Address by Mbhazima Shilowa, General Secretary at the COSATU Policy Conference

"Employment Creation "

In April 1994, South Africans of all walks of life went to the first ever democratic elections to bring about a new political dispensation. In these elections, the ANC won an overwhelming victory securing a majority of 62 per cent. Despite the propaganda of the National Party, their caricature of the RDP as a wish list, the violence that was unleashed by them and their surrogates, the overwhelming majority of the working class gave their mandate to the ANC. As COSATU we convened workers forums, released our leadership and shopstewards for the election campaign - thereby contributing resources for a successful outcome in the elections.

In Mpumalanga, Northern Province and the Eastern Cape, which are mainly rural and characterised by high levels of unemployment, extreme poverty and a lack of basic infrastructure, the ANC received more than 80 percent of the vote. In these areas the majority are women and the youth. Most of them are unemployed. They rely on remittances or pensions for survival. Those who are employed, happened to be in low paid jobs. These are the people who gave the ANC the mandate to govern.

This was due in part to the ANC`s history and track record of struggle against apartheid oppression and exploitation and also because of its programme for the reconstruction of society. This programme was drafted by the Alliance and supported by all progressive forces in our country. This is the RDP. In it we put forward programmes to rebuild the economy, restructure industries and enterprises, develop the human potential of our people, provide infrastructure - particularly in rural areas - and to create sustainable and better paying jobs. For blacks in general and the working class in particular, it was also a vote for a new beginning which promised to transform apartheid policies at all levels - economically and politically. They wanted to put in place a government that would locate the needs of the working class at the centre of those of society.

One of the themes that appealed to our people during the election campaign was: jobs, jobs, jobs. We chose it not because it sounded nice. We chose it because we realised that among the many legacies of apartheid faced by our people was poverty, unemployment, low wages, lack of skills and lack of basic infrastructure. We realised that since 1981 there had been virtually no increase in formal sector employment. The Nats and big business had deliberately scaled down investment in job creating areas both in the private sector and parastatals. Hundreds of thousands of workers had been retrenched or were facing retrenchment particularly in the manufacturing, agricultural, public utilities, construction and mining..

It is therefore disappointing that three years after the election of a democratic government, we have yet to see a sustainable programme for employment creation by both the government and the private sector. In fact, as is argued in the Social Equity document, we remain in the main a society characterised by vast inequalities in wealth, economic power and incomes. If democracy is to mean anything more than the right to vote every couple of years, we have to face up to the challenges of addressing the glaring inequities in our country.

Early last year, a right-wing business organisation known as the South African Foundation, released a document titled Growth for All. The proposals contained in this document has many disturbing and dangerous features for the working class and the country as a whole. It repeats business` old prescriptions about privatisation, low wages, lifting of exchange controls, the acceleration of trade liberalisation and restrictive fiscal and monetary policies. They went as far as to call for a dual labour market system. They suggested a category of first class citizens who would enjoy all labour rights as outlined in labour legislation. Alongside them will be another category of second class citizens who would not have protection of the law. This group would be open to massive exploitation in the labour market and elsewhere. A return indeed to apartheid labour market fragmentation! In this document, no mention was made of job creation! Yet these hypocrites have appointed themselves spokespersons for the unemployed.

The ANC`s initial response was dismissive of this document. Comrade Tito Mboweni - speaking in his capacity as the Convenor of the ANC`s transformation task team - went as far as to give it a new title - Growth for some! Even the Business South Africa tried to distance themselves from this document. Leslie Boyd claimed at a NEDLAC summit that it was not a document for negotiations in NEDLAC but proposals to the government. As will be outlined later, business has every reason to smile with the adoption of GEAR as it contains most of the issues raised in their document - signaling acceptance of their document by government.

In a scathing an interview in Millennium magazine after the release of this document, Comrade Thabo Mbeki said: "There isn`t sufficient commitment on the part of business to do something. They wait for an initiative from government or labour and the standard response is to say; Well it can`t work, really". He went further and said: "There are some partners who treat the national partnership as though it were entirely a vehicle for their own promotion without regard to reconciliation. These are our captains of industry."

On 30 April last year Organised Labour comprising COSATU, NACTU and FEDSAL released a document titled Social Equity and Job Creation. In this document we outlined six pillars to promote social equity. These are:

  • a programme for job creation
  • redistributive fiscal policies
  • proposals to break up economic concentration
  • measures to promote worker rights
  • a plan to build industrial democracy
  • steps to promote equity and economic development globally

In the same document we further elaborated eleven measures to create jobs. These are:

  • public works and mass housing programmes
  • modernising our industrial base
  • "job sharing" arrangements
  • pragmatic trade and tariff policies
  • expanding domestic demand and local purchasing policies
  • training and retraining the workforce
  • productivity increases in the economy
  • creating jobs in labour intensive processes
  • stopping retrenchments in the economy
  • a programme of land reforms the stimulation of economic activity

We put these proposals not to score points against anyone or for the sake of public debates. We put them because we are convinced that this programme can succeed in creating sustainable and better paying jobs, improve the economic position of women and youth, improve the industrial base, train more workers and help build infrastructure, particularly in the rural areas. As COSATU we are concerned about the plight of the majority of South Africans particularly the poor, the underpaid, the unemployed, those who are homeless as well as those whose basic needs and requirements are not satisfied by the economy. Unlike business who have not committed themselves to do anything for the needy, except to ask for a "climate conducive to investment", we put proposals which are aimed at our members as well the broader society. However unlike business we do not subscribe to a notion that the poor alone must bear the cost of reconstruction.

