BHEKI NTSHALINTSHALI: Neoliberal Treasury is making workers pay for politicians’ errors
Cutting back the number of public servants will increase unemployment and reduce the chances of recovery
The government offensive against public service employees, led by the Treasury, is alarming but not surprising. Public service employees are being unfairly singled out and targeted, with a narrative being created that the public sector wage bill is threatening the state’s survival even though it is, in fact, stable and in line with international norms at 35% of the consolidated budget.
More troubling than the Treasury targeting the public service wage bill in its efforts to reduce the budget deficit is that the focus is on the lower levels of the hierarchy rather than the bloated managerial or executive levels. The Treasury wants a spending ceiling or limit to be imposed on the wage bill, covering both national and provincial government departments.
Public service employees are being used as scapegoat by people who refuse to admit that their own policies have worsened a bad situation since 1996. The truth is that the imposition of the growth, employment and redistribution (Gear) policy in the mid-1990s meant necessary reform of the apartheid public sector took place along the lines of then public service & administration minister Geraldine Fraser-Moleketi’s so-called new public management model, in which Gear set the overarching neoliberal framework.
One of the model’s goals was to curb spending on public service salaries, which it saw as consumption (and therefore wasteful) rather than investment. In the delivery of services the model insisted on the user-pays principle (such as with e-tolls), as opposed to cross-subsidisation of the poor by the rich. It promoted the commodification of public services rather than the promotion of constitutional or citizenship rights, and as such citizens became “customers” or “clients” in the delivery of public services.
In part the crisis of poor service delivery in SA, manifested in often-violent community protests, is related to the effect and legacy of such reforms, which have weakened the state’s capacity and unleashed profit-maximisation in the delivery of public services. The state has been taken over by private interests, both established white-owned business and emerging black business. The influence of white business interests is visible in policy development (not only at the Treasury but across government) and in large construction projects of the national infrastructure plan. Black business has tended to be more involved in the boards of the state-owned enterprises and the delivery of outsourced services such as security, office letting, cleaning, catering, housing and IT.
Often the tender and procurement contracts struck between the state and these businesses (both black and white) have involved corruption and fraud, and many senior public servants have been exposed advancing their own narrow personal, or in some cases nepotistic, interests. As recently as 2015 the government was still pushing for the agencification of the state through the Border Management Agency Bill, which aimed to create an agency outside the public service to manage points of entry at the national borders. This happened despite overwhelming evidence that agencification usually opens the door to wasteful outsourcing. For example, the SA Social Security Agency turned out to be an empty shell created for the purpose of outsourcing functions to the private sector — proof enough that agencification is a terrible idea that has a negative effect on the poor.
The mismanagement of the public service and of the entire economy is not the fault of workers, who are the backbone of service delivery. The structural faultlines of the semi-peripheral SA economy, which is still trapped in a condition of dependency on mineral imports by the EU and China with no substantial beneficiation to promote industrialisation and is dominated by the Big Four banks, is not the fault of workers. The persistence of this socioeconomic structure — “colonialism of a special type” — means production and power remain concentrated in white capitalist hands; the old apartheid oligarchy.
The looting of the Road Accident Fund and a culture of bling expenditure including R5bn on cellphones by the government, are also not the fault of public sector workers. Nor can they be blamed for the fact that the department of health is spending billions on medical malpractice claims. The government’s corporate welfare culture has allowed private companies to receive billions through the employment tax incentive and youth employment scheme, which have been staunchly opposed by workers.
State employees did not lose R500bn to state capture, and also cannot be blamed for the fact that according to the auditor-general on average 10% of the budget is lost to corruption and wasteful expenditure. Our cabinet still ranks as one of the biggest and most expensive in the world, and the workers are not responsible for that either.
According to the latest quarterly labour survey, 29.1% of people of the working age group in SA are officially unemployed. This is calamitous for the country because it means millions of young people and their families are dependent on the state for their survival. It is therefore bizarre that there are attempts by the government to weaken the capacity of the state through public service cuts.
Such cuts will worsen SA’s unemployment level and increase the number of people requiring government assistance for health, housing, education and social security, placing increased pressure on the fiscus. Cosatu views the cutting of public sector jobs as nothing other than a reallocation of funds from the public sector wage bill to social security as more workers line up to collect Unemployment Insurance Fund cheques. The cuts will yield no actual benefit to the fiscus but will threaten the economy and service delivery.
The long lines at hospitals will continue to increase, making public health inaccessible and less reliable as fewer nurses and doctors are available in public hospitals. Teacher-to-student ratios are set to multiply, reducing the performance and pass rates of students and further depressing SA’s standing on the human development indices.
The Treasury sees public sector cuts as a silver bullet that will appease the ratings agencies to avoid further credit rating downgrades. However, job cuts of any kind will have the opposite effect in a country with already high unemployment. Both spending and saving will be reduced, further depressing growth and prolonging the recession, which for a country rated subinvestment grade is an invitation to the ratings agencies to downgrade further. The Treasury has clearly not thought through the rationale of a public sector wage cut and the unintended consequences for the health of the economy.
The Treasury’s neoliberal capitalist approach is not the solution to SA’s economic challenges, which call for bold measures of transformation. Foreign direct investment is not the only solution, and sometimes worsens the situation by encouraging external dependency and stifling economic transformation. Both the Gear macroeconomic framework and the National Development Plan 2030 were adopted over the objections of workers, and in the current economic conditions it would be treacherous for the labour movement to allow innocent public service employees to be punished for the sins of the real decision-makers.
The government should take responsibility for its policy failures and leave workers alone.
• Ntshalintshali is Cosatu general secretary.