Zwelinzima Vavi on the global financial crisis, the "new black DA"

Speech by COSATU General Secretary to the SADTU NGC October 22 008

Input to SADTU NGC, October 22 2008 by Zwelinzima Vavi, General Secretary, COSATU

Dear comrades and friends,

I am grateful for this opportunity to speak at the SADTU NGC. SADTU is one of the largest unions in the country and one of the most representative in its sector. It is therefore critical that we honestly address both the complex times faced by our country and the challenges confronting the union.

Truly this year has been a turning point both for South Africa and for the world economy. To ensure that workers don't end up paying for the global financial crash will require increased militancy, better organisation and more sophisticated engagement on economic policy both in South Africa and in solidarity with the global trade union movement.

At the same time, the political transition now being experienced in South Africa opens up both risks and opportunities for the working class and its allies. As COSATU, we need to think through carefully how we manage this situation.

The international economy has entered a deep recession, following on a financial crisis of historic proportions. We don't know yet how long the recession will last. If we are lucky, it will be over in a year or so; but if things go wrong, it could endure much longer. The challenge for workers is to ensure that the poor do not end up bearing the brunt of the crisis.

The roots of the economic downturn lie in the post-imperial status of the United States. Because of its dominant position in world financial markets, the U.S. could borrow money from the emerging giants of Asia, especially China, to maintain its economic and political power while producing less and less. This system let the U.S. economy boom in recent years even as its government engaged in cynical and costly wars of aggression in the Middle East. It meant that the rich in the U.S. grew ever richer, while the incomes of the majority remained stagnant or fell.

In the past decade, the U.S. has run a huge trade deficit, while China and other Asian countries maintained a surplus. The Asian countries then invested in the U.S. banks, which in turn lent the money recklessly to people to buy homes and to speculators. The neo-liberal policy of deregulation meant that the banks could take increasingly serious risks with the money of depositors, including the Asian investors and locals.

The result: the U.S. banks finally crashed this year. They took with them European banks that had invested in them. The governments of the North are spending hundreds of billions to bail them out. And countries like South Africa are faced with the fall-out. 

We need to understand how the international downturn is likely to affect workers in South Africa.

First, as we have already seen, foreign investors are pulling their money out of the country. That, in turn, has led to a decline in the rand. This will make imports more expensive for the foreseeable future, pushing up inflation. The risk is that the Reserve Bank will use this as an excuse to again increase interest rates. And we all know how that hurts workers, especially those who - like so many teachers - have taken out loans in recent years.

Still, depreciation is not a bad thing in itself. COSATU has long argued that a lower value for the rand would let South African industry compete better. If we can get the government to adopt a stronger development strategy that prioritises job creation, in line with the Polokwane resolutions, we can get some good out of this part of the crisis. But it will require a complete rethink of the government's current industrial policy, which only emphasises a few industries and can never create employment or meet the needs of our people on the necessary scale.

Second, South Africa is already seeing a drop in the prices of our exports, most of which are mining products. The reason is that the recession in the North narrows our markets overseas. This is the real danger: if international markets shrink, making it harder for South Africa to export, overall growth will become much more difficult. We may well see job losses, especially from the retail sector and mining. Moreover, the government's public-investment programme is based on importing technologies and, to some extent, on foreign funds. Both will become tougher if our exports get squeezed by the recession.

Finally, a particular problem for public servants as well as working people in general is that slow growth in the economy will squeeze government revenues. The risk is that the government will say this means it cannot increase staffing levels as planned, or maintain above-inflation increases for public servants. We need to work together to make sure that the budget is not balanced on the back of public servants.

Still, we are pleased that yesterday the government agreed that it could no longer maintain a surplus. It has set the deficit at 1,6% of the GDP, so that in real terms government spending will grow by 2% or 3%. We may need bigger deficits in the next two years, however, in order to maintain government investment, which is now more critical than ever for economic growth, while maintaining standards for our members in the public service and in the community.

Over the past weekend, we participated in an Alliance Summit on economic policy, which laid a basis for a progressive response to the global economic crisis. That summit made important decisions to take forward the resolutions reached at Polokwane, resolutions that should initiate a new economic and social policy geared to the needs of our people, not the demands of big business at home and abroad.

Key elements in the Summit's decisions include the following:

First, industrial policy must from now on prioritise employment creation. Joblessness remains extraordinarily high in South Africa, at almost 25% (using the narrow definition), and will likely get worse due to the current crisis. We need to ensure that government has a strategy to ensure that every sector of the economy, including the public services, contributes as much as possible to sustainable employment creation. That requires a huge change in thinking about industrial policy as well as government employment.

Second, the Summit agreed on the need to drive an agrarian development policy that will improve living conditions for the millions of rural poor, especially those who have long been left in the former Bantustans with inadequate infrastructure, services and land. We need to fundamentally rethink the government's current proposals on land reform to achieve this end.

Third, fiscal and monetary policy must support the transformation of the economy, rather than simply giving capital whatever it wants. We realise that government cannot spend recklessly, and that government mustn't let inflation get out of hand. But we also can't put holding the line on spending and inflation above the interests of our people. And that means we need reasonably expansionary policies that support economic growth and increased opportunities.

