Tuesday, June 07, 2016

Pacifying Rating Agencies Is Not a Panacea to Our Economic Problems
6 May 2016
COSATU Statement

The decision by Standard and Poor to uphold the country’s credit grade rating, while welcomed should not be treated as a panacea to our economic problems. COSATU recognises the importance of the impact that the ratings agencies have upon encouraging or discouraging badly needed investment and bank's lending rates. While it’s imperative for our government to prove its ability and willingness to meet its financial obligations in full and on time; it is also important for it’s to prove the same commitment and ability to meet its service delivery obligations to the citizens.

COSATU is worried that the political and economic reforms that are being proposed are targeted at pacifying investors and not the citizens. The ratings agencies should not be used to reintroduce the privatisation of State Owned Entities programme and also revive the discourse about the deregulation of labour and more austerity measures.

The myriad of challenges facing South Africa's economy are not new and workers have been in a perpetual and devastating economic crisis long before the ratings agencies graced our news coverage. Workers have been obliterated by a long term unemployment crisis of 36% and the massive resultant levels of unsustainable poverty and inequality for over two decades.

Even when this country’s economy was growing, workers were not benefitting because the economy was not creating jobs and the apartheid wage structure has not been addressed. This year we have already seen up to 52 000 mining, 10 000 retail and hundreds of banking jobs lost. We have seen government freeze badly needed public service vacancies and there are calls for more government’s austerity measures.

Even the neoliberal hardliners at the International Monetary Fund learned the hard way, when they were forced to admit that austerity measures caused more problems ,and did not help fix what was wrong with the Greek economy in 2011.The austerity measures only served to decimate the poor Greek citizens. They did not restore market confidence and the economy encountered a much deeper than expected recession with exceptionally high unemployment.

South Africa should learn lessons from the Greek tragedy and examine existing development models to ascertain ,what is suitable for our economy. COSATU refuses to believe and embrace the much repeated fallacy that capital is the primary basis of economic growth. South African government has been implementing the neoliberal policies for the last twenty two years without seeing any tangible results. These policies have failed to address unemployment, poverty and inequality.

Whilst government has managed to largely keep inflation within the 3% to 6% target range, workers all too often experience inflation in double digits year after year with massive electricity, municipal tariff, petrol, transport, education and food price increases. Government must accept that its economic policies have failed to ensure decent permanent work for all. We cannot afford to continue with our business as usual approach, when one out of three people are unemployed.

COSATU calls on government and business to seize the opportunity of the ratings reprieve and sum up the courage and seriousness to tackle unemployment, which is our real national crisis.

Government and the private sector must act fast to reindustrialise our battered economy. More support and incentives must be given to our industrial, manufacturing, agricultural, renewable energy, recycling, tourism, and transport and mining sectors. We must efficiently use our tariffs to increase our exports, reduce our imports, and fix the current unfavourable balance of trade.

Local industries must be protected from subsidised European, American and Chinese imports. Mines must be forced and incentivised to beneficiate our raw mineral exports and more support must be given to SMMEs. Workers facing retrenchment must be covered by the UIF, re-skilled and deployed to new jobs. A decent living meaningful national minimum wage for all workers must become a reality now rather than later.

Pacifying rating agencies should not be treated as a panacea to our economic problems and needless austerity measures will not fix our unemployment , poverty and inequality. The introduction and enforcement of unnecessary austerity measures will only send our economy on a death spiral and cause social instability.

Sizwe Pamla (National Spokesperson)
Congress of South African Trade Unions
110 Jorissen Cnr Simmonds Street

P.O.Box 1019
South Africa

Tel: +27 11 339-4911 Direct 010 219-1339
Mobile: 060 975 6794
E-Mail: sizwe@cosatu.org.za

- See more at: http://www.cosatu.org.za/show.php?ID=11703#sthash.4EUabbfV.dpuf

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