Commentators believe Cosatu’s latest document is out of step with the ANC and worldwide economic trends, writes Madeleine Wackernagel
THE latest submission to the economic debate by the Congress of South African Trade Unions (Cosatu) – A Draft Programme for the Alliance – has been largely ignored by the business community, but not for very much longer. Signs are that the first six months of next year will see confrontation developing on several fronts.
The document is interpreted by many as a last-ditch attempt on the part of the trade union movement to get back to the centre of policy-making. Instead of taking the debate further, however, one insider sees it as a major step backwards.
“We’re back to the kinds of economic arguments that were popular five years ago. But the world has moved on since then and only Cosatu seems oblivious to the fact. It is ignoring the international picture. Globalisation means we cannot operate in a vacuum,” he says.
“To talk of increasing this country’s Budget deficit when every other country is doing its best to cut back on public spending is totally unrealistic. And Cosatu’s attitude to the business community is off-beam, to say the least.”
The document proposes two types of interventions, covering state activities and private sector issues that require state regulation (see table). The former, including proposals for a national health service, would be impossible to fund, the latter impossible to implement.
“One cannot take such suggestions seriously. According to Cosatu, only business is to blame for the lack of jobs, inflation and high interest rates. The fact that Anglo American announced a R30-billion investment programme this week, and that private sector investment has risen by about 35% in the past few years, immediately contradicts its claim that the private sector is not playing its part in developing our economy.”
Such talk can be dangerous, adds another analyst. “So far the markets have not reacted to Cosatu’s arguments, but should investors, local and international, start thinking that the African National Congress will take such arguments seriously, we could be in for a hard time.
“Thankfully, the ANC is way ahead of Cosatu in developing sound, realistic economic policy and as long as all the arguing takes place behind the scenes, I cannot see it affecting the markets or investor sentiment.”
The irony is that the Cosatu document purports to have the same goals as the government, and indeed, business, in terms of economic growth, job creation, and redistribution of wealth. Its means of attaining them, though, are irreconcilable with those of government’s macro-economic strategy, unveiled in June.
But, insists a senior Cosatu strategist, the policy document will be taken seriously by the government. And while more work needs to be done to flesh out the economic programme put forward by Cosatu, the government’s stand on economics is at the heart of the disquiet within the alliance, and as such, needs to be addressed, urgently.
He also maintains that it is not incompatible with the government’s Growth, Employment and Redistribution (Gear) strategy, a view at odds with those of the business community.
Says one economist: “These proposals are a difference of kind, not degree. Cosatu is at the opposite end of the economic spectrum to the government, and one can’t take the movement seriously. The issue of prescribed assets, for example, is completely unworkable and very detrimental to the [pensions] industry.”
Possibly more important is the outcome of Cosatu’s September Commission, due by April, which is investigating strategies to meet the economic challenges of the 21st century.
“Everybody,” says Tony Twine of Econometrix, “is saving their ammunition for that. There seems to be some ambivalence in the alliance to Gear; only the economic generals are very enthusiastic. Then again, nobody is shooting it down either.”
The next six months are crucial for the alliance, however, as the government fleshes out its policies on privatisation and exchange controls. “We could see some conflict if the government sticks to its guns and ignores Cosatu’s demands,” says Nick Barnardt of BoE NatWest.
On balance though, commentators do not see Cosatu’s stand as presenting a serious threat to economic policy.
Says the Old Mutual’s Dave Mohr: “It took a currency crisis to concentrate the minds of policy-makers earlier this year. As a result, the more moderate wing won the day. Now that the government has accepted the reality of a market-oriented economy, any kind of reversal would immediately impact on the markets, with knock-on effects throughout the economy. At most, I would expect Cosatu’s influence to delay the key issues such as privatisation – it cannot reverse the process.”