Fourth, the summit reached important agreements on improving social security and the criminal justice system. In both areas, we need stronger government measures to improve conditions for working people and the poor.

Finally, and perhaps most importantly for future development, the Summit called for the creation of a developmental state. The two key steps to achieving that end are streamlining the Cabinet and establishing a planning commission. These systemic changes should help ensure a more consistent and rigorous approach to transformation of our society and the economy.

But we cannot expect that these decisions will be implemented easily or automatically. Only our unity, organisation, vigilance and militancy can ensure that the new institutions reflect the demands of working people and the poor, who form the ANC's main constituency.

Comrades and friends,

While we are making progress in ensuring a more progressive policy framework for the government, we cannot close our eyes to the difficulties facing the democratic movement, and in particular the ANC.

We have no doubt that Polokwane represented a great victory for working people, who were able to reclaim the ANC as our own. For years before Polokwane, COSATU watched with great concern as the space for democratic discussions within the ANC was closed, and the state apparatus in many ways dominated the policy discourse in the Alliance. Our efforts to give voice to our members and to working people in general were condemned as ultra-left or counter-revolutionary.

But our victories at Polokwane are not yet complete.

On the one hand, we have to translate our broad strategic guidelines into detailed policies to serve our people. That requires growing sophistication about economic and social policy as well as the strengthening of systems for mandating and reporting back. We need to decide how closely we will work within policy processes, which will inevitably require some compromises and pragmatism, and how much we need to remain an independent voice outside the state, able to speak on behalf of working people and the poor no matter who is in power.

On the other hand, we are now seeing a counter-action by those who lost out at Polokwane. They are not willing to admit that they lost in a democratic process, a process that has been hailed around the world for its openness and courage.

We must ask what these comrades have to offer the working class beyond their righteous pronouncements. What is their programme to address the challenges facing the working class - the burdens of unemployment, poor quality jobs, poverty, inequality and crime? Or are they simply seeking to regain their former glory and status by hook or by crook?

What is their track record? Was it not they who led the adoption of neo liberal solutions - who forced GEAR down our throats, who privatised and commoditised basic services? Was it not they who managed the economy in ways that ensured most of the benefits went to monopoly capital? We all know that we have not changed the accumulation path we inherited from apartheid. In real terms these people have failed workers and the poor. What will they offer us in their convention and their new political party?

The ANC has remained a liberation movement of all freedom-loving South Africans but with a bias towards the workers and the poor. Lekota and the others have spent the last few years trying to change the ANC from within, to move it away from being a home for all, in particular workers and the poor, into a party for the black elite. We have been calling on them to return and not to embark on the route to nowhere. If they insist to go ahead and form a new black DA, then they must know that they are committing political suicide.

We call on all our members and all our people to recognise the misinformation and lies that are being spread about the ANC. More than ever before, COSATU members should swell the ranks of the ANC to ensure that all the clauses of the Freedom Charter are implemented to the fullest.  

But we must be honest with ourselves. The divisions facing the ANC have also infected COSATU. We saw them in our 9th National Congress and again as we prepared for the ANC's 52nd National Conference.  COSATU faced a bitter leadership contest for the position of president in our last congress.  COSATU leaders appeared in different lists during the Polokwane conference.

Going forward, we need to ensure that we manage the divisions in the democratic movement in the only effective way: by ensuring, first, that there is democratic space for debate and difference, and second, that any worker who is committed to workplace unity feels at home in COSATU and its affiliates.

Comrades and friends,

SADTU must use the opportunity of this NGC to review its work and deal honestly and openly with problems. As worker leaders, we cannot afford to lie to ourselves about our shortcomings, even as we recognise our strengths and build on them.

In 2005, COSATU met with the leadership of SADTU. After long discussions, SADTU issued an important declaration. It recognised the need for more comradely, open and constructive engagement across the union. We committed ourselves to ensuring an end to factions. Particularly important, we agreed on the need for organisation development, above all for clarity about the roles and responsibilities of our leadership in order to avoid divisions and competition.

At the same time, we recognised that only the commitment to meeting the needs of our members could ensure long-term unity in action. Teachers are not like any other workers: they are entrusted with both the new generations and the cultural capital of our country. We agreed that we needed to renew our engagement with strategic issues around the transformation of education as well as maintaining the strength of our organisation to defend members.

At this NGC, we have to ask how well we have met these commitments. The union movement as a whole has been through rough times in the past few years, times which have made it easy to fall into divisions and factions based on the political situation. But the responsibility of union leadership is to manage any disagreements in ways that strengthen the union, rather than undermining its ability to act in a unified way to defend the workers' interests.

I am sure this NGC will deal openly, honestly and constructively with the challenges SADTU faces. Your ranks are full of experienced cadre who prize the union above their own prestige and position. You must work together to chart a way forward for SADTU, one that will ensure you can protect workers against the risks of the international economic crisis and the difficult political transition now underway. But only honesty and a commitment to unity, the foundation of the labour movement, can ensure success in this hard job.

Remember: In unity is our strength. An injury to one is an injury to all!

Issued by COSATU October 22 2008