COSATU General Secretary, Zwelinzima Vavi's address to NEHAWU Securities, Johannesburg, November 5 2998

Thank you for the opportunity to address this important meeting, which brings together key leaders of business and labour.

We meet against the background of tumultuous economic and political events. The world economy is currently in the middle of its biggest crisis since the late 1920s. Billions of dollars have been wiped off the value of shares; financial institutions have collapsed or been bailed out by taxpayers; an economic slump threatens million of jobs; living standards could soon start to nose-dive. The crisis will certainly impact upon South Africa's growth prospects over the next few years and pose challenges for job creation and other developmental goals.

In Sandton on Saturday we saw the formation of a new political party - the coalition of the disgruntled losers from the ANC Polokwane Conference. Meanwhile the ANC, boosted by the democratic regeneration at Polokwane, is in the process of renewal and preparation for what will undoubtedly be the most important and fiercely contested elections since 1994.

This morning we woke to the news that Barrack Obama became the first African-American to be a President of America. COSATU congratulates him on his historic victory. It is an exceptional achievement for an African-American candidate to be voted into the highest office in the land by an electorate dominated by the descendents of those whose forefathers enslaved and disenfranchised black Americans. This result is a huge step forward in the battle to defeat racism and discrimination, in the US and around the world.

From a class point of view however, COSATU takes a more cautious view. While we are expecting Barrack Obama to reverse Bush's policy of reckless, unilateral interventions around the world, we would also hope that he will use his victory to promote a developmental agenda in world trade talks and implement a new ‘Marshall Plan' to boost the economies of the developing world.

We fear however that the campaign pledges to protect American jobs and oppose the outsourcing of investment and jobs to developing countries - and the overwhelming support he received from American workers for this - means he will take a more protectionist line and try to block further progress in the WTO's Doha developmental round of negotiations. The consequences for developing countries, especially in the context of the global financial crisis and possible economic recession would be catastrophic.

COSATU also appeals to the new president to lift the economic blockade on Cuba and to stop trying to impose an economic system, which the Cuban people have consistently rejected. If the pledge to be an ally of democrats is to become real, it must be extended to the people of Cuba.
 
COSATU has also noted the generous way in which John McCain accepted his defeat, and contrasts this with the reluctance of Robert Mugabe and Mwai Kibaki to bow to the will of the people of Zimbabwe and Kenya when they were defeated.

McCain's 47% vote was also more than the 40% vote for those defeated at the Polokwane ANC Conference. While he graciously accepted defeat, some of those who lost there are hell-bent on forming a breakaway party with the sole aim of disrupting and dividing the liberation movement. It is time to follow McCain's example and accept that there are winners and losers in every election, but the result is the will of the people and has to be accepted.

Economic and political analysts have devoted column after column in the newspapers debating whether or not the ANC changed its economic policies at Polokwane and whether it has been ‘hijacked' by COSATU and the SACP.

On behalf of COSATU I can assure you of two things. No! The ANC has not been ‘hijacked', nor has there been a violent or radical rupture from the ANC's traditional views. But Yes, policies have changed, and for the better. The Alliance Economic Summit in October succinctly summed up the policy as "both continuity and change" and it is these changes that I would like to speak about today.

Polokwane represented a grass-roots revolt by the workers and the poor against economic policies which had clearly failed to solve South Africa's main problems - the massive levels of unemployment and poverty and growing inequality.

We have of course made progress since 1994 in many areas. Millions of poor families now have access to basic services, which they lacked under apartheid. At the same time however, macro-economic policies like GEAR have deepened the structural problems of the economy, entrenching inequality, and making our economy ever more vulnerable.

The Summit agreed that policies needed to be reviewed and that it must be guided by the Polokwane resolutions and the Freedom Charter's call that "The people shall share in the country's wealth".

The Summit declared that "decisive action is required to transform the patterns of wealth production and distribution. Macroeconomic policy needs to support economic development and employment creation. Interest rate policy, while continuing to be directed at containing inflation should also be sensitive to its impact on the productive economy and employment. The priority, in line with the Polokwane resolutions, is to create decent jobs and combat poverty and unemployment".

That declaration is wholly in line with COSATU's own economic policies.

Conservative, neoliberal policies like GEAR have mainly benefited a few extremely big and powerful firms, which are using their power, and the space given to them by government policy, to entrench their monopoly positions. At the same time the ‘consumer-led boom' is not addressing, but exacerbating the economic marginalisation and poverty of the majority.

The only difference now is that a relatively small black middle class is being incorporated into the apartheid enclave of luxury consumption, while the majority still suffer unemployment and poverty.

Opening us up to the ‘chill winds of competition' has reduced our economic policy autonomy and our scope to pursue a developmental agenda. The government's draft developmental Industrial Strategy, which itself is nowhere close to being perfect, is being contradicted by free-market fiscal and monetary policies.

These have contributed to the decline of the manufacturing sector in favour of tourism, services, real estate and the financial sector, which is accompanied with the growth of atypical, unprotected and low paid work.

Internationally it is now widely accepted that the essentially neoliberal economic policy prescriptions, on which our government modelled its economic strategy in 1996, have failed and been discredited. Continuation of this approach will lead to our government being punished both by capital, and its own mass constituency, as indeed happened at Polokwane.

The important political shifts, which have begun post-Polokwane, have now created the space to advance alternative economic strategies. The Summit agreed that the overarching objective must be "to greatly speed up ensuring decent work for all, in overcoming poverty and deep-seated inequality, and in addressing rural marginalisation".

This is also the first pillar of COSATU's alternative economic strategy. Policies which produce high growth but which benefit only a few, while reproducing continued high levels of infant mortality, poverty, illiteracy, casualisation, unemployment and inequality, are out. Policies promoting shared economic growth and decent work are in.

