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23 October 2014 10:31 (South Africa)
South Africa

Zwelinzima Vavi's address to The Gathering 2.0

  • Zwelinzima Vavi
  • South Africa
C:\fakepath\vavi address to the gathering

South Africa: the good, the bad and the downright depressing, from Zwelinzima Vavi’s address at The Gathering. By ZWELINZIMA VAVI.

Thank you very much to the Daily Maverick for inviting me to this important gathering. The Daily Maverick provides one of the best platforms we have for serious debate on the big issues of the day. COSATU does not of course always agree with the views expressed by your contributors, but we will always defend your constitutional right to express those views.

It is unusual to be invited to make a “presentation of your choice” without any guidance as to what you would like to hear, but there is certainly no shortage of burning issues confronting us today.

The one topic which is absolutely certain to come up this morning is the ANC Conference in Mangaung, now just three weeks away. I hope however that we will focus on the debates on policy and not personalities.

The ANC can learn from COSATU. In the run-up to our September National Congress, the media was awash with unfounded predictions of fights and splits, and even blood on the floor. In the event the Workers’ Parliament emerged more united than ever, with a leadership returned unopposed, many excellent policy resolutions and two stirring declarations setting out how we are going to confront the challenges, which we face.

Let me briefly speak about the challenges of our moment. If you were to wake up any South African tonight and ask them what concerns them the most, I have no doubt they will rate unemployment the first, followed by poverty and inequalities.

They would also mention corruption that has become epidemic. They would also talk about a morality crisis, the leadership question, and divisions in the ANC, HIV and AIDS, the state of education and healthcare. They will however agree that most South Africans want these challenges addressed.

Yes, today is undoubtedly better than yesterday – there can be no question about that. Yes, we have made tremendous progress in many fronts.

There can be debate however that South Africa should not be where it is today. The undisputable truth is that the working class, whilst they celebrate the political medals hanging on their necks, the reality they recognised at the point of celebrating the first decade of democracy is that the economic jewellery still resides elsewhere.

In economic terms it is the capitalist class, in particular white monopoly capital, that has most reason to celebrate real gains from a struggle that was led by the black working class.

We should not be where we are today! Today unemployment, by the more realistic expanded figure, which includes discouraged work-seekers, has risen to the outrageous level of 36, 3%. Among Africans it is now above 40%, up from 38% in 1995.

There is a particularly severe crisis among the youth, who constitute 63% of the working population, yet make 72% of the unemployed. This makes it the worst in comparison to other middle-income countries. The difference between the others and us is that we have become used to this as normality.

The inevitable consequence of high unemployment is poverty. 22.5-million people live on or below R10 a day. Around 14.5-million South Africans suffer from hunger. In 2005, 17% of the South African population were recipients of social grants. In 2010 this figure increased to 28%.

This is both positive and negative - positive in that without these grants these mainly black South Africans would have starved to death, negative in that these social grants are on average R477 a month or R16 a day. To understand fully this R16, think about the price of bread and other based foodstuffs, electricity, water, education, transport, healthcare, etc.

Poverty is a severe human tragedy for those affected but a huge impediment to economic growth. To have so many people too poor to participate in the market as consumers spells disaster for the prospects of economic growth.

Inequality has now risen to a level that has made us the most unequal society in the world. 80% of South Africans receive just 25% of the national income. The workers’ share of national income declined from 55% in 2000 to 50% in 2011, a reverse redistribution from the poor to the rich. The Gini coefficient stood at 0.64 in 1995 and worsened to 0.68 in 2008. The top 10% of the rich accounted for 33 times the income earned by the bottom 10% in 2000.

COSATU has been saying for many years that this cocktail of socio-economic problems has created ticking time bombs, some of which are starting to explode, in the waves of spontaneous strikes among mine and farm workers, now spreading into other sectors, and continuing community protests.

How I wish every song, every poem, every discussion in every political party and civil society formation would be about this unfolding tragedy. How I wish that the ANC delegates to its 53rd national conference in Mangaung would be preoccupied with answering the central question of today – what is to be done and how can the ‘second phase of the transition’, as they have called it, become a reality?

If we fail to mobilise every member of our society to be preoccupied not just finding answer to these questions, then I am afraid the consequences will be dire – a downward slide into a derailed revolution, with rampant corruption and incompetence and even more people plunged into poverty and despair.

Last Saturday, I was one of those privileged to hear a man who has an answer - former president of Brazil, Comrade Lula da Silva. He inspired us not just with a vision for the future but evidence of practical steps taken by the government he led to resolve exactly the same challenges that South Africa faces today and concrete results that have been achieved in Brazil.

