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Media Centre  |  COSATU Speeches

Speakers' Notes and Memorandum on Privatisation - 16 August 2001

Speakers' Notes and Memorandum on Privatisation

16 August 2001

Why does COSATU oppose privatisation? And why have we decided that we had to take action?

Privatisation lets business decide about basic services, like education, water and electricity supply. Instead of government deciding who should get services and at what level, business is expected to provide them - at a profit. But business won't profit f rom serving poor and working people, who can't afford to pay much. Meanwhile, the public sector is continually shrinking, even though for most of us it is the only way to get basic services. COSATU Memorandum to the Department of Public Enterprises

On behalf of COSATU and our two million fellow unionists, SANCO and as well as many of our people's formations, we here assembled demand that Government end privatisation of basic services and national infrastructure.

Privatisation has imposed great hardship on poor South Africans, both as members of the public and as workers.

Privatisation of government services has meant rising prices and worse provision for the poor and working people. It undermines the capacity of our government to overcome the legacy of apartheid, which left our communities with poor roads and a shortage of housing, piped water, electricity, refuse removal and sanitation. Our schools and hospitals were in poor condition and understaffed.

Privatisation reduces government's capacity to overcome these shortfalls. It aggravates the inequalities between rich and poor. It means the rich can pay for improved services, like education, health and transport, while the poor are left to face cut offs and soaring bills.

It is an illusion to think that private interests will bring better services to the poor. Our experiences already show that government regulators do not have the capacity to set up or implement regulatory frameworks that work to serve working and poor comm unities.

For workers, privatisation has spelled job losses, in a country where unemployment is already the main economic problem. Unemployment rose from 16 per cent to 25 per cent between 1995 and 1999, and has probably risen since then. And that is only using the narrow definition of unemployment. Using the extended vision that counts the discouraged workers this figure rises to 38 per cent.

Over a hundred thousand job losses can be traced to commercialisation and privatisation in the state-owned enterprises, the public service and local government. Where jobs have been outsourced, workers have been moved outside their bargaining unit and face d reduced pay, benefits and job security.

The majority of those who face retrenchment are lower skilled Africans from the rural areas - workers who will not easily find new jobs. For every worker who loses their job, a minimum of five and up to ten people lose their livelihood.

We did not fight for liberation so that we can sell every thing we won to the highest bidder! We remain in full support of the Freedom Charter, which declared that "the people shall share in the country's wealth." We support of the policy directives of t he RDP, which are not reflected in the Department of Public Enterprises policy framework, the recently published Department of Trade Industry paper on industrial policy and the Treasury's Budget Review, amongst others.

The government claims that it is not privatising but restructuring can no longer fool workers and the South African public. Government can only convince itself with this left rhetoric whilst it continuously acts right.

We demand:

  • Government must stop privatising basic services and national infrastructure at once. Basic services are water, sewage, rubbish disposal, electricity, welfare, and basic housing, health, transport, education, telecommunications and cultural services such as stadiums, parks and libraries; these services must remain in the hands of the people.
  • Any restructuring of the state must improve services for our communities and especially for the poor. It must keep and create quality jobs.
  • Restructuring must be negotiated with communities and labour, and be approved by parliament or local government councils.
  • A new policy framework based on the demands of the Freedom Charter and the RDP must be developed in consultation with the labour movement, SANCO and the rest of the civil society. The current framework should be scrapped.

The government must respond before the end of the month. A further march is being organised to receive the government's response either on the 29 or 30 of August 2001. We expect a positive response to our demands.

In practice, this means worse services and job cuts.

Government partially privatised our schools in 1994. Now, the rich pay high fees and get great schools in the suburbs. Meanwhile, working people's schools in the townships and rural areas don't have electricity or enough classrooms, resulting in high failu re rates.

In health, the rich can afford private care with the best services in the world - while the poor are trapped in an underfunded, understaffed system, with long queues and hospitals and clinics that are deteriorating.

Where cities have privatised water management, the cost goes up and the service gets worse. Durban is facing a 28% increase in water costs. Making people pay for water has led to cut offs and even exacerbated the cholera epidemic.

Because government says Eskom has to make profits and pay taxes, we have seen mass cut offs - with 60 000 households shut down in mid winter in Soweto alone. Now the National Electricity Regulator says it wants market prices for electricity, and households could end up with a 20% price hike.