The true test of economic policies must not be narrow economic indicators - the level of the budget deficit, or profits - but sustainable human and social development.

The Summit declared that "industrial policy can play an important role in ensuring decent standards of work and a growing income for workers. Practices such as labour broking and casualisation should be reviewed, given the damage they cause to labour standards. Regulation should be introduced to address this matter".

It also noted with concern "the high levels of executive pay in the corporate sector and SOEs as well as the huge income inequalities in the labour market and called for consideration of ways to promote more equitable income outcomes" and that in implementing the decent work agenda, as defined by the ILO." The meeting agreed we must aim to:

1. Create five million new jobs
2. Fast track development and implementation of sectoral programmes
3. Use the more realistic expanded figure for unemployment.
4. Fast-track existing job-creation programmes
5. Review the proposed closure of nursing, education and agricultural colleges
6. Improve service delivery in public sector."

The second pillar of a new economic policy is to create a vibrant, diversified and labour-intensive manufacturing industry and to break with excessive dependence on export of raw materials, imports of machinery, equipment and consumer goods, and economic domination by the financial sector and monopolies.

The Summit agreed that "resource-based policies should ensure maximum downstream economic activities through beneficiation to increase the level of jobs in the local economy and this framework should embrace minerals, agriculture and the marine sector. Infrastructure needs to be biased towards growing increasingly diversified and complex manufactured exports rather than encouraging the export of un- and semi- beneficiated exports of bulk commodities."

The third pillar is a regional development strategy, which must recognise South Africa's integration within southern Africa. The international fuel and energy crisis creates an opportunity and challenge to adopt a regional industrial strategy that could make SA a hub for intermediate products, capital equipment and consumer durables, as opposed to the current one-sided export strategy.

A fourth pillar is an investment strategy to channel private, public and socially owned capital into productive investment, infrastructure, and the development of people.

We are concerned about low levels of savings and investment in the economy, but the reality is that vast quantities of capital are lying idle, being channelled into speculative activity, or being misdirected to mega capital intensive projects, golfing estates and glass buildings, or channelled out of the country, when our people are crying out for real investment in communities, and jobs. 

One way to address this misallocation of resources is the reintroduction of legislated prescribed asset requirements, to compel the funds, which control nearly R2 trillion in workers' assets to direct a certain portion of their investments into socially productive investment, such as co-ops, community investment programmes and providing infrastructural and financial help to small businesses.

The fifth pillar is a developmental monetary policy. Current monetary policy is to use interest rates as a blunt instrument to achieve a rigid inflation target - despite the inability of this crude mechanism to impact on external factors - and using high interest rates to maintain short-term capital inflows. We need to develop a policy, which uses multiple tools to combat excessive inflation, while promoting employment and growth.

This would give monetary policy a radically different orientation from the narrow inflation-targeting model, which Professor Joseph Stiglitz has described as a ‘disaster'.

The sixth pillar is to realign fiscal policy. It is currently driven technocratically by the Treasury, and is unduly focused on chasing macro-economic targets, such as low budget deficits or even surplus, with inadequate attention to how policy can target resources to transform the economy, promote employment and redistribution, and build the capacity of the state.

We also need to look at a progressive tax system, which promotes equity and growth. Instead of constantly lamenting the ‘lack of state capacity', and the erroneous expectation that delivery depends on the private sector, we need a new mindset, which sees the proper resourcing of the state and investment in capacity as a national priority.

The seventh pillar is the alignment of all state institutions to pursue these new economic policy objectives. Unlike today, when government departments and state institutions often pursue disjointed and sometimes contradictory goals, there has to be effective political and technical co-ordination and a mobilised and active civil society.

The Summit agreed on the need for a high level planning, evaluation and monitoring capacity in government. Its preferred option was a Planning Commission, headed by the Presidency, with the power to align the work of all Departments of government and organs of state to government's developmental agenda. The Commission would promote the alignment of government budgets with developmental planning, set broad targets through medium- and long-term plans, conduct strategic risk assessment.

The Eighth pillar is rural development and agrarian reform. 40% of our people live in rural areas, where poverty and destitution lead to continued mass migration into urban centres. The crisis of food security underlines the importance of a coherent strategy to create sustainable livelihoods and ensure the production of affordable food.

The ANC's resolution on rural development contains detailed proposals, which question government's current minimalist approach to rural development and say that the current situation of entire communities subsisting mainly on remittances from families and social welfare grants is not sustainable.

The Ninth pillar is comprehensive social protection. Social protection is not welfare, as traditionally understood. Providing universal access to affordable basic services and income support has both an economic and social logic. Policies must aim to construct liveable communities, which are accessible to jobs, health, electricity and water provision, and to promote economic productivity and decent lives.

Comprehensive social security provides a basic income for people. It enables them to participate in economic activity. This is why it is not only a social necessity, but also an economic imperative, which unleashes people's creativity and human potential, rather than locking them into a cycle of poverty and dependence.

Universal income support means that unlike the current situation, everybody should enjoy this support as a right, and no person should fall through the cracks. Current proposals for comprehensive retirement provision don't address this need since millions, particularly unemployed adults of working age, are still left without any form of income. Therefore the need for a Basic Income Grant or similar scheme remains imperative.

I look forward to seeing these policies incorporated into the ANC election manifesto and then implemented by the new ANC government led by Comrade Jacob Zuma next year. It will open up the next phase of the national democratic revolution and create a better life for all South Africans.

I am extremely disappointed that the public discourse in not dominated by these issues. I gladly accepted your invitation because yet again it presented another opportunity to change public discourse from issues and concerns of the elite in our society to issues affecting the majority and our country.

Thank you.