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CONTENTS
A
transformative budget?
Social services
Debt
Revenue The reduction in company tax from 35% to 30% was unexpected. It is, however, consistent with historical trends towards reducing corporate taxation and increasing the burden on individuals. In the context of the current 'investment strike' by the private sector, however,it is unlikely that companies will use the money they save to create jobs. Instead, it might well mean that working people subsidise higher dividends, offshore investment, and other unproductive diversions of surplus. