Cosatu CC: Singing a new tune

CC to consolidate its industrial policy vision

‘Asifuni iGear’ is often the cry at union meetings. The detrimental effects of government’s Gear policy on the poor and the unemployed have long been the reason for the unions’ hatred of the policy.

But a new song could be sung at the CC. Documents drawn up for it ask affiliates to debate the merits of different industrial strategies – redistribution, industrialisation and a third which combines the two.

Redistribution is roughly the model that government is following now. It says that it involves using “resources from the formal sector to support the un- and underemployed”.

An industrialisation strategy on the other hand “emphasises employment creation through a massive increase in support for light industry and services.”

A redistributive strategy would continue to see the economy dominated by the exports of minerals, heavy chemicals as well as cars, car components and possibly armaments. Unemployment would continue to be high. Those employed in the export sectors and in those sectors producing for the locally employed, would continue to receive high wages.

Government would support the unemployed and underemployed through taxes collected from the formal economy. It could do this through grants and/or supporting micro enterprises like spaza shops and promoting black economic empowerment. But the gap between those formally employed and those unemployed would continue to be huge.

Such a strategy would rely on the continued rise in commodity prices (gold, coal, steel, platinum etc). This could occur because of growth in China and the US . But if commodity prices fell, the economy would be in deep trouble.

An industrialisation strategy emphasises job creation. It looks at growing new sectors, some for export but others to meet local demand, especially from the poor. New sectors would be labour intensive to absorb more of the unemployed and would concentrate on light industry, services and agriculture.

A strong state is needed because the strategy “requires a fundamental redirection of activities by all stakeholders, including the state, capital and even labour.”

The state would have to support employment-creating activities. It should try and reduce the cost of living for working communities by improving efficiencies and subsidies for services like public transport, water, electricity and education.

Its monetary policy “should ensure lower real interest rates” and a depreciated rand. But it should make sure that the costs of essential items for workers are kept in check.

Its trade policy should raise tariffs – “every country that has industrialised has far higher tariff protection than South Africa .” Without raising tariffs, start up industries will struggle to compete with outside competition.

Although wages in these new light industries may not be high, they should absorb more of the youth that are unemployed. This should increase overall family incomes.

Even this strategy risks failure. The state could support industries that are not sustainable or capital could decide to take its money overseas thus threatening the strategy.

The document suggests that a combination of the two strategies might be the least risky.

Mining will continue to dominate. But more beneficiation (processing/refining raw materials further to make new products) and the building of capital-goods industries and services would back it up.

Government must institute massive land reform to raise living standards and provide opportunities for those trapped in former homelands.

It must also give more support to light industries and services providing basic necessities to working class communities.

Labour must ensure more collective ownership through broad-based BEE and a strong co-ops movement.