By Solly Phetoe
South Africa’s economy is limping, public services and workers are struggling.
Cosatu and workers had expected much more from the Medium-Term Budget Policy Statement tabled at Parliament on Wednesday.
The Budget is government’s most strategic tool and needs to be used far more strategically to stimulate growth, slash unemployment and rebuild the state.
Cosatu’s disappointment is that it was a business-as-usual budget statement with little new to tackle our many socio-economic challenges.
Our number one crisis is our staggering unemployment rate of 42.6%. We are in danger of creating a class of the permanent unemployed with a youth unemployment rate of 70%.
All our socio-economic challenges cascade from this, be it poverty, inequality, crime, disease, homelessness. Public services cannot cope when so many cannot find work. Whilst we appreciate that state resources are limited and face many pressing demands, we differ fundamentally with Treasury’s approach of elevating cutting expenditure and squeezing the public service wage bill above stimulating economic growth, slashing unemployment and rebuilding the state.
The approach of Treasury is that South Africa’s crisis is one of debt, when in reality it is one of economic growth.
If we are to set public debt on a sustainable path, then we need to grow the economy and get people in jobs and thus generate the taxes needed to fund quality public and municipal services society needs to thrive and thus reduce our dependence on borrowing.
Much has been said by Treasury, politicians and commentators about the state being bloated and the wage bill being out of control. Yet the Budget reveals these myths are not born by reality.
In 1994 there were a million public servants for 34 million South Africans. Today with both the economy and the population having nearly doubled, the latter to 64 million citizens, the public service has barely grown to about 1.2 million with on average 70 000 vacancies.
We have however seen a ballooning of Cabinet positions and the number of Councillors, with little to show for them!
The public service wage bill had been stable at 35% of the budget since 2008 when it had increased with the filling of critical skilled positions, e.g. nurses, doctors, teachers and police officers.
Despite the ill-informed public narrative of a rising wage bill, it has decreased over the past two years to 31% of the budget with the 2020 wage freeze and below inflation adjustments since.
We have witnessed the freezing of critical posts resulting in rising ratios between teachers and learners, nurses and patients, a 15% decrease in the police headcount whilst crime and population increase, and a massive number of vacancies at Home Affairs when staff struggle to cope with endless queues.
The further dangers of Treasury’s determination to squeeze the wage bill is fueling a brain drain of badly needed skills from the public service.
High in demand professionals from doctors to nurses, teachers and police officers are being aggressively recruited to better paying and less stressful jobs in the private sector and overseas.
This robs the state of the skills needed to provide the services the economy requires to grow and renders meaningless the billions it spends on training these workers only for them to seek greener pastures internationally.
What are Cosatu’s alternatives?
Government will be tabling the 2025/26 Budget at Parliament in three months. We need a bold budget that will stimulate the economy, slash unemployment and deliver world class public services.
We need to build upon the successes achieved under the government led by President Cyril Ramaphosa and the ANC and tackle the deep fault lines.
Eskom has seen a remarkable turnaround from 12 hours of loadshedding a day a year ago to none for the past 6 months. Yet it remains fragile and needs further support to tackle corruption and plug its financial losses, in particular the R80 billion owed to it by municipalities.
This necessitates a move for all consumers to pay Eskom directly and upfront. No company can survive if only half its customers pay.
Transnet has stabilised and Metro Rail is making real progress returning to full capacity.
More needs to be done to secure and rebuild our railway network and modernise our ports. Both once returned to their glory days will unlock badly needed jobs and revenue from the mining, manufacturing and agricultural sectors as well as provide an immediate boost to the economy.
Similar interventions are needed to re-pivot Denel, the Post Office and Postbank, who with the right management and support can once again play a positive role in the economy.
Government has put in place a massive infrastructure programme of R943bn, which if spent well, will be an invaluable stimulus for the economy.
But this requires urgent interventions to turn the deeply worrying state of local government around.
Actions are needed in key departments which are already far behind their targets for the year, in particular Basic Education, Water and Sanitation, Agriculture and Rural Development, and Cooperative Governance.
These critical interventions can unlock the economy and create the jobs we need, but they must be accompanied by solidarity and relief for the poor and SMMEs.
A stimulus package and more affordable credit from the public and private sectors for SMMEs are required, including ensuring they are paid within 30 days.
A road map is needed to raise the SRD Grant to the food poverty line and link its participants to skills and employment opportunities.
The shameful cuts to the Presidential Employment Stimulus must end and it must be ramped up to accommodate at least 2 million young people annually to enable them to earn a salary and acquire the skills and experience needed to find permanent jobs.
It’s time we declared war on unemployment, put in place a Marshall Plan to grow an inclusive economy and build a well capacitated developmental state.
This will come with a price tag, but it is far more affordable than stagnant growth, 40% plus unemployment and deteriorating public and municipal services.
Solly Phetoe is the General Secretary of Cosatu.
BUSINESS REPORT