I must place on record that in so far as the Labour document is concerned, to date there has been no official response by the ANC or the government. I am talking about public positions rather than gossip. My view is that those who gossip are cowards. Those with ideas to build society will put them to the public and be willing to defend them.

Based on the above as well as the ANC`s rejection of the Growth for all strategy, it was suprising to say the least to see the government produce a similar document but differently packaged under a new name - Growth, Employment and Redistribution (GEAR ). In presenting it to parliament, comrade Trevor Manual said that:

"The major challenge facing our country is the creation of jobs. I stand here today to place before you a programme of economic reforms which will make a significant difference to the ability of this economy to address this fundamental challenge."

Less than a year after these famous words, by the honorable minister, there is no evidence to back them. What we see is the continuation of jobless growth. In fact the government is becoming "pessimistic about the success of GEAR in creating jobs". In an editorial in Business Day recently it was said that "Government was unlikely to meet the employment growth targets set out in its macro-economic strategy". An official in the Finance Department was also quoted as saying that the "government was on track to meet all its other commitments in terms of GEAR, but was "less confident" about job creation targets".

This is exactly what COSATU warned in its response to GEAR. We said that GEAR would be judged by its impact on the working class and the poor, job creation and job retention, impact wage levels, workers` rights, provision of infrastructure, role of the state in the productive sector of the economy and labour market policy. Furthermore we pointed out that conservative models proposed by this strategy would not bring about the envisaged 400,000 new jobs, nor would it deliver the social needs of our people. After all there is a difference between generating figures by computer and employment creation. We predicted that it was more likely to increase the gap between the poor and the rich, and condemn the homeless and jobless to continued extreme levels of poverty. Were it not for the impact on the working class we would now be saying that: We told you so!

As conference we need to consider proposals which will ensure implementation of our policies as outlined in the RDP and elaborated in the Social Equity document. The challenge that we face as a country is to ensure that government policies are based on RDP objectives. Our primary focus must be on job creation. We are also challenged with linking job creation to redistributive fiscal policies, breaking up economic concentration in the hand of a few, promoting worker rights, building industrial democracy and promoting global equity and economic development.

We said then - and I repeat - that while we are all concerned about unemployment the answer is not to ask domestic workers to accept less than R160 a month in order to create jobs, or to ask the poor to share their wages. The best way to create jobs is to engage in massive public works programmes for roads, houses, infrastructure etc. What we should emphasize at this point, is a clear and defined role for the state. The state must take responsibility for creating jobs, for building houses, roads, dams and generally developing infrastructure, particularly in rural poor areas. The last budget was a missed opportunity to act as a tool of the government to implement policies which will ensure the redistribution of resources. The government has a direct role to ensure that there is investment in the productive sector rather than arbitrary speculations on the JSE!

At the same time, the labour movement must take responsibility for areas where we have not done enough on this front. While most of the proposals on employment creation in the Social Equity document require government and business co-operation, the one on job sharing is within our control. There is no credible reason why we have made no movement around our demand for a ban on overtime. I know that the reason why you work overtime is because of poor wages, high unemployment and the need to support a number of people, at the same time we should focus on the fact that overtime work takes away potential jobs, and we must therefore be prepared to sacrifice around this issue for the long term gains. We have also not followed through on our proposal for a payroll levy with a visible campaign to achieve it.

Critical policy areas

An employment strategy requires an unambiguous commitment to employment creation within priority areas.

The first of these areas is that of economic structure which requires shifts in both, • the sectoral composition of output, to favour more labour-intensive activities, and • the scale of production, toward smaller and more labour-intensive enterprise. The government needs to develop programmes which are based on maximising employment. Some of the most effective programmes already in place involve interactions with the private-sector in developing specific projects, as with the Spatial Development Initiatives and the cluster studies. As a labour movement we need to develop policies to respond to these areas particularly in so far as they require the input of our Regional structures.

The most labour-intensive sectors with reasonable prospects for growth are:

  • Agriculture and related industries, especially food production.
  • The service sector
  • Household and economic infrastructure
  • Housing

Overall, the central government appears to be concentrating its resources almost exclusively on enhancing competitiveness. Unless carefully managed, this strategy may rebound to the detriment of employment creation.

Employment in the public sector should be assessed in terms of its overall impact on the labour force. In many Black areas, services remain poor, especially in fields related to human resource development such as education and health. Here, the search for a smaller, more qualified public service may be inappropriate. as outlined by SAMWU yesterday, the personnel needs of the public service should be assessed in terms of the commitment to providing basic services to all communities.

