SA way off path of economic change

COSATU believes that developmental policies adopted by the government for more than a decade have been a disaster and South Africa needs to learn from its Brics partners how to build a more interventionist state.

In a no-holds-barred secretariat report to be delivered to the federation’s national congress starting tomorrow, Cosatu says the country is far from the path of radical economic transformation it is meant to be on.

“The most glaring effect of the policy choices made in the last 21 years is that in almost all the key aspects of development, the policies of the past 16 years have failed to deliver tangible material progress for the working class,” the document reads.

“The working class has been severely marginalised from effectively participating and staking its claim in the economy in a number of ways: through the scourge of unemployment, an extremely flexible labour market in the form of casualisation, outsourcing and the use of labour brokers, the commodification of basic needs and the suppression of wages below productivity gains.”

The federation explores a number of reasons for South Africa’s inability to reduce the country’s soaring unemployment and inequality. It believes one way the country can turn the tide is to follow the “unconventional” policies of the Brics partners to support development.

While SA’s growth estimates have slumped to 1.5 percent for the year and unemployment stands at above 25 percent, Brazil, Russia, India and China are forecasting higher growth and maintaining single-digit unemployment rates.

Cosatu says while it has concerns about what class interests Brics members represent, the group does represent a bloc poised to take on the established powers.

Some unionists are concerned that Brics does not represent an anti-imperialist bloc, but rather an anti-US hegemony bloc.

However, a key feature of the group is that it refuses to be used by global powers to bear the brunt of global adjustments.

While there has been an outcry in SA from different quarters over the state intervening in the economy, some of these countries have established state-owned operations to help drive socio-economic growth.

“They have set stateowned central banks that operate at the same level as commercial banks and they use trade and industrial policy instruments that would ordinarily be rejected out of hand here in South Africa.

“Although, like any other country, they claim to be concerned about inflation, this is not their overriding concern,” the document reads.

“There central banks subordinate inflation concerns to employment, industrial development and economic growth. In short, when it comes to policy tools, these countries embody almost everything that South Africa rejects.”

Unorthodox policies include Brazil imposing taxes on speculative capital inflows to raise revenue to finance long-term development, and India protecting jobs by ensuring sufficient supply of credit to its productive sectors through its stateowned banking system.

The congress delegates will discuss a number of recommendations to pursue a South-South agenda.

While the secretariat report does recognise that this agenda is critical, there is concern that in its current form, it is exclusively determined by states, and not the majority of citizens and their organisations.

If this does not change, it warns Brics will be no different from other multilateral institutions.