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Shopsteward Volume 26 No. 2

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  |  COSATU Press Statements

Counter-memorandum to DA, COSATU House, Johannesburg

15 May 2012

The Congress of South African Trade unions recognises the constitutional right of the Democratic Alliance to march to COSATU House. We are confident however that COSATU members assembled outside their head quarters, and workers around the country, will resoundingly reject the arguments of these shop stewards of the employers and spokespersons for big business.

No workers will be deceived by its programme which is pro-big business and anti-workers, pro-rich and anti-poor. The workers’ struggles to build a new and better South Africa cannot be led by those who benefitted, and continue to profit from inequalities, poverty and our oppression, and want to continue pursuing policies to entrench these injustices.

If ever the DA were to come to power, they would introduce policies which will cut workers’ wages and strip workers’ rights. Let us never forget Helen Zille’s warning to the government that they will never emulate the levels of growth shown by countries like China unless they stand up to COSATU.

Of course COSATU is concerned about the intolerable levels of youth unemployment. COSATU, more than anyone, else has highlighted the unacceptable levels of youth unemployment in our country. COSATU has done everything to bring to the attention of the country this unfolding tragedy of our times. We have called strike after strike in protest, initiated jobs summit after job summit, called on workers to donate one day’s wages and collected over R120 million and in the process created over 40 000 jobs, and initiated all the policy initiatives including the RDP, IPAP and the NGP, etc.

We have over and over again pointed out that the triple challenge of unemployment, poverty and inequalities is a product of the structural fault-lines we inherited from apartheid. These structural problems cannot be addressed by the piecemeal interventions such as the proposed youth wage subsidy called for by the employers and now supported by the DA and a few in our government.

This is the structural deficiency we have pointed out.

Our education system is in a crisis and it sidelines 400 000 young people who do not proceed with the studies after writing exams every year. Today 95% of the people who are unemployed have no tertiary education. 60% of the unemployed have no secondary education. As a result of this crisis 68% of the unemployed have been unemployed for the past five years or have not worked in their lives. The youth wage subsidy will worsen this situation.

The UNDP report in 2010 says 44% of workers in South Africa live on less than R10 a day. Using the Treasury poverty line that says anyone who lives on a R325 a month is poor, it means 48% of our people live in poverty. The youth wage subsidy proposal will worsen this situation.

The bottom 50% of the South African population lives on 8% of national income and the top 50% lives on 92% of the national income. The top 5% earners take 30 times what the bottom earners take. The directors of the top 20 listed companies on Johannesburg earn 1728 times the average worker. In the USA the directors earn 319 times above the average wage of a worker.

Approximately 71% of African female headed households earn less than R800 a month and 59% have no income. 58% of African headed households earn less than R800 a month and 48% have no income. On average African man earns in the region of R2400 per month whilst on average white man earns around R19 000 a month. Most white women earn in the region of R9600 per whereas most African women R1200 per month on average.

The Stats SA says around 60% of workers earn R3000 and below, 34% of workers earn R1000 and less and 16% earn less than R500. South Africa has become the most unequal society in the world. But the DA will not march against this pathetic situation. It now acts on behalf of those who benefit from these inequalities and poverty. The youth wage subsidy will worsen this situation by getting young workers to earn below the already pathetic levels.

The means of production and power remains concentrated in white capitalist hands. Estimates of black ownership of JSE listed companies ranged between 1.6% and 4.6%. The JSE is still dominated by a few large firms. Almost all the top paid directors in JSE listed companies are white males. The structure of the economy remains mineral dependent and now finance led.

Basically our economy is still in white hands. As we have said, we have political medals but the jewellery resides elsewhere. The DA will not raise this because it is a shop steward of these owners of the economy. They are now saying we must adopt a youth subsidy policy so that those who own the economy who in reality remain white males so that through our taxes we can subsidise firms to employ what will be in the main African youths.

We keep saying that if we do not create jobs for this new generation we are heading for a national catastrophe. We are sitting on a ticking bomb, which is already starting to explode in violent service-delivery protests. That is why we are working with government and business on ways to create decent jobs for young South Africans and give them hope for the future.

But these must be real new jobs for the youth, doing work to rebuild our infrastructure and providing basic services for our poorest communities. That is why we welcome the government’s bold new infrastructure development plans which can create many new jobs in its roll-out and lay the foundations of a modern, manufacturing-based economy.

If these plans are speedily and efficiently implemented, and are not sabotaged by corrupt tenderpreneurs, they offer a real possibility of creating real jobs and giving our young people a future.