In policing, the rich get their own security guards and fence in their suburbs. For the rest of us, there are not enough police and police vans to ensure safety and security.

Privatisation of the telephone system means even though Telkom is rolling out new phones, basic rentals and local call costs go up - and phones get cut off for poor people. The cost of local calls has risen by 40 per cent in the past three years, while the cost of international calls, which mostly rich people use, has dropped 35 per cent.

In transport, the rich have their own cars and can afford toll roads. But government trains and buses have been cut back, so our people have to rely on dangerous taxis, and stampedes in train stations cost more lives.

As services get worse for the poor, we have seen the loss of over a hundred thousand jobs by the public sector - local government, the parastatals and the public service. The shrinking of the public sector accounted for about a quarter of job losses in the 1990s.

Public-sector job losses have contributed to soaring unemployment. Between 1995 and 1999, unemployment rose from 15 to 25 per cent, using the narrow definition that counts only workers who are still actively looking for work. It has probably risen even hig her since then. If we include workers too discouraged to look for jobs, unemployment is now close to 40 per cent.

Most of the workers threatened with retrenchment by the public sector are relatively low skilled Africans in the rural areas, where they are unlikely to find new jobs. And for every worker who losses their job, five to six people lose their livelihood.

The downsizing of the public sector has been accompanied by efforts to roll back improvements in wages and conditions, especially for African workers. The current hardline government is taking in the public service is part of these attacks on the state sec tor.

These reasons have led us to say: Enough. We did not fight for liberation so that we could sell everything we won to the highest bidder. COSATU supports the restructuring state-owned enterprises and local government to improve their capacity to deliver ba sic services. We want a strong government to build our economy to provide jobs and improve our lives. But privatisation won't help achieve these ends.

So who wants privatisation?

The rich and big companies want privatisation because they make millions off government as consultants and managers, and then they get better services. They are the main force pushing for privatisation.

A second force for privatisation is in the bureaucracy. Too often, government officials seem to see privatisation as the main way to solve their problems. They ignore the impact on our communities and our jobs.

Government says it isn't privatising, only "restructuring state assets." That is because it conveniently narrows the definition of privatisation to mean only selling off its enterprises completely. But in fact, government is giving the private sector contr ol of state services on a broad scale.

Government is selling shares in our parastatals and letting private companies compete with state companies like Telkom and Eskom; handing over the management of state agencies to private interests; outsourcing services like catering and cleaning in hospita ls; and making state-owned enterprise work like private companies, just to make profits - commercialising them. These are all forms of privatisation, because they let the private sector take over government services.

Government says it can force private companies to serve the poor. But the facts speak for themselves: that approach has already failed in education, water, and electricity, and it can't work in other sectors either.

Government policies have departed from the tenets of the ANC itself. They insist on competition and reliance on markets as the way to reach development. In contrast, the Alliance has always insisted that a strong state is critical to achieving our economic and social aims. The Alliance agreed that privatisation should only be attempted where investigations show it won't undermine development. Yet virtually every government proposal for restructuring has been put forward without enough research into its impa ct on our communities or the economy.

Of course COSATU is disappointed that the ANC-led government has chosen to believe naively in the benefits of privatisation. We are disappointed, too, that the ANC has let government departments take policy positions that diverge from those of the Alliance .

But that does not mean that the Alliance is under threat. The Alliance is like a marriage: we can have disagreements without heading for divorce. Still, COSATU has long demanded that the Alliance work harder to develop a common programme on the transformat ion of the economy and the state, and to ensure that government policies reflect the strategies of the democratic movement. We hope that in the long run, this campaign will bring us closer to these aims.

In this campaign, COSATU demands:

  • Government must stop privatising basic services and national infrastructure at once. Basic services are water, sewage, rubbish disposal, electricity, welfare, and basic housing, health, transport, education, telecommunications and cultural services such as stadiums, parks and libraries; these services must remain in the hands of the people.
  • Any restructuring of the state must improve services for our communities and especially for the poor. It must keep and create quality jobs.
  • Restructuring must be negotiated with communities and labour, and be approved by parliament or local government councils.

So far, government has not seriously negotiated these demands with us. We hope that we will be able to make more progress in the coming weeks. If not, we will continue to take action to oppose privatisation.

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