SA needs a Thatcher to take on the public sector
It’s a completely predictable routine. The audience watches with jaded indifference.
The steps are choreographed from entry through to exit. The swoops and bows are unchanging from one year to the next.
It’s the annual dance of wage negotiations between the public service unions and the government. This year, the government’s first offer was an inflation-tracked increase of 4.8% for all employees except those in the top two grades, who were asked to signal their selflessness by accepting a percentage point less.
The Conngress of SA Trade Unions (Cosatu) kicked off by demanding 10% increase at the top end and 12% for the rest, who are at present subsisting on “slave wages”. Then there are all kinds of fringe add-ons, such as increased housing allowances, bursaries, and leave benefits.
As the negotiation quadrille stumbles about, these figures are obviously in flux. But the detail is just a distraction from what is the real issue. And that is how much excessive resources will in the end be pumped into an already grotesquely bloated public service? Will it be too much, or way, way, too much?
Both the rate of growth of remuneration and public service staff numbers are unsustainable, given the country’s lacklustre economic growth. Everyone knows that at some time in the future, there will have to be a reckoning and that disaster beckons.
Nevertheless, there are the usual threats of mass action, if the unions don’t get there way. Cosatu is “combat ready” and will “take to the streets”.
No one has the courage to take on the labour movement, least of all Acting President Cyril Ramaphosa. After all, it was with the assistance of Cosatu and the SA Communist Party (SACP) that he got his hands on the levers of power. So, he is pretty much beholden to these two alliance partners – whose influence, ironically, former president Jacob Zuma had challenged and reduced substantially – to keep his mitts on those handles.
Zuma’s sidelining of the SACP and Cosatu unfortunately had nothing to do with curbing the baleful effect of these two on the economy, but rather with rendering them harmless to his personal ambitions. During the Zuma years, the public-sector wage bill increased by an annual 10.3%, well in excess of inflation, as Zuma followed an unstated but key element to the African National Congress’ philosophy – the more people that are on the state payroll, the more guaranteed ANC voters there are.
As the Institute of Race Relations points out in an analysis last week, the statistics are dismal. A third of all government spending is on public service salaries; government sector employment has risen by 25% since 1996, to hit 2m in 2017; and since 1994, pay increases for the public sector outstrip, by far, those awarded in the private sector.
The situation is eerily analogous to the plight of Britain in the 1970s, where the social contract between the powerful union movement and successive governments had deteriorated into a rampant worker militancy. For comparison purposes, imagine our untouchable, work-shy SA Democratic Teachers Union, multiplied several fold.
Any and all attempts to curb union power, whether by Conservative governments or those of the unions’ traditional ally, Labour, were thwarted, while the British economy spiralled downwards. It was a Labour government that in 1976 was confronted with a fiscal abyss and had to slash government spending, bringing it into conflict with the unions and leading to the government’s collapse after only three years in power.
Onto the field of conflict rode the Conservative Party’s iron-willed Margaret Thatcher. She delivered exactly what she promised: the union movement was brought to heel and, eventually, there was a powerful economic recovery.
There persists, to this day, an enormous antipathy towards Thatcher. It is understandable, since her more than 11 years as prime minister were marked by intense social divisiveness and, initially, excruciating economic pain.
In her defence, Britain was in a state of terminal decline when she took over care. It was a case of kill or cure and as she said, in response to expectations that she would be forced to make a U turn on her desperately unpopular policies, “the lady’s not for turning”.
The era of monetarist certainties, as espoused by Thatcher, is long over. Nevertheless, every country faces at some stage a crisis of such magnitude that demands a leader willing to take necessary decisions, despite vilification and anger.
SA is approaching that crisis, but given his debt to the unions and the SACP, that person is unlikely to be Ramaphosa. Nor is it Mmusi Maimane, leader of the Democratic Alliance.
The DA might be the largest opposition party, but for the foreseeable future it is still far too small to be in contention to govern. In any case, the drift in the DA is towards an economic populism that echoes the ANC. The DA simply cannot espouse the harsh public service cutbacks that are necessary, without harming its electoral prospects.
The truth is that nothing will change until it has to. Like Britain, SA will have to topple into the abyss, then pick itself up and find a way up and out. The feel-good Ramaphosa era may be very short-lived.
Follow WSM on Twitter @TheJaundicedEye