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South Africa – COSATU condemns IMF report

03 October 2013

The Congress of South Africa Trade Unions (COSATU), which represents 2.2 million workers, is flabbergasted by the International Monetary Fund's Annual Article IV Country Report on South Africa.

In their statement, COSATU says that the IMF lays the blame for the poorly performing economy of South Africa on ‘the government's poor record in controlling the wage bill and potential spill-overs from high wage demands in other sectors represent downside risks’.

COSATU believes that it is thus blaming the world capitalist crisis - brought about by the IMF's own neoliberal ‘free-market' capitalist policies, and the shocking levels of unemployment, poverty and inequality, which this has caused in South Africa and elsewhere - on the main victims of that crisis, the workers and the poor.

The report calls for a social bargain between labour and business, where labour will make ‘commitments to wage restraint’. COSATU describes this as an ‘egg and bacon’ agreement, where the business ‘chicken' commits to lay eggs for breakfast and calls on the worker ‘pig' to lay down its life to supply the bacon.

Apart from the obvious injustice in such an arrangement, writes COSATU, this will lead to a downward spiral of the already meagre living standards of most workers and the families that they support, increase poverty and inequality, and lead to an even lower level of demand for goods and services, which will inevitably lead to even more jobs being lost and take us even further away from achieving the government's aim of full employment.

The IMF view is also completely at odds with research done by the International Labour Organisation (ILO), which argues in favour of a wage-led growth strategy, which is likely to generate a much more stable growth regime for the future.

COSTAU writes that it is a myth that South African workers are high earners, as the report suggests. 40% of workers and their families live on less than USD 2.50 (about ZAR 25) a day. These are the poverty wage that the IMF not only wants to maintain, but to reduce.

It is also a myth, regurgitated once again by the IMF that South Africa's ‘inflexible' labour laws contribute to our economic woes. The ILO South African director Vic van Vuuren has disputed the view that South Africa's labour regulations are ‘excessively rigid’ and contribute to youth unemployment.

Mr van Vuuren said: "When we look at our labour laws and we analyse them and compare them to other best-practice countries. I don't think we have a rigid labour market that is preventing youth employment or employment in general". 

The IMF report urges the government to ‘resist’ a proposal to restrict the use of labour brokers, and goes on to say that "temporary employment was responsible for a large share of employment growth in recent years."

COSATU claims that this is disingenuous. Labour brokers do not create any form of employment. The only thing they create is a triangular relationship where a labour broker employs workers on behalf of a company to fill vacancies that would have been there anyway, and thus shields the company from its responsibility to provide the workers with basic benefits that they are eligible for under the Labour Relations Act. 

COSATU is calling on the government of South Africa not be misled by the IMF's failed neo-liberal policies, but rather stick with the ANC's proposal for a radical economic programme for the 2nd Phase of the Transition, and engage with the economic proposals tabled at the recent Alliance Summit, on which there was considerable agreement between COSATU, the ANC and SACP. 

COSATU is adamant that capitalism, and particularly free market capitalism, cannot be a solution to high unemployment rates and slow growth. Only through industrialisation, more state intervention and strategic nationalisation of the commanding heights of the economy will we be able to meet our job creation targets.

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