No one can say this is not relevant to South Africa. The two countries have remarkable similarities. They are both former colonies, rich in natural resources but underdeveloped, with massive problems of poverty and inequality.

When President Lula took office on 1 January 2003, Brazil faced exactly the same challenges we face – inequalities, poverty, marginalisation and exclusion, a succession of corruption scandals, social distance, low morality index, etc.

So after being re-elected in 2006, he engineered a radical shift to the left. He made the government’s top priority raising the incomes of the poor. Among many other progressive policies he implemented the following measures:

  • Introduced a new income and wage policy that ensured that the minimum wage increased by 67% between 2003 and 2010, faster than the rate of inflation, which meant real, not just monetary increases; 
  • In the process of this salaries increased from 58% of GDP in 2004 to 62% in 2009; 
  • He introduced Bolsa Família and recipients of which were women and attached a condition that they send kids to school, get vaccines and care. 
  • He lifted 28 million out of poverty; the number living in poverty fell by 34.3%, from 61.4 million in 2003 to 41.5 million in 2008; 
  • He lifted 40 million into middle class; 52% of Brazilians are now defined as middle class, a rise of 22% since 2004; 
  • He introduced a micro credit policy to help people start small enterprises and small farmers; 
  • He helped the poor get credit at very low interest rates, with only 30% of salaries to be used as collateral – in 8 years people with access to bank account increased to 150 million; 
  • He built 3 million new houses for the poor and provided them with free electricity. 

These achievements alone would be reason to rejoice. But the even more significant lesson for South Africa is that, contrary to the predictions of pro-business economists, who always warn that higher wages and benefits will lead to runaway inflation, slower growth, business bankruptcies and higher unemployment, in Brazil these policies had exactly the opposite effect:

  • Gross Domestic Product has reached $2.5-trillion, lifting Brazil above the UK to become the world’s sixth biggest economy and expects to be the fifth largest in 2015; 
  • Unemployment fell from 12.6% in 2002 to 4.7% in 2011! 
  • Formal employment rose from 36.1% in 2004 to 40.9% in 2009, with the creation of 17 million formal jobs 
  • Inflation, which was running at 6821.3 % in 1990, is currently 5.45%. 

These hard facts shatter the false arguments we hear every day from right-wing economists and business people – that higher wages and better working conditions will inevitably lead to economic collapse.

And President Lula spelled out precisely why: once you put money in hands of poor, they start buying goods, more of which need to be produced, so the giant wheel of the economy starts turning. When the poor earn, they spend and create jobs.

South Africa suffers from exactly the same problem as Brazil – what economists call under-consumption or the low level of effective demand for goods and services. In simple terms it means too many people have no money to spend.

In their short sighted obsession with short-term profits, South African businesses, and their economic commentators cannot see that their preferred option - low wages, no collective bargaining and weak trade unions - will make our economic crisis even worse. We need the opposite policies which President Lula has proved can work.

I appeal to the ANC delegates, government and business to stop listening to ‘rating agencies’, neoliberal economists and multi-national big business, all of whom try to justify the short-term interests of a small elite, but instead to do what the Brazilians did – listen to the people. The government organised no fewer than 74 consultative conferences on all the major issues, to hear the views of the people, and rally the whole population behind them.

We need to listen to the mine and farm workers, the resident of shack settlements, and all South Africans, instead of ramming unpopular decisions like e-tolling and the demolition of houses in Lenasia down their throats.

So we hope that the ANC conference, and then government, will follow the Lula road and lead us forward. The ANC must move away from being “Absolutely No Consequences” back to be the African National Congress – the real congress of the people.

I have no doubt in my mind that if delegates will just see this as a gathering to elect leaders based on the slates that are debated now, South Africa will continue to deteriorate, to be not only a laughing stock of the world but another basket case – another examples of a failed revolution.

One thing that was very clear from Comrade Lula’s speech, however, is that we do not just need changes in policy but a change in mindset. In South Africa we already have many excellent policies – on industrial policy, infrastructure development, a new growth path, local procurement, skills development, a green economy, etc – but are far too slow in implementing them.

Projects get bogged down in incompetence, maladministration and corruption. Brazil faced all those problems but was able to change the way in which government operated by insisting that every minister, public official and indeed every Brazilian, make the fight against poverty the number one priority. That is the challenge we face today.

Thank you very much and I wish you a highly successful gathering. DM

  • Zwelinzima Vavi
  • South Africa


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