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State needs fortitude, vision to avert jobs bloodbath

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Picture: Courtney Africa / African News Agency (ANA) – Metrorail passengers rush to catch a train. Urgent government intervention is needed for Transnet and Metrorail to secure and rebuild our freight and passenger railway network and modernise our ports to grow the economy, says the writer.

By Solly Phetoe

The Congress of South African Trade Unions (Cosatu) rejects National Treasury’s reckless attempts to impose misguided austerity budget cuts across government in the run-up to the medium-term budget policy statement (MTBPS). The federation is dismayed that the Treasury has written to all state institutions instructing them to slash budgets by up to 15 percent, freeze all vacancies and infrastructure rollout programmes.

While we appreciate the very real fiscal constraints facing the state and the need to cut fat and re-prioritise expenditure, slashing expenditure and further de-capacitating will only choke the economy and further weaken an already enfeebled government. Instead, the economy is in desperate need of stimulus and a well-oiled and capacitated public service, thus enabling the state to provide the quality public and municipal services upon which the working class and the economy depend.

What is needed now is to grow the economy. That is the only sober and sustainable path to pay down our worrying debt trajectory. Pickpocketing nurses and underpaying police officers is not a solution. Cutting the public service wage bill is exactly what the Treasury has being doing since 2020, when then Finance Minister Tito Mboweni imposed a unilateral wage freeze and since then adjusted the wage bill at below inflation rates.

The narrow fixation of the Treasury on cutting the wage bill is a lazy option and one that will not resolve the multiplicity of crises the country is facing. Underpaying a nurse will not get the trains to run on time. What it will do is fuel the brain drain of skilled public servants, in particular, doctors, nurses, teachers, engineers and police officers, amongst others, to pack their bags and move to better-paying and less stressful jobs overseas.

The crisis we are facing is not an expenditure crisis. The wage bill has been stable at 35 percent of the budget for more than a decade. The crisis is a collapse in company tax. This is because of the rapid deterioration in the capacity of Transnet to transport mining, manufacturing and agricultural exports and products to their markets timeously. Mining, in particular, is a major contributor to the state of company taxes and an earner of foreign investment and exchange for the economy.

If the government does not turn things around at Transnet fast, we will face a jobs bloodbath in the mining industry and a crisis of revenue that no amount of pickpocketing public servants will fix. To grow the economy, reduce unemployment and increase revenue, the state needs to reduce debt.

Then, the government needs to deal with the real obstacles suffocating the economy, workers and businesses by:

  • Providing additional support to Eskom to reduce and end loadshedding and ensure reliable and affordable electricity.
  • Urgently intervening at Transnet and Metrorail to secure and rebuild our freight and passenger railway network and modernise our ports.
  • Stabilising and overhaul dysfunctional municipalities and restore basic services communities and businesses depend upon.
  • Allocating additional resources to the South African Revenue Service to tackle tax evasion and customs fraud and conduct lifestyle audits on the wealthy, and thus generate badly needed State revenue.
  • Filling critical front-line service vacancies in the public services, especially the police, National Prosecuting Authority and courts, enabling them to crack down on crime and corruption.
  • Giving relief to commuters and the economy by reducing the taxes currently consuming 28 percent of the fuel price and place the chaotic Road Accident Fund under administration to lessen its need for fuel levy hikes.
  • Expanding the Presidential Employment Programme to accommodate 1 million active participants by October’s MTBPS and two million by February’s budget speech to help young people earn a salary …
  • Enhancing the invaluable Social Relief of Distress Grant to recover value lost to inflationary erosion by raising it to the Food Poverty Line and link its recipients to skills and job opportunities.

If the government can show the necessary fortitude and vision and implement these common-sense interventions, the economy can grow and soon meet the 4 percent growth target. This will set the nation on the path to a prosperous job creating economy and ensure the fiscus is set back on a secure path. Cutting medication to a patient in the ICU ward at hospital will achieve little besides killing that patient.

Workers can no longer afford to live on hope and prayers, whilst Treasury experiments with economic theories that have been rejected across the world. Cosatu is engaging the leadership of government and the Alliance to seek a more pragmatic and sustainable path to rebuilding the economy.

Solly Phetoe is General Secretary of Cosatu