Cosatu: Mboweni's plan for jobs will make things worse - even if it works

Finance minister Tito Mboweni at the Banking Summit. Photo: The Banking Association of SA.
Finance minister Tito Mboweni at the Banking Summit. Photo: The Banking Association of SA.

The Congress of South African Trade Unions has slammed Minister of Finance Tito Mboweni’s economic policy paper in a submission to National Treasury Director General Dondo Mogajane, saying the recently-released paper may worsen uncertainty and potential labour market conflict.

The document, entitled Economic Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa, was published on National Treasury's website in late August. Mboweni asked the public to submit comments by September 15.

Cosatu is in an alliance with the governing African National Congress and the labour federation was an outspoken supporter of President Cyril Ramaphosa during his campaign to become the party's president in 2017.

In its submission to Mogajane, the labour federation said it was extremely concerned with "several fundamental aspects" of National Treasury’s paper.

National Minimum Wage and Labour Market

Cosatu - which previously called for Mboweni to withdraw the paper, arguing that it was "incoherent" and unreliable - said the document's target of having a million jobs created in a decade was unclear and added that even if this were to take place, it would still amount to a decline from the number of jobs created in the previous ten years.

It would even result in less job creation than the country has seen in the last five years, Cosatu claimed. 

"Even if it's over five years, it will still be less than the 1.2 million [jobs created] over the past five years. It will still be far too little to reduce the unemployed population [...] We need to be creating on average of 100 000 jobs per month if we intend to reduce our dangerously out-of-control levels of unemployment," Cosatu's submission said. According to StatsSA, South Africa has 6.7 million unemployed people.

Minister Ebrahim Patel previously reported that 1.2 million jobs had been created between 2012 and 2015, but that 1.7 million new people had entered the job market

The federation said the paper’s proposed exemption for SMMEs from paying workers the National Minimum wage was also a contentious issue.

Eskom

Cosatu further opined that the only proposal from the paper regarding Eskom was that the beleaguered entity be privatised "through the back door by auctioning its coal assets", and that this was not viable.

"No logical evidence has been provided by the paper as to why anyone would pay R450bn for Eskom's coal assets. It directly undermines the president and the ruling party, the ANC's commitment not to privatise Eskom," the submission said.

Macro-economic and fiscal policy matters

Cosatu criticised the paper's "silence on the key policy crises that are undermining economic growth", saying it proposed no new macro-economic policies or interventions.

Large amounts being lost to corruption and wasteful expenditure each year, alongside a shortage in state revenue, Cosatu noted in its submission. "Our key SOEs are on the verge of collapse. Yet the paper does not address these fundamental impediments to stabilising the state and SOEs and growing the economy," the submission said.

Synergy with departments

Cosatu said it was unclear whether input was sought out by National Treasury from other government departments to better inform the paper.

"This makes it very difficult to engage with, as not only are some aspects factually contentious, but also that some Ministers and SOC leadership themselves have questioned its understandings and proposals publicly," the submission said.

Silence on crises

Cosatu argued that the paper was silent on the dire financial state of the Passenger Rail Agency of South Africa, customs fraud, alleged lack of enforcement of custom duties, and alleged corruption within the South African Revenue Service.

"This directly undermines the massive investments the state has put into the clothing industry, for example by exposing it to a flood of illegal, cheap, subsidised imports," the submission said. (President Cyril Ramaphosa has promised workers that government will do more to clamp down on the illegal importation of Chinese clothing and textiles which undercut locally manufactured goods, Fin24 earlier reported.)

Cosatu said it was willing to engage any social partner on ways to tackle the economic crises facing workers and the nation.

ANC national spokesperson Pule Mabe has praised the paper as focusing on a more stable macro-economic framework, saying it reflects a desire to lessen public sector debt and to boost business confidence. 

Mboweni, for his part, has said he welcomes criticism of the paper, adding that as of the end of last week, there had been "lots of noise" but little engagement in the way of public comment. In response to Cosatu's previous criticism of the plan, he said: "Some of them spoke before reading the document. So instead of dealing with the content of the document they were dealing with process, and that’s not helpful."

According to Mboweni, the paper aims to create jobs, improve ease of doing business, and stimulate economic growth by up to 3 percentage points, among other things.

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