RW Johnson says there is only one way out left for the ANC
The SABC board, in announcing the retrenchment of 400 of its 3,000 staff, said that if it did not take this action “this organisation will collapse like SAA or will be unable to pay salaries like Denel”. Although, after a torrid day of threat, counter-threat and emotional appeals, this retrenchment notice was then snatched back – the only thing that the SABC seems to do well is soap opera – but it is hard to believe that this can be more than a brief stay of execution. Meanwhile there are threats of a blackout of services, strikes, go-slows and doubtless we shall hear of death threats ere long.
At the same time Commission for Conciliation, Mediation and Arbitration (CCMA) – what Business Day described as “the fulcrum of SA’s labour relations architecture” – declared that “more budget cuts will kill us”. This after Mboweni had cut their budget by R99m. Since cuts of R170m. and R231m. pencilled in for next year and the year after logically this should indeed mean the end of the CCMA, though there are not a few folk who believe this would be no bad thing and, indeed, some who think that it would be quite splendid.
There are a number of interesting facets to this situation. First, note the government’s kamikaze style of management. This consists of allowing the State Owned Enterprises to recruit massively more personnel than are actually required and then to feed these swollen workforces with inflation-plus wage increases, year after year. This is the logic of a patronage state run for the benefit of the bureaucratic bourgeoisie.
That is, the real purpose of an SOE like the SABC is only incidentally to do with providing news or entertainment. Its real function, indeed its true raison d’etre, is to provide the maximum number of well-paid jobs for deployed cadres and their friends who, of course, ensure an ANC-friendly service in return.
This ends up with the current situation in which staff salaries average more than R1 million a year per person. If you take account of the large number of gardeners, security guards, clerks, cleaners and secretaries employed by the SABC, all of whom earn a lot less than this, you realise that a large number of its staff must be taking home quite princely salaries. Currently, salaries consume 45% of the SABC’s budget.
This figure is interesting not just because it is entirely unsustainable but because the SABC doesn’t devote remotely comparable resources to any of what are alleged to be its main functions. This again emphasises that its real purpose is to provide what Cosatu calls “decent jobs”, which is to say, jobs with sufficient salaries, benefits and perks as to be worth many times the average wage. Naturally, the creation and retention of such jobs increases social inequality.
Secondly, the references to SAA and Denel (the state arms-maker) show that the SABC board has understood the game it is in. Because kamikaze management means recruiting so many and so well paid staff and then running the organization right into the ground. Naturally, as this happens the various SOEs emit cries of pain, demand extra subsidies from the taxpayer and, usually, come up with a “turnaround plan” entirely lacking in credibility.
SAA produced so many of these plans that its management seemed to be permanently circulating at speed in a revolving door. In fact this chorus of plans is a death rattle. It ended as we know with SAA reduced to a thousand staff, three planes and still dependent on a Prince Charming in whom only Pravin Gordhan believes.
So the SABC wants to avoid that final crash but to do that it has to abolish some of those “decent jobs”. In the land of the bureaucratic bourgeoisie this is the ultimate crime. It is against Holy Writ, which is to say, the Freedom Charter: “The state shall recognise the right and duty of all to work” – which means no retrenchments. And, indeed, no unemployment: hence the notion of the state as “the employer of last resort”. All of which means that losing even a single job in the public sector is a great drama. Compare this with the ruthless ease with which privately owned sections of the media have been slimmed down.
Already the Minister for Communications, Stella Ndabeni-Abrahams, has once before prevented the board from pursuing this, its sole means of organizational survival, and she is doing the same thing again now. So are the unions, interdict in hand. And Ace Magashule, out on bail as he may be, has told ANC MPs that it is their duty to refuse all job losses and that the SABC board “which has ANC deployees” must do the same.
How is this to be done? “The government must find the money.” Since Mr Magashule has proven remarkably proficient in his own career at just “finding the money”, no doubt this doesn’t sound quite as fanciful to him as it does to the rest of us. But it is a straight fight between ANC ideology and economics.
