BHEKI NTSHALINTSHALI: Poverty and record joblessness demand a people-centred budget
About 15-million people live below the food poverty line and unemployment is at 46.9%
The upcoming budget speech to be delivered by finance minister Enoch Godongwana should respond to the real context of the economic crisis as experienced by millions of workers and their families daily. Many households continue to struggle to absorb escalating living costs.
About 15-million people now live below the food poverty line and the unemployment rate is at an all-time high of 46.9%. These are the statistics that should inform this year’s budget speech. The nation needs a clear strategy to help stimulate growth and regenerate the economy.
The economic stagnation shows that we cannot simply depend upon an economy that is based on unrealistic free market economic principles to solve the issue of poverty, unemployment and income inequality.
In response to this economic stagnation, the government should stimulate the economy by increasing the following:
- investment in the economy;
- funding to the “training of layoff schemes”;
- wages to motivate workers; and
- demand for goods and services.
The government should also provide funding to worker co-operatives to take over closed factories or those in liquidationor insolvency and nationalise companies in key sectors of the economy to retain skills and jobs. There is a need to increase social grants and use infrastructure projects to create decent permanent jobs.
A new macroeconomic policy framework is needed because the government cannot afford to rely on the dangerous and unsustainable levels of borrowing to meet its obligations. To avoid a possible massive societal breakdown, the government needs to reimagine a different type of economic framework that brings more people into the mainstream economy. The nation cannot afford to remain locked in an austerity framework due to ratings agencies’ threats.
Workers expect a clear commitment from the minister and government that last-mentioned will respect collective bargaining and engage workers on conditions of service, including the wage bill, in the relevant collective bargaining councils.
Workers also expect a coherent plan to fix our ailing state-owned enterprises. This should be expedited because we remain opposed to any plans to privatise them. Additional support is needed for Eskom to reduce its unsustainable debt levels, ramp up maintenance and bring on board new generation capacity.
The workers also expect to hear whether the government has a plan to manage the ever-increasing petrol price and the crippling electricity load-shedding. These twin challenges will worsen an already dire situation and will devastate poor families and communities. The recovery of the economy depends upon there being reliable and affordable electricity and fuel.
Urgent interventions are needed to save Transnet and the Passenger Rail Agency of SA, which are in a fight for survival against criminal syndicates. This needs to include the deployment of the SA National Defence Force to secure railway lines, the re-establishment of the police Railway Unit and the banning of scrap copper sales and exports. Plans are needed to stabilise and rebuild other key SOEs, in particular Denel, the SA Post Office and the SABC.
There is an urgent need to close tax loopholes for the rich, who are illegally taking about R147bn annually out of the country. More must be done to boost Sars's capacity to deal with tax, and in particular customs evasion and fraud. This will generate badly needed revenue for the state, protect local jobs and help boost the local manufacturing sector. Sars must be empowered to undertake lifestyle audits of the leadership of the government, SOEs and municipalities to help root out corruption.
The long-awaited Public Procurement Bill should be expedited. It needs to provide for a single online transparent public procurement system for the entire state. This will be key to clamping down on corruption and supporting local procurement.
The president's recent state of the national address referred to investing in the capacity of the police service, and the budget should deliver on that, including the rebuilding of the National Prosecuting Authority if we are to tackle corruption and crime.
We also expect the government to expedite the processing of the pension withdrawal scheme for highly indebted and struggling workers by introducing the necessary amendments. According to the Debt Counselling Association about 10-million people in SA have bad debt, meaning they have missed three or more monthly repayments. These people have an average of eight loans each. The Reserve Bank has depressingly pointed out that almost 73.7% of households’ income is spent on debt, while consumer spending contributes 60% to the economy.
Workers also expect a progress report on the impact of incentives that have been given to the private sector. The government has been generously handing unconditional tax breaks and employment subsidies such as the Employment Tax Incentive and Youth Employment Scheme to the private sector, and many have used that money to accelerate automation and mechanisation. In some situations they have replaced older workers. These should be cancelled if they are not serving their intended purpose.
Cosatu has also noted that the number of entrepreneurs and start-ups in the country is not at the level of normal economies of our size. Entrepreneurship is important in fixing the unemployment problem. This can take the shape of individual businesses or co-operatives.
One of the key challenges facing small businesses is a lack of funding. Young people are rarely targeted with subsidised credit, and they are not well served by formal sector financial institutions. By becoming so profit seeking, micro-lending institutions have also contributed to the marginalisation of young people as they resorted to charging high interest rates and demanding collateral for informal financing. The budget needs to speak to the government’s commitment to a revamped Loan Guarantee Scheme to help struggling businesses and sectors.
The government should also fix the National Youth Development Agency and ensure its funds go to young people seeking to set up their own businesses. Banks should be engaged to provide affordable and accessible credit to young people wanting to set up their own businesses. There is also a need for the development of a state bank and not-for-profit financial institutions that can reduce lending costs to young people.
Some government programmes such as the Presidential Employment Programme and internship programmes, which have managed to give relief to some unemployed young people, should be expanded and should pay young people a living wage. The budget should allocate sufficient resources to the Presidential Employment Programme to ensure it can create at least 2-million job opportunities. The budget should help narrow the gap between the R350 Social Relief of Distress (SRD) grant and the food poverty level of R624. The SRD grant should be retained beyond 2022 and used as the foundation for a basic income grant.
SA should learn from Malaysia. Before the 1970s it was focused on growth and exports and neglected the empowerment of the indigenous Malay majority. In 1969 there were riots that resulted in the killing of Chinese Malays. It was only after these riots that the Malay government introduced a new economic policy that sought to increase state intervention in the economy and introduce redistributive economic policies.
• Ntshalintshali is Cosatu general secretary.
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