Trade unionists have warned that the unified front presented by the tripartite alliance partners at their summit last weekend will fracture unless the African National Congress-led government moves to implement the resolutions adopted at the meeting.
The resolutions, which include an unprecedented commitment by the ANC to promote a competitive value for the rand, suggest greater concord between the alliance partners on economic policy than has existed for a decade. The alliance’s core message was that the South African Reserve Bank would be challenged to widen the inflation target parameters.
This goes against the grain of government monetary policy of low inflation targeting to achieve price and wage stability.
The summit resolution states that: “The rand should be valued competitively.
“We need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry.”
The summit also resolved that retailers should agree with the unions to procure 75% of their products locally, and that business should treat retrenchments as a last option.
But Congress of South African Trade Unions (Cosatu) secretary general Zwelinzima Vavi sounded a note of caution.
“I saw an ANC commitment to implement the resolutions, but I’ll be very disappointed if the government doesn’t move on that basis. It will completely kill confidence in the alliance process and put a nail in the alliance coffin,” he said.
Vavi’s concerns echo those of other Cosatu leaders.
“One of the problems with the summit declaration is that there is no concrete next step,” said Cosatu economist Neva Makgetla. “How to develop the resolutions, particularly those requiring government action, is up in the air.”
Cosatu president Willie Madisha remarked: “The [blanket] agreement on resolutions has never happened in the past. There seems to be acknowledgement that we face a job crisis. We can only hope all agreements will be implemented.”
Although Cosatu and the South African Communist Party have consistently called for a weaker rand — Cosatu is mobilising members to strike over job cuts and the currency — the ANC has, until now, been silent on the exchange rate.
Politicians have been sensitive to perceptions of interference with central bank independence.
“For the first time the alliance is signalling that you can’t have complete independence of the Reserve Bank. It has to act in the national interest,” said Tony Ehrenreich, Cosatu’s Western Cape secretary.
Deputy Minister of Finance Jabu Moleketi, who attended the summit, said that devaluing the rand isn’t the only solution, but conceded that it is necessary.
“We need a package of measures to ensure the retention of jobs and ensure economic growth. On its own the rand cannot solve the problem. Companies also need to improve efficiencies.”
Kgalema Motlanthe, the secretary general of the ANC, told Business Day this week that “we need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry”.
A senior alliance leader said there was concern that “the hotshots from the ANC weren’t at the summit. There is doubt about how much buy-in there is to the resolutions.”
ANC chairperson Mosiuoa Lekota, Motlanthe, Minister of Provincial and Local Government Sydney Mufamadi and Moleketi, among other ANC members, attended the summit.
“We got stronger statements because the guys [who argue against a weaker rand] weren’t there to say that you can’t afford to rock the boat,” said one alliance leader. “Whether the ANC national executive committee accepts the resolution on the rand is another thing.”