Ebrahim Harvey
Crossfire
Seen against the background of preceding developments, the reaction to recent statements by Minister of Finance Trevor Manuel has exaggerated the significance of what he said.
Most of Manuel’s policy pronouncements and the impending “big bang” in economic reforms reported last week were said many times last year: the need to accelerate privatisation of state assets, review labour laws, trim a bloated and burdensome civil service, lower interest rates to attract foreign investment and promote small business development, and the difficulty for the government to create jobs, et cetera.
However, two things in Manuel’s statement were significant. Firstly, his emphatic statement that the government cannot create jobs and his scathing criticism of the Congress of South African Trade Unions’s (Cosatu) planned “job creation marches” against this.
This has serious policy and political implications for the tripartite alliance and comes, ironically, at a time when job losses and job creation are its top priorities.
Secondly, his statement that while the government can consult with its alliance partners it cannot be held back from taking decisions. While the government has already done exactly that, as in the case of the privatisation of Eskom, it is an ominous precursor to a more hardline stance on the implementation of economic policy measures. That this coincides with the decline in Cosatu’s political power is not a coincidence.
But the stage for Manuel’s statements was largely set by what took place in the past few months. The ruling party’s refusal to give in to the recent public sector wage strike was the first signal that it was irrevocably tied to tight fiscal discipline, the heart of the market-driven growth, employment and redistribution (Gear) strategy, and measures to maintain it.
On November 29 1999 a Cabinet meeting took a firm decision to accelerate privatisation, the one critical area which has been stalled by union power.
At the December tripartite meeting, President Thabo Mbeki reaffirmed the government’s commitment to the current economic policy. However, in an interview this week, Blade Nzimande, general secretary of the South African Communist Party, strongly denied a press report on the meeting which stated that the party and Cosatu appeared to realise the futility of opposing Gear and instead sought to devise practical contributions to the policy.
He said: “We reiterate our opposition to certain aspects of Gear, such as the privatisation of strategic state assets which undermine the objectives of the Reconstruction and Development Programme [RDP], but we also cannot bury our heads in the sand and ignore or wish away the realities of globalisation.”
Nzimande declined to comment on the implications of Manuel’s statement, stating that the matter is being discussed in the alliance.
But the calculated boldness of Manuel cannot escape serious problems for the ruling party.
In the face of high and rising unemployment, some of which comes from ongoing privatisation of state assets, the ruling party has latched on to an old, convenient and discredited dictum of the free marketeers, namely “the government does not and cannot create jobs”. If this is accepted then the inescapable but deceiving logic is that the ruling party cannot be held responsible for unemployment and job creation. So where is the RDP in which job creation was central and critical? The rationale behind the Jobs Summit and its outcome would be seriously questioned.
But more importantly, this is a big setback to the creation of a strong developmental state, which the African National Congress always believed was necessary, and which its alliance partners are particularly keen on, to deal with the huge social needs.
How does the ruling party remain, in part, a liberation movement which requires a significant degree of state intervention to facilitate and support development, empowerment and delivery, but at the same time increasingly diminish the government’s involvement in the economy in an unfettered embrace of market forces when the role of the former is undermined by the actions of the latter? To the extent that privatisation is accelerated this contradiction will become more pronounced. Besides, the money required to fund development and delivery will by far exceed what the government gets from the sale of state assets.
When that money runs out, which will be soon in the face of massive social deficits, what then will be demanded by investors?
But the further significance of Manuel’s statement is that the government will increasingly abandon any economic populist pretence and submit the economy to a much greater degree to the dictates of market forces and the demands of globalisation.
As the pace at which privatisation and other aspects of Gear implementation quickens, Cosatu faces a very difficult situation which demands momentous decisions. How the Cosatu leadership will respond is fairly predictable, but how the rank and file will is the big question.
If the combative mood of the recent public sector strike (mass action against Transnet and Igoli 2002 privatisation) is anything to go by, some gigantic battles loom. Will Cosatu translate into action its founding slogan – “An injury to one is an injury to all” – when the crunch comes and will the present vacillating leadership survive that crisis?
Since the adoption of Gear in 1996 the acid test for the alliance was whether or not the ruling party could get Cosatu to accept market- driven economic policies. That test has now reached the decisive moment which makes further postponement of a final resolution increasingly difficult to sustain under the relentless pressures of globalisation. Hence the statements of Manuel. The stakes have risen for both sides. But to ensure smooth implementation the ruling party has to win Cosatu over to accepting the Gear strategy or at least neutralise it.
The outcome of the oncoming battles between the South African Municipal Workers’s Union (Samwu) and the Greater Johannesburg Metropolitan Council over the privatisation- driven Igoli 2002 is most likely going to determine the outcome of the larger battle between Cosatu and the central government. However, one thing is certain: if Samwu is defeated by the biggest and most important local council in the country, it is highly unlikely that Cosatu will win the bigger battles with the central government. With Samwu vowing to fight Igoli 2002 and bring the city to a standstill, the stage is set for a battle with far-reaching consequences.
ENDS