The current strategy of decreasing personnel in order to cut costs runs contrary to approach we would expect. While it is true that personnel makes up the largest share of spending in key service departments this is because of their labour-intensive nature. Cost-cutting should start with other recurrent costs and with activities that do not provide core services, rather than targeting personnel first.

Monetary and fiscal strategies

a) Fiscal policy

Current fiscal policies foresee a cut in government spending. Continued cuts in funding for economic services will reduce government`s power to bring about structural change. Ways must be found to accelerate the redirection of resources to support employment creation, including the restructuring of incentive programmes and improved delivery of services to working class communities.

b) Monetary policy

The current extremely high rate of real interest clearly forms a brake on economic growth and employment generation. To remove the pressure on monetary policy, the employment strategy should:

  • address the structural factors underlying inflation - notably food production and distribution, and other factors affecting the prices of necessities;
  • accelerate the redirection of economic programmes, so that sectors which seem likely to create substantial employment, such as tourism or food production, can access lower-cost funds and other supply-side supports; and
  • define a more pro-active approach to the private financial sector to generate preferential packages for employment-generating projects.

Policies that affect the cost of living.

a) Densification

The costs of providing housing nearer to business areas may seem large in the short run, in terms of both money and difficulties of delivery. But they should be weighed against the cost to employment of longer commuting distances and the related labour costs.

  • All housing and infrastructure projects, including the development of new industrial and retail sites, should include estimates of commuting costs.
  • Homesteading should be allowed in abandoned buildings in city centres.
  • High-density housing schemes should be encouraged.

b) Restraining prices on wage goods

A strategy of enhancing the production of basic goods, while reducing additional costs from distribution and taxes, could go a long way toward limiting upward pressure on wages.

  • Policies on agricultural production and marketing should aim to minimise prices on essential foods.
  • Tariffs should be minimised on wage goods such as clothing and food.
  • Government should assess retail mark-ups on wage goods and introduce measures to enhance competition, if necessary.
  • Current efforts to reform social security should minimise non-wage costs of employment and reduce the burden on wage earners.

c) Human resource development

The Department of Labour has published a skills-development strategy that aims to enhance access to and assessment of capabilities. Improvements in labour-market information forms a critical component. The strategy aims to combine levies on industry with government incentives to encourage training for informal workers and the unemployed. The level of government funding will obviously affect the success of the strategy. As a labour movement we should broadly support this initiative, but also fight to change the envisaged level of the levy.

d) Reform of labour-market regulation to enhance efficiency

We have already on the first day discussed our approach to the reform and regulation of the Labour market. We should look at how we can use the LRA to improve negotiations, vastly increasing the peaceful settlement of disputes and reducing the time involved.

We should help to define clear procedures and criteria for extending sectoral agreements and setting wage determinations in ways that minimise possible disemployment effects, without undermining collective bargaining as well as our struggle for a living wage..

Likewise with the need for the reform of social insurance systems to minimise non-wage costs, especially for medical insurance and pensions, and enhance the mobility of labour.

e) Potential for synergy

An effective employment strategy should cover the following areas:

  • the provision of household infrastructure, which should reduce the cost of living and improve social capital while providing important inputs for micro enterprise, especially home-based production and services;
  • restructuring agriculture, which should both cut food costs and improve employment directly; and
  • the reform and extension of social security.

Strategic choices

The proposed employment strategy raised above does not pretend to provide a quick fix to our employment problems. Instead, it seeks to co-ordinate efforts around job creation. For any employment strategy to succeed, it must make some overarching policy choices. Central decisions include:

  • the priority attached to employment creation;
  • the levels of income and security that government programmes should support; and
  • the extent to which government can or should affect ownership and economic power in order to enhance employment and income distribution.

An employment strategy must define levels of funding for key programmes. That, in turn, involves agreement on the main direction of the employment strategy and its importance relative to other government aims. If necessary, government must redirect resources from past beneficiaries even in the face of considerable resistance.

Job Summit

Let me conclude by dealing with the approach to the often mooted Job Summit. We have noted calls by both the Labour Market Commission and GEAR for a Presidential Job Summit. Recent reports speculate that it will take place sometimes in September. I hope they are not referring to the COSATU Congress. We must make it clear that we have no problem with a forum which will look at the problems around unemployment and job creation.

What drives Business and government approach to the Job Summit is to get us to help with the implementation of GEAR. This we reject. Rushing into a summit with the parties holding positions which are diametrically opposed to one another is a sure formula for deadlock. This we should avoid.

What is needed is for the Alliance to hold a series of meetings leading to an Alliance Policy Conference on employment creation. This should then be our respective mandate to the NEDLAC discussions. By the time a Job Summit under the auspices of NEDLAC is convened, we will have forged consensus on most of the issues underpinning a strategy for employment creation.

I also wish to propose that in the event the government ignores our approach to the summit, we should go to the summit to put forward our approach. The government will then have to take the blame for a deadlock that will ensue.