ANC stops gravy train (again)
In a bid to revive SA’s ailing economy, the ruling party will be forced to take a business-friendly approach
The implementation of the ANC’s radical leftist policies is poised to take a back seat as the economic crunch forces the governing party to take a more businessfriendly approach in a bid to revive the ailing economy. The “pro-business” discussions during the ANC’s national executive committee (NEC) lekgotla last week are expected to set the tone for President Jacob Zuma’s state of the nation address (Sona) this week and the budget speech later this month.
Proposals include containing social spending, freezing vacant public posts, more freedom for businesses and the relaxing of labour laws, City Press has heard.
The ANC’s 2012 elective conference in Mangaung and last year’s national general council resolved that the government should push ahead with radical economic transformation – a move that is now set to be put on hold.
The lekgotla serves as an advisory body to government, which thereafter has the responsibility to find innovative mechanisms to implement the ANC’s policy proposals.
Insiders who attended the lekgotla said the meeting felt that it was better to put ideology aside and take a pragmatic approach to reviving the economy during these difficult times.
Another factor was government’s need to restore the confidence of big business as a result of Zuma’s miscalculated decision last year to fire Nhlanhla Nene as finance minister.
Ahead of the Sona, Western Cape Premier Helen Zille has thrown into the mix a proposal that the 7.5% salary increase reached with workers last year be revised down to the originally budgeted 5.5%, as public sector salaries are the main expense that has hit government’s coffers.
Opposed to the proposals at the ANC lekgotla were the party’s leftist alliance partners, labour federation Cosatu and the SA Communist Party, which warned that the ANC risked social instability if it placed the interests of the rich ahead of those of poor people in the country.
“There are too many policies that are being pursued by the state whose content is meant to hollow out and erode the hard-won rights of the workers,” said Cosatu this week.
Joel Netshitenzhe, a member of the NEC’s economic transformation subcommittee, said: “I do not think there is a stark choice between what some may characterise as radical policies and business-friendly policies.”
He said all policies that encouraged growth were good for business, and added that under the circumstances, government had to make a choice between increasing social grants in real terms by margins that were much higher than inflation, or using whatever spare resources there were to ensure an increase in investment in the economy and job creation.
“I would argue that the latter is more sustainable. It is not about cutting social expenditure as such, but a question of containing its growth in a manner that ensures the long-term sustainability of the fiscus,” said Netshitenzhe.
“There comes a time in the life of any economy where you would have to make decisions on what to prioritise against the background of the resources that are available.
“The question is what would be the most productive and most advantageous areas to allocate resources to,” he said.
He said that in terms of freezing vacant public posts, “a while back, during wage negotiations in the public sector, there was a question on whether to increase the packages of the employed public servants by such a magnitude that it would be difficult, if not impossible, to employ any new people”.
“The argument by the public servants was that we should increase the packages and, I think, to some extent, that was done. The consequence of that is that you will now have to freeze posts to pay those who are already employed,” he said.
Netshitenzhe also said “there might also be moments where an existing state-owned enterprise did not have sufficient resources to do what it wants, and is reaching the limits of its borrowing power”.
He added that questions needed to be asked about whether private equity injections would benefit state entities in terms of ensuring their sustainability and ability to implement programmes for the benefit of the country.
“So it is not so much about privitisation or nationalisation as such,” he added.
However, a senior alliance leader who attended the lekgotla said the decisions the ANC had made were “straitjacketed by the fear of investors”.
“The reality is it is just an offensive against the poor and the have-nots in this country. We are told that ratings agencies are worried about grades and we have to allow business to grow,” he said.
He said the question of the ballooning public sector wage bill was being presented in public as if the police, nurses and teachers were themselves responsible for it. But those people were at the bottom end of the salary scale, he said.
“The people who have more benefits and money are directors, directors-general and their deputies, the magistrates, judges, traditional leaders, politicians and members of the legislatures. Those are the people you have to target if you want to reduce the bill,” he said.
He said that freezing vacancies in the public service meant fewer teachers and nurses in a workforce that was supposed to serve the people.
“Those in the system will be overburdened. There will be volatility because those who are overworked will go on strike,” he said.
He said South Africa rated badly on employee relations because of high levels of worker exploitation.
“The hiring and firing in this country is ridiculous,” he said.
A number of ANC-run provinces, including Gauteng, the Eastern Cape, KwaZulu-Natal, North West and the Northern Cape, were looking at cutting so-called noncore service-delivery items – such as catering, venue hire and travel – which often invited wasteful expenditure.
Together with Mpumalanga and KwaZulu-Natal, the Northern Cape had already put a moratorium on filling vacant posts.
Nedbank economist Isaac Matshego said the economic crunch had highlighted the need for government to work more closely with the private sector, as evidenced in the meeting last week between Finance Minister Pravin Gordhan and CEOs from many of the country’s major companies.
There are too many policies that are being pursued by the state whose content is meant to hollow out and erode the hard-won rights of the workers