These are early days, however. We know the Land Bank is also in trouble and so is the Empowerment Fund, that the Passenger Rail Agency is under administration and that Eskom is technically insolvent as is SANRAL, the national roads agency, but undoubtedly the list of public entities in trouble will grow as the budget cuts begin to feed through. A very large number of municipalities are in trouble and the recent madly generous pay deal for municipal workers shows that kamikaze management is alive and well in that sector too. The Post Office is closing down branches right, left and centre but since it last made a profit in 2006 mere survival still seems like a heady ambition. Ominously, the Post Office also falls under the buck-passing Ndabeni-Abrahams.
What we are talking about really is the crisis of the entire public sector, for so long pampered by feather-bedding, overpayment and complete immunity from retrenchments. This crisis has been accelerated by the way public agencies have lagged badly behind market trends and innovation. Eskom’s decision to build two giant coal-fired power stations was criticized by the World Bank even when it was made but it looks sheerly ridiculous now, particularly since they don’t work. SAA’s decision to turn down a buyout from BA in the 1990s was similarly benighted. The government could have made a nice profit and guaranteed the airline’s future as a feeder into a major world network. Comair and Airlink have been far quicker to sign up foreign partners.
When Telkom was corporatized a condition was that it would lay down huge amounts of cable so that poor people in rural areas had phones, something which the apartheid regime had wickedly neglected. A fortune was spent on this only for the said poor people not to pay their bills so their phones all got cut off, so the investment was largely wasted. Alan Knott-Craig, then the head of Vodacom, pointed out that it would be miles cheaper just to give out free cellphones and erect a few more phone masts, but this sensible advice was brushed aside.
Telkom once had 100% of the telecoms market. Now it has been elbowed aside by the cellphone companies and relies mainly on its fixed line network as an internet provider. But how long can it be before the big tech companies move in to provide wireless broadband internet?
This is, after all, what has happened to the SABC, also once a 100% owner of its market. Multi-Choice, Netflix and Showmax have already moved powerfully into that space and every informal settlement bristles with thousands of satellite TV aerials. Disney and various other streaming services are expected soon. Private radio stations have also sprung up and meanwhile a good deal of the SABC’s advertising has migrated away to digital media. The SABC is still struggling with the century-old license fee structure. Two-thirds of its customers don’t pay the fee and the SABC is hoping, rather desperately, to get Multi-Choice and Netflix to collect their license fees for them.
It’s the same with the Post Office. First a whole rival chain of better-run private postal services, Postnet, sprang up. The courier companies moved in to take much of the parcel trade and the bulk of the letter trade migrated to email and thus to internet companies. The Post Office just sat and watched this happen. Like all its public sector peers it is at the mercy of powerful Cosatu unions which strike easily and make moves to rationalise the business very difficult.
Thus far, of course, the public sector (less SAA) has been wholly protected from job losses whilst the private sector has suffered 1.7 million losses. But this cannot really continue, particularly since it is clear that any spare money will have to go to prop Eskom up. The elephant in the room, of course, is the 1.2 million strong public service itself. We have currently reached the fantastic situation in which, on the one hand, the state’s fiscal crisis derives quite largely from overpaying the over-large public service and yet, on the other hand, Ramaphosa is quite frank about admitting that the state (ie. the civil service) is largely incapable. That is to say, we are in a mess because we have a civil service which is overpaid, overstaffed and can’t/won’t do its job.
A note on language here. President Ramaphosa brightly told investors this week that there were “huge” gaps in the state’s abilities but said that the good news was that this problem had now “been identified” and steps were afoot to “address” the problem. Leaving aside that the problem results from the quite deliberate ANC policy of cadre deployment and its systematic neglect of education since 1994, the language is the give-away. To reassure investors that the problem has been “identified” makes it sound as if there has been a needle-in-the-haystack search to discover a problem which has in fact been glaringly obvious for decades.
I once spoke to a British economist seconded by DIFD to advise the ANC government. He had, he told me, just been to a meeting where a colossal mess had been revealed. After a lot of sad commentary it was resolved that it was all a great pity and steps should be taken. He had exploded, “What this is is a mistake and it needs to be rectified and someone held responsible”. This was regarded as most unseemly and the committee recommended that “this is a challenge which must be addressed”. “What that means is that we will just sit and look at it, not admit a mistake and hold no one responsible”, he said. The word “address” does much service in an environment of incompetence and bad policy.)
The overall problem, though, is how does one slim down the public sector in a state run for the benefit of a bureaucratic bourgeoisie? If the real raison d’etre of the state is to provide well remunerated positions for the ANC elite, is such a process of rationalisation even possible?
