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Having our cake and eating it

Defend Truth

Opinionista

Having our cake and eating it

By Ian Ollis
25 Mar 2011 0

Ian Ollis is currently a candidate for the Masters of City Planning (Transportation) programme at MIT in Boston. He formerly served as a South African MP, (Shadow Transport, Labour and Education Minister). He has also worked as a city councillor in Johannesburg, briefly lectured at Wits University and ran a real estate company. He has no dogs!

Marie Antoinette’s notorious remark when told the French masses were revolting because they had no bread to eat, was to say, “Then let them eat cake”. Not only was it the zenith of arrogance, but demonstrated the most reprehensible detachment from the realities of her people’s suffering. The idiom of having your cake and eating it (meaning to enjoy consuming something and yet to preserve it, like a never-emptying bottle of single-malt Scotch) is only a slightly different perspective on the same idiocy.

A therapist once told me that one of my personal weaknesses is that I love to have my cake and eat it – I want it all! If someone offers me pistachio ice cream or banana, I usually want both. I mean, why choose? Mercedes or BMW? Send me one of each. Throw in an Audi, too. There is unfortunately that little problem: How do I afford both, or sometimes either? And therein lies the rub, of course. Affordability.

South Africa faces a similar problem. In simple terms, it is the case of Cosatu and other unions wanting better working conditions for their workers, and government needing to provide more jobs. Unfortunately government has to choose, because resources are limited. Sounds like a simple choice, doesn’t it? Well.

Of course government in general and the president and minister of finance in particular, have a prickly problem in dealing with this choice. It is not only government’s resources that are limited, but also private resources, particularly in business are limited. And because these resources are finite, choices have to be made. The simplistic model is: Do we apply more resources to create more jobs or do we apply more resources to improve the working conditions, job security and remuneration of existing, lower paid workers. The collective opposition generally is pushing for more jobs first. Cosatu is pushing for better quality jobs and applies a slightly misrepresented phrase “decent work”, borrowed from the International Labour Organisation  to champion their cause. Of course, I say misrepresented because there is a difference between what the ILO understands as “decent work” and what Cosatu champions as “decent work”. The ILO has an emphasis on safety and security in the work place, and ancillary services such as unemployment insurance. Cosatu wants higher wages, job security and benefits, benefits, benefits. The ruling party is afraid of making this choice and resorts to explaining their philosophy with the almost meaningless (economically speaking) catchphrase “decent work for all”. Which side-steps the issue completely.

As we develop our new democracy, as citizens, we are trying to decide what government’s role is in the workplace and society generally and, therefore, in this jobs paradigm. How much intervention in the market by government is tolerable for us as a country and an electorate? Do we want government to force companies to provide “better quality” jobs and what does that mean? Do we want government to directly create jobs and how exactly can they do that? These are complex and far reaching decisions involving one’s theory of economics, a subject which I will not venture into in this short piece.

At the very least, we do need to evaluate government’s performance in developing a policy and implementing that policy as well as evaluating the results and whether we are satisfied with our government’s performance in this regard.

Unfortunately, our government appears to have become stuck. The president and finance minister, in simple terms, are being asked to choose between the unionised and the unemployed. And therein lies the current crisis and stalemate in the ruling alliance. They would prefer to do both. Government wants better working conditions for the workers in the unions that support the ruling party at the poles, and more jobs for the unemployed workers, who mostly vote ANC too. It’s not an artificial conundrum either. Labour policy and economic policy have to align to unlock the economy. In the Mandela era, for largely similar reasons, the economic policy (at the time Washington consensus) and labour policy (protecting workers with complex and stifling labour laws) went in very different directions leading to a mixed and sluggish economy.

The recent spat in this regard in the media between the new labour minister, the general secretary of the ANC and Cosatu highlighted the squabble. Initially government tried to get out of the logjam by focusing on more jobs, at least at the level of debate. Cosatu rattled its sabres and the genie went back in the bottle – and we went back to the logjam. Then the president tabled his State of the Nation speech and we got a look at the budget – jobs, jobs, jobs, but not too much on the quality side, leaving Cosatu unhappy again. The budget indicates incentives for larger companies to take on youth, Seta “learners” and the like.

The president then focused the administration on doing a completely disastrous thing – each department is instructed to provide a plan to create more jobs and he makes all cabinet ministers responsible for coming up with plans to create more government jobs.  Having looked at the strategic plan for the labour department, by way of example, together with their new budget, it doesn’t look like there is anything significant there.

Finally, the president appealed to business to “do more” because it is, of course, a partnership. Why should business help the president in his need to create jobs? No reasons given.

Taken together, these measures present the economy with a lethal cocktail. The cash/tax incentive to take on more workers is the only part that shows promise.

The attempt by the president to force government departments to create jobs is going to be government’s downfall. This is a communist-style solution and it will not work. Even if departments are able to create new positions in the public service, by bloating budgets, this approach will be unsustainable in the long term. The reason is easy to see. We have less than 6 million income tax payers, 14.5 million people on welfare and an already bloated public service. If you employ more people in the public service, you have to up the tax revenue on those same 5 million people or you have to radically increase the country’s debt (other solutions, like printing more money, are simply too horrific to contemplate). Either of those methods will cause an economic collapse sooner than we think.

Government now faces a crisis and it appears there has been a failure of leadership at the crucial moment. Cabinet and its bosses are unable to make the choice, and leadership has avoided the decision by promising decent work and more jobs at the same time as kind of a miracle. They have offered a sort of youth wage subsidy (good), forced government departments to create more jobs (bad) and tabled draft labour laws which make it much more difficult (and costly) to do business in SA (unbelievably bad). Foreign investment will dry up if these laws are implemented.

We cannot have our cake and eat it. Jobs can only be created in future in the private sector. Government cannot employ any more workers using funds off the current tax base. Instead of asking for the private sector to create jobs and then lining government policy up to prevent that from happening, we should see leadership making the difficult choices. We need to assist the private sector to be more competitive, we need to support the development of new small businesses and we need to ramp up our apprenticeship system. Laws need to be jobs-friendly and the budget and labour laws should line up with these priorities.

In the current climate, keeping Cosatu happy and simultaneously creating new sustainable jobs in this economy is simply unachievable.  The masses of unemployed need bread and Cosatu’s solution, in a perverted sense similar to Marie Antoinette, is to ask for more cake. DM

Ollis is a Democratic Alliance MP.

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