in a way which has led to huge disparities in incomes which are virtually unparalleled in other parts of the world.

What also emerges, is that the concept of flexibility/rigidity needs to be closely scrutinised to ensure that it is not achieving the opposite of what is intended. For example, employers in South Africa often tend to confuse government intervention and regulation with rigidities, and deregulation with flexibility. The reality is that, effective targeted intervention is needed in South Africa to overcome many of the inherited rigidities which retard the economic development and introduce dynamism where there is now stagnation. Failure to do this will lead to an economy being trapped within the same structural constraints.

An example of this is the need for effective intervention to drive the development of a dynamic education and mining - aimed at ensuring development of our human resources, mobility in our labour market, portability of skills and breaking down rigid apartheid hierarchies which underpin income inequality.

The government is trying to do this through the introduction of a new qualifications framework, the introduction of a training levy, and other mechanisms. Yet many employers abuse concepts such as 'flexibility' and the need to keep the cost of labour down, to avoid investing greater resources in programmes which are essential for introducing dynamism into our economy, and breaking down all barriers.

The same ILO study also shows that our collective bargaining is dynamic and allows for a degree of flexibility which accommodates a variety of economic conditions, while at the same time ensuring a viable framework for regulation of basic conditions. This study decisively discredits the allegation that the system of bargaining councils and centralised bargaining constitutes an impediment to employment and economic growth.

What I am arguing therefore is that whatever its good intentions may have been, labour marker flexibility has become discredited among workers. We see it as a euphemism for very little or no regulations at all, make it easy for employers to hire and fire, pay whatever level of wages, make no investment in people, deny workers a say in decision making and have no protection for workers. This we reject. In fact as I have said before, it is offering us nothing new but a return to apartheid where employers could hire and fire without any hearings, pay starvation wages, denial of rights to workers, no investment in people.

During those days there was very little difference between a machine and a black worker, I would go further to argue that in this instance a machine was better off because it still received service. We can only go this route if we want a return to industrial strife.

The alternative is to recognise that change means more than the right to vote every couple of years. That we have a new constitution that provides for worker rights. In this way proponents of labour market flexibility will react differently to our proposals of paid maternity, a ban on child labour, reduction in working hours, etc.

Let me conclude by saying that we are concerned about job creation. We however do not believe that unemployment in South Africa is caused by the labour market but by a host of issues associated with apartheid.

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