This test has come suddenly. The SABC board has a week in which to conduct “consultations” but they have no way out of job cuts unless the Treasury caves in and bails them out. But a bail out would simply mean that the SABC remained stuck with too many people and too high a salary bill, so it would be no solution. The Treasury cannot cave in without throwing its whole budgetary strategy to the winds. Magashule and Cosatu will no doubt remind Ramaphosa that at his first Jobs Summit the president gave an (extremely foolish) promise that there would be no job cuts in the public sector.
Ramaphosa could of course reply that Covid-19 did not exist then and that has changed everything. But he won’t want to say that and not only because it’s not really true – for this reglement des comptes was always coming. The real point is that Ramaphosa doesn’t really want to intervene so that he becomes the hard face enforcing job cuts. Far better to just put it down anonymously to “economic necessity” and let Mboweni take the flak. But Cosatu and Magashule won’t allow him to get away with that.
With both Magashule and Zuma now on the line for their misdeeds this would be the perfect time for them to expose Ramaphosa as a busted flush. So if Ramaphosa is going to survive he has to face up and act like a strong leader even though he isn’t one. The worst thing he can do is to try to duck.
Yet that is probably what he will do, as will everyone else. No one will want to stand up and say, yes some SABC jobs have to go. So the organization will trundle on, deeper and deeper into debt until the banks refuse to lend to it and the moment of truth is reached. This is what happened at SAA and Denel and it is already happening at the Post Office, which hasn’t paid its staff’s medical or pension benefits for four months now. Kamikaze management, in other words, is not a conscious strategy but merely the result of universal buck-passing. No one wants to take responsibility or accept consequences.
These are only the first of a long, long line of such tests. If a 10% cut has the CCMA howling, imagine what the next cuts of 17% and 23% will do. Scores of municipalities are going to go bust and even the metropoles will be in trouble. What of the Land Bank? The water boards? The list is endless. And even if Mboweni’s now more relaxed timetable for debt reduction is followed, there will have to be quite a few years of cuts and freezes.
Has Ramaphosa really got the stomach for that? Has the ANC? Or was it just a fair weather party, able to govern only when it could shower largesse? It may be so but to govern is to choose and sooner or later every government has to squeeze and freeze. If the ANC can’t do that, it can’t govern. It managed it once, under GEAR, but it is not clear it can do it a second time. If that is the case then we really do have what John Steenhuisen called “an incapable head of an incapable state”.
But Ramaphosa has hidden strengths. The ANC is generally aware that he is now their only credible leader. In the 2019 election 11% of voters said they would only vote ANC because they trusted Ramaphosa: without him they might have gone under 50%. If the ANC pushed him out it is difficult to believe that the electorate would stomach Magashule or Mabuza in his place. Zweli Mkhize and Paul Mashatile would be more acceptable but they are second rank figures.
Moreover, the private sector – now the only thing that works in South Africa – might not accept any of these alternatives. How many of those investment pledges would be worth anything if Ramaphosa was overthrown? Not even half. Of course, the RET faction likes to depict Ramaphosa as being in cahoots with white capitalists and there is some truth in that. But one of the great benefits of the Zuma period was that the RET crowd was definitely exposed not as sincere lefties but as crooks and thugs.
One way and another Ramaphosa may seem tightly hemmed in but there is another way out: the bolt for growth. If South Africa could credibly launch itself on a 3%-5% growth path all our debts would become more payable, jobs would be created, the tensions would ease. The recent EU survey showed just how to do that: the two biggest factors impeding investment from the EU were our BEE and Equity Employment laws. Scrap those, deregulate and liberalize and the money will flow in.
Of course, even that would mean letting down other ANC constituencies but one could plausibly argue that 26 years of affirmative action and BEE favouritism was quite enough. No sensible company will want to do without black employees and managers in key positions. - they don’t need to have their arms legally twisted to do that.
And anyway the ANC and Ramaphosa are going to have to choose. Even ducking is a form of choosing: it just means handing the final power of decision over to the banks. And kamikaze management means destroying organizations which could have been saved if they were reformed, rationalized and slimmed down. Politically that is extremely dangerous because it sends the message that the state cannot or will not any longer protect the bureaucratic bourgeoisie – in which case that class could turn against the state and pull it down.