Cosatu proposals call for business overhaul

2010-09-04 07:43

Labour federation Cosatu has put together a policy proposal document calling for a radical revamp of how the country does business.

The proposed sweeping legislation changes include new taxes on the rich, regulating farming, forcing business to stock mostly locally made products, restricting foreign ownership of large corporates, banning the export of scrap metals and establishing a state bank.

Titled A Growth Path Towards Full Employment, the 134-page document proposes that 75% of the content carried by the wholesale and retail sector should be ­local. The policy document advocates an introduction of super-rich and solidarity taxes to cap the ­earnings growth of the top 10% of ­income earners.

It is not clear yet how the top 10% of earners would be determined and how the taxes would be administered.

Rudi Dicks, who heads Cosatu’s research arm Naledi, said Statistics SA figures showed the average income earned by the lowest decile was R4 214 a year, while the top tenth decile earned an average of R405 645 in the same period.

The R400 000 pay level is close to what deputy directors in ­government earn.

The document says the top 20 ­directors at the JSE earned an average of R6.6 million a year in 2008, which is 194 times more than an average worker earned.

It proposes that foreign ownership of multinational companies be limited to 51%.

“SA conglomerates have been very brutal in their exploitation of our people and we need to increase worker participation in decision-making at company level,” the ­document reads.

The policy document, leaked to City Press, is due for release on September 14, six days before the start of the ANC national general council policy conference.

The conference is used to ­conduct a mid-term review of the ANC’s performance.

Cosatu president S’dumo Dlamini said the proposals would feed into the ongoing discussions in the ANC about economic ­transformation.

Some of the proposals, such as the proposed tax on speculative ­financial transactions, do overlap with those in the ANC’s economic transformation discussion paper.

Mncane Mthunzi, chief executive of the Consumer Goods ­Council, an association of retailers, declined to comment this week.

In agriculture, Cosatu recommended setting up a regulatory body that would control the prices and exports of food and farm ­produce.

Lindie Stroebell, manager of economic intelligence and finance at the Agricultural Business Chamber, said appointing a regulator would kill competition.

“If the market is regulated, ­competition will fall away as there will be no incentives for farmers to ­invest in efficient technologies and provide consumers with better products and services,” said ­Stroebell.

She added that restricting the ­exports of agricultural produce could see many farmers ­driven out of business.

“We export grapes, apples, pears and ostrich meat, and restricting the movement of such products will see farmers losing billions of rands in foreign earnings.”

The Cosatu document also proposes that the exporting of scrap metals be banned and local companies be incentivised to recycle the material.

However, the document ­cautioned against criminal ­elements that have infiltrated the metal recycling industry.

“In poor communities, metal ­recycling has taken a destructive form,” states the document.

“Public infrastructure is stripped off metal for the recycling industry and measures to promote recycling must therefore take into account these potential perverse effects,” it further reads.

Lumkile Mondi, economist at the Industrial Development ­Corporation, questioned Cosatu’s motives.

“South Africa does not have a long-term economic strategy and what will the country gain from these Cosatu policy proposals?” Mondi asked.

He said Cosatu, an ally of the ANC, should rather push the ruling party to come up with a long-term economic strategy, and thereafter align labour’s policy proposals with the strategy.

“We need a long-term goal so that when the time comes to ban the exporting of scrap metals, for instance, investors don’t get shocked,” he said.

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