South Africa: Capitalism has failed the country

Statement by Zwelinzima Vavi,
General Secretary, Council of South African Trade Unions

Let me start by wishing Madiba (Nelson Mandela) many more years 
of health and social activism. He has made huge contributions to 
the liberation of workers, all our people and indeed humanity as 
a whole. He has been an activist since before most of us were 
born.

He has given consistent support to the trade union movement, and 
kept the issues of our people — for jobs, higher pay, decent 
working conditions — at the core of our struggle. Last week, 
(mid-July) the General Secretary of the SACP (South African 
Communist Party) Blade Nzimande, made an important speech that 
the media largely ignored.

"Capitalism and the free market", he said, "have done nothing for 
South Africa in the last ten years of democracy. They have failed 
our democracy dismally." He pointed to massive retrenchments, 
"despite the fact that the capitalist class has made huge profits 
over these last ten years".

He noted that productivity is at record highs, while strike days 
are far down compared to the years before 1994. Nonetheless, 
employers have continued their huge assault on the working class.

Blade concluded that, "It is for these reasons that socialism is 
the only alternative". I could not agree more. Progress in the 
past ten years has resulted almost only from efforts by the 
state, communities and people's organisations. The economic 
rulers of our country have barred broader access to the wealth 
and power under their control.

Our economy is dominated by the private sector. It accounts for 
75 percent of investment, 80 percent of output, 86 percent of 
employment and about 80 percent of income. It has abused this 
position of dominance to ask continually for more concessions 
from the state, workers and society. It has become a bottomless 
pit.

Big business looks after big business

Despite increases in profits, despite industrial peace after 
1994, despite government's efforts to hold down taxes, the budget 
and inflation, big business has not played ball.

Instead of rewarding government for delivering the policies they 
demanded, they have maintained a long investment strike. Yet 
investment is critical for job creation and growth. In the early 
1980s, at the height of apartheid, private companies invested 
15.5 percent of the GDP; now they invest only 11 percent. Some of 
our biggest companies, which were founded on our workers' blood 
and sweat, have moved their headquarters and much of their 
business overseas.

The roll call of shame includes Old Mutual, Anglo American, SAB, 
and Liberty Life. Capital has grown formal jobs by only about one 
percent a year in the past five years — far slower than the 
growth in the population. No wonder, then, that unemployment is 
now over 40 percent.

Casualisation and outsourcing are undoubtedly on the rise. 
Employed workers face lower real pay and efforts to cut benefits. 
Particularly workers outside of unions have faced a continual 
decline in pay and conditions.

Meanwhile, top bosses have embraced the bonus system that grants 
them millions every year. Sizwe Nxasana, the head of Telkom, got 
11 million Rand (A $2.5 million) last year. That much money would 
save the jobs of around a third of the workers the company now 
plans to retrench.

Jacko Maree, Stanbic's chief executive, was getting R9.5 million 
a year two years ago. Some of their pals earn even more.

In the real world, where our members have to live, two out of 
five workers earned under R1000 (A$250) a month in September 
2003. Another quarter earned between R1000 and R2500. 
Unemployment and poverty wages combined to reduce labour's total 
share of income to its lowest since 1981, at 57 percent of the 
GDP, while the share of profits soared.

Poverty and unemployment

The poverty and inequalities shaped by the barbarous form of 
capitalism called apartheid remain with us. Almost exactly half 
of our people live below the poverty line. Some 56 percent of 
Africans earn less than the poverty line, but only seven percent 
of whites.

Just last week, the Commission for Employment Equity released a 
report indicating that the number of black people and women in 
professional jobs in big companies actually fell between 2000 and 
2002. In other senior management jobs, the report says progress 
toward equity has been at "a snail's pace". Last week, we also 
got a bombshell from Telkom, which plans to retrench 1,400 
workers. That adds to the 25,000 jobs they have gotten rid of 
since 1997. Meanwhile, they are boasting record profits.

Whilst all this is happening, news headlines are filled by 
stories of "black economic empowerment" involving the transfer of 
shares in big companies to a few lucky black faces, often former 
struggle heroes. These billions are just a small slice of what 
white capital has in its possession.

And they are hardly being used to empower the poor and 
unemployed. No wonder there is increasing restlessness amongst 
workers and the unemployed. Despite our political and social 
freedoms, most people face economic oppression very like that of 
the past.

They are poor; their children go hungry and jobless. And then 
people who should know better stigmatise them as "unemployable". 
Yet a black woman with a university degree is still half as 
likely to earn over R8000 a month as a white man with 
matriculation.

Workers fought the apartheid system. Now capital has snatched 
victory out of the jaws of defeat. In economic terms it has 
become the major beneficiary of our struggle, while workers are 
the main casualties.

What more evidence is needed to support Blade's point that 
capitalist policies and methods are failing the nation? Business 
tells us all the time that there is no choice: the market 
dictates its decisions. To be competitive, they say, they must 
fire workers and close down local operations.

But these are mere excuses. Within the capitalist system, 
countries have succeeded only where capital has understood the 
need to protect social coherence and sustainability, rather than 
fighting narrowly for itself.

Even in South Africa, we have seen some captains of industry who 
want to negotiate sustainable solutions. They recognise that only 
broader benefits for all our people can lead to long-run 
prosperity. That is why we saw some progress at the Growth and 
Development Summit (GDS).

But much of business ignores or undermines these efforts. Too 
often we have seen companies proclaim the GDS while they continue 
to retrench, outsource, casualise and reduce benefits for 
workers. They virtually ignore their obligations around skills 
development and employment equity.

This can't go on forever. There is an alternative!