Only a socialist economy will end poverty


Figures from Statistics South Africa’s report, Poverty Trends in South Africa: An Examination of Absolute Poverty Between 2006 & 2015, show that 30.4-million of the country’s 55-million citizens lived below the upper poverty line of R992 a month — three million more than in 2011.

One in three South Africans lived on less than R797 a month, or half of the country’s 2015 mean annual household income of R19 120, with more women affected than men, and children and the elderly hardest hit, while racial inequalities continue to define poverty as largely a black African problem.

For one in seven people, this meant extreme food poverty, or survival on R441 or less per person a month in 2015.

“The last five years, notably between 2011 and 2015, have been a rough economic roller coaster for South Africa — driven by a combination of international and domestic factors, such as low and anaemic economic growth, continuing unemployment levels, low commodity prices, higher consumer prices, lower investment levels, greater household dependency on credit and policy uncertainty,” says the report.

It also shows that this period saw an increase of extreme food poverty to 25.2% in 2015, up from 21.4% in 2011. The goal of the National Development Plan (NDP), to reduce the percentage of citizens in the lowest poverty category from 39% to zero, has failed abysmally. There was no reduction; there was a 1% increase.

The report also gave us the shocking figure that levels of household indebtedness rose to 76.9% in 2015, up from 54.1% in 2000.

Executives’ salaries have risen from 50 to 500 times greater than workers’ wages. Many of the companies paying these grotesque amounts to their executives are the same as those demanding that unions agree to lower wages for their workers.

Others are outsourcing labour, using labour brokers and retrenching staff to increase their profits.

Inequality and poverty is obviously also linked to shocking rates of unemployment. As statistician general Pali Lehohla said when introducing his report: “The key driver of poverty is unemployment.”

There was a net loss of 113 000 jobs between the first and second quarters of this year. The rate of unemployment remained at 27.7% — the highest level for 14 years. And the more realistic expanded definition of unemployment, which includes an extra 3.1-million people who were available to work but did not look for it during the reference period, rose slightly to 36.6%.

These unemployment figures relate directly to the levels of poverty because, on average, earners living in poor households support not just themselves but also people in their household and others to whom they send money. Ten percent of wage earners in poor households support themselves and four other people — 6% support five others, 4% support six others and some poor wage earners support up to 10 dependents.

Unemployment, inequality and poverty must not only be measured in income and wealth, but also in the social wage.

Employment, or employability, depends on education levels. The StatsSA report shows that 79.2% of those without formal education were poor in 2015 — down from 86.4% in 2006, but up by 4% from 2011 — compared with 8.4% of those with a post-matric qualification in 2015.

In education, healthcare, sanitation and public transport, the appalling levels of service in a country where the rich minority elite enjoy world-class service provision make conditions for the poor majority even worse.

This descent into inequality has taken place under the watch of a ruling party which, for 23 years, has talked about the need for change, now called “radical economic transformation”, while carrying out economic policies based on a capitalist free market and neoliberal policies, such as the Growth, Employment and Redistribution strategy and the NDP, which have led to the opposite — soaring levels of inequality, unemployment and poverty.

The economic crisis is now made worse by the explosion of corruption, looting and the capture of state institutions by crooked politicians and public officials, heads of state-owned enterprises and a widening layer of international companies — not only the Guptas — who have shifted money from the public purse into the pockets of this new class of billionaires.

This has robbed the country of billions, bankrupted state-owned enterprises, sabotaged public institutions, undermined democratic accountability and led to the rating agencies downgrading the country to junk status, and a looming economic and social catastrophe.

So what is to be done?

I welcome the fact that a handful of business leaders and organisations have now admitted that things have to change and are talking about the idea of “inclusive growth” and some sort of social compact between government, business and labour as the solution.

Yet a recent Deloitte report proves that this message has failed to reach most business leaders. It is further shown by the companies — in food, dairy, bread, cement, construction, pharmaceutical, fire-control and other sectors — found guilty of price-fixing, collusion over tenders and other anti-competitive practices.

But even if more business leaders join this call, it cannot change the basis of a system driven by the need to maximise profits. Important decisions on investments and disinvestments are increasingly taken by asset managers and investment brokers, who do not look at the effect of this on workers’ jobs, communities’ livelihoods, the environment or the long-term future of the economy.

The NDP is fatally flawed. It promises to reduce poverty, unemployment and inequality by 2030, and reduce poverty-induced hunger to zero, but it can achieve none of these because its vision for the economy is rooted in the belief that wealth and power must remain in the hands of unaccountable capitalist monopolies — still overwhelmingly white-owned and operating under a neoliberal economic system enforced by rating agencies. This is the main reason we have this economic crisis.

Hence the South African Federation of Trade Unions, and a growing number of people around the world, are now demanding a fundamentally different, socialist economy. We are determined to reinstate the real programme for radical economic transformation — which has been hijacked by a corrupt faction — and to mobilise mass support for it, based on the call of the Freedom Charter that “there shall be jobs and security” for all. We are mobilising for a full-blown strike in November in support of these demands.

This is an edited version of an address to the Decent Standard of Living conference. Zwelinzima Vavi is the general secretary of the South African Federation of Trade Unions 

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