As our part in taking these plans forward COSATU has signed four accords with government and business, on basic education, skills development, the green economy and local procurement, all of which relate to job creation. We are striving vigorously to reach the targets set in these accords to create jobs and improve the lives of workers and the poor.

This is not an easy task but one which we cannot dodge. The DA by contrast has made no attempt to find real solutions to the problem but proposes a completely bogus ‘solution’ - the Youth Wage Subsidy - which will do nothing to solve the problem of youth unemployment.

It is based on the false premise that the cause of high unemployment is the high cost of labour and restrictive labour laws that make it too hard to fire workers.

They simplistically imagine that if the tax-payers give employers generous hand-outs, they will create thousands of new jobs for young workers while retaining all their current older workers!

The obvious reality is that employers will employ more young workers and line their pockets with the generous subsidy, while retrenching an equal or greater number of older workers and thus create no more jobs overall. Then, when these new young workers reach the age limit for the subsidy they can be thrown out and replaced by a new set of subsidised workers.

It is a completely bogus, knee-jerk ‘solution’, which pretends to be tacking the problem by waving a magic wand at it, but actually solves nothing.

Why is the DA an eternal class enemy of workers?

In their 2009 election manifesto the DA made it absolutely clear what the workers would have to suffer if ever they came to power, when it made these promises to its rich and big business constituency. They said they would:

  • Reduce corporate taxes - i.e. make the poor pay more, so the rich can pay less
  • Reduce the labour laws to make it easy for employers to hire and fire workers – i.e. take us back to apartheid super-exploitation
  • Introduce a six-months probation period in which employers can easily dismiss workers without any recourse
  • Turn the current Industrial Development Zones into Export Processing Zones where employers will be attracted to invest on the basis of not paying taxes and where workers will not enjoy any rights!

That amounts to a blueprint for reducing workers to poverty and slavery. In what is already the most unequal society in the world, they would transfer even more wealth from the pockets of the poor to the bank accounts of the super-rich. They would speed up the casualisation of employment at an even faster rate than is already happening. They would slash away at the laws that protect workers’ rights to fair treatment.

Its 2004 election manifesto called for a second-tier of workers whose wages would be set at a level equivalent to the state old-age pension. What is that but poverty pay?

Now they are marching in support of their proposed youth wage subsidy, which is yet another way of transferring more money from the tax-payers to the employers.

The Export Processing Zones (EPZs) are another example of the DA’s pro-business bias. They want to allow firms to obtain partial labour law exemptions by creating EPZs in which firms are granted exemptions from certain taxes and labour laws in order to produce cheap goods exclusively for export.

For example they suggest that the government should follow the Chinese growth path for the clothing industry, under which Chinese workers have been paid starvation wages and worked under sweatshop conditions. That is why we were also not surprised at Zille and the DA’s very vocal support for the starvation wage levels paid to clothing workers in Newcastle, by the Newcastle Chinese Chamber of Commerce (NCCC) employers.

Clothing sector member companies of the NCCC were paying machinists a weekly wage of between R180 and R280, while the legal starting minimum wage for a qualified machinist was already as low as R479.10 per week.

These are the sort of poverty wage levels that clothing and other workers could expect under a DA government.

The illusion that structural problems of unemployment can be remedied by waving a magic wand to deregulate the labour market is justified by neither historical facts nor current experience. Unemployment is not caused by the high cost of labour, nor trade unions, nor low labour productivity, nor inadequate skills of the workforce but the nature of our industrial structure.

The underlying reason is the economy’s over-dependence on the export of raw materials, and the failure to develop manufacturing industry. It is also a consequence of the low level of demand for goods and services, reflecting the lack of spending power by the majority of South Africans, as a result of high levels of unemployment and - low wages.

A new growth path for South Africa cannot be based on reducing demand even further by poverty wages, nor by an attack on workers’ rights, as is being advocated by Zille and the DA. Such a race to the bottom is not an option. A new growth path must be based on decent work. This is the mandate from Polokwane and this is what workers expect the ANC-led government to implement.

The basis for these differences are rooted in the fact that while COSATU represents the working class and the poor, the DA speaks for big business, the wealthy and the privileged. That is why we can see no benefit in discussing these matters with them.

A luta continua!

Patrick Craven (National Spokesperson)
Congress of South African Trade Unions
110 Jorissen Cnr Simmonds Street

P.O.Box 1019
South Africa

Tel: +27 11 339-4911 or 010 219-1339
Mobile: +27 82 821 7456
E-Mail: patrick@cosatu.org.za