The problem with SAFTU’s 15 point plan

Ben Levitas says the Federation is stuck in old and destructive ways of thinking

7 August 2019

We are all in agreement with the South African Federation of Trade Unions (SAFTU’s) call that a completely new mind-set is now urgent! “, in order to avoid the country falling over a “precipice of an explosion”, as they describe it.

Yet, even a cursory examination of SAFTU’S 15-point plan reveals no original thinking and only more of the same “mind-set” that got us into this mess in the first place.

1) Announce a stimulus passage of R500 billion to save the situation

There is no detail of what they plan to stimulate. However, knowing their mind-set, rest assured it will be to spend money to save jobs that are already unsustainable, like jobs at various State owned enterprises, particularly Escom, jobs in the bloated public sector and jobs that banks have already made redundant with the closing of branches. The union is obsessed with the retention of unproductive jobs. SAFTU is unable to break the mould to realise that the economy can only grow when they focus on creating new jobs in new industries.

The union is also stuck so deeply in the groove of Socialist “Command” economics, which thinks that you can “command” jobs to be created, whereas the remedy is to free the economy of government interference (such as the petty BBEEE and restrictive labour laws). Rest assured if the R500 billion rescue stimulus was agreed to, our national debt would spiral out of control and we would become a basket case requiring the intervention of the International Monetary Fund(IMF).

2) Introduce a wealth tax

Again this is the standard hymn from the Union’s song-book. Out of the 7,6 million taxpayers, only 2 million already contribute more than 80 per cent of the tax collected. The rich are already paying their due and are receiving very little in return. Tax them more and they will flee the country and lead to less tax being collected.

3) Implement legislation to curb tax avoidance

Although such legislation already exists, there will be a propensity to avoid paying taxes if taxpayers feel that the government is corrupt and wasteful. Instead of more legislation, perhaps the focus needs to shift to enhance the abilities of SARS to be restored to its previous efficiencies in the collection of income tax, through the removal of corrupt cadre-employees.

4) Review Corporate taxes back to 45%

In their Ivory towers the unions forget that we operate in a global world where companies and foreign direct investment (FDI) is attracted to those countries that exact less corporate tax. America under Trump reduced its corporate taxes further from their already low levels. Why has Ireland attracted so much FDI? Mainly due to its low corporate tax rates, and this has enabled it to outperform and grow its GDP to be larger than South Africa’s. Unions also need to be reminded that Corporations are not the enemy. In fact, they provide the high level and productive jobs that the country is desperate to attract.

5) Make those who can, pay more personal income tax to the fiscus

Collect more to waste more. Take money from those who are productive and transfer to those who are wasteful and unproductive-how on earth this will help create jobs, God only knows!

6) Cap the salaries of those earning gruesome amounts

With the worst Gini coefficient in the world, the inequality of earnings is a serious problem and unjustifiable, and needs to be addressed. Capping the salaries of high earners and how this is going to contribute to solving our job crisis is not explained or explainable.

7) Find creative ways of taxing incomes gained from financial markets

Yet another tax aimed at the rich, because only they are involved in the financial markets. Yet how in heavens name will this help to create work?

8) Raise government revenue to 33% of GDP

Salaries of government employees already account for more than 40% of the revenue collected. This is already way too much. Government is responsible for the creation of too many unneeded and unsustainable jobs.

What would be the purpose of increasing government revenue, but to create more unsustainable jobs? These jobs would have to be financed through more debt, so the fiscus would be burdened with more debt repayments and the country would end up even poorer.

9) Scrap labour bills that undermine worker’s rights to strike

We already carry the burden of too many strikes that are too easily called. Unions enjoy more power than almost anywhere in the world. Striking workers cause havoc to the economy, to infrastructure, to their employees and employers and don’t accept any responsibility for the damage they cause. Strikes are merging into the service level protests that are now everyday occurrences and contributing to make our country ungovernable. Unions care only for their members, because they are the ones who pay their dues. Those lucky enough to have jobs are protected, while those without work are forgotten as they are voiceless. The crucial question is how does SAFTU assert that having more strikes is going to create more workers or job opportunities?

10) End the private sector investment strike

This will only end when the private sector feels it can operate in a business friendly environment-less strikes, less onerous labour laws, less BBEEE, less government red-tape and interference. Yes, SAFTU, you are correct, that the way to go is through private investment. Only private investment will unleash the genie of job creation. It is however not something that you can decree or legislate!

11) Adopt industrial policy of import substitution

We can now import most goods at cheaper prices than we can manufacture locally, and one of the main reasons for this is that we are part of a global world market, and our input costs such as labour are no longer cheap. The government’s wasteful and negligent policies have ensured that our electricity and other input costs, are also no longer cheap or reliable. SAFTU’s policies which demand higher wages, minimum wages and retaining unnecessary jobs, will just contribute to increase these input labour costs.

12) Increase state social spending

We have about 7 million taxpayers and about 18 million social welfare beneficiaries-an already unsustainable burden for the taxpayers. Where is the funding going to come from if not from more debt? Yet again, I ask in exasperation how is this going to create work, even one job.?

13) Reorient infrastructure

Yes, we do need to spend more on infrastructure on sewerage, on water treatment, on improving our road and rail services and on delivering to our people, who have seen the promise of freedom and democracy evaporate before their eyes. Do away with the unworkable tender system, that because of BBEEE adds huge costs to the goods acquired by municipalities which reduces the range of services they can render. Employ people on merit, not on racial or party membership criteria and criminalise those corrupt officials who deflect expenditure from where it is needed.

14) Adopt “Million Climate” jobs..

SAFTU is at it again, with the Socialist “command” economics mantra that you can just proclaim a million jobs into being. Come on, get real, this is not a plan. This is voodoo science! On the other hand, we should be preparing for climate change with a real plan. Instead of opposing green energy and independent power producers, as the unions are inclined to do for fear of laying off workers from existing jobs, we should be embracing these new technologies. Let it be stated for the record, the unions have played an unconstructive and reactionary role in supporting the continuation of Eskom’s coal powered generating units and the coal industry that provides the fuel.

15) Nationalise land… 

Just look at how unproductively the state is using the huge tracts of land the state already owns. What will change if it were to acquire even more land-nothing except more waste and less production! Land ownership is portrayed as the magic bullet that will solve all our problems, particularly the problems of the poor and of poverty. The protection of ownership rights is a fundamental human rights and tampering with it will unleash insecurity on an unprecedented scale. If it is done in the way that the EFF is proposing, no one will benefit and the country will sink into a black-hole of futility and poverty.

The purview of unions is to protect and increase the earnings of their members and to reduce income disparities. Essentially their brief is redistributive-to reduce the incomes of the owners of capital and redistribute to the workers. The owners are viewed as hostile and greedy and as the enemies of the workers, who are exploited. The relationship is always confrontational, and the weaker workers always depend on the support of the unions to get their fair slice of the pie. Redistribution does not grow the pie or engender growth of jobs or even encourage the creation of new jobs. Unions are reactionary in that they support the status quo and hinder change. In this sense, Unions are inimical to preparation for the Fourth Industrial Revolution.

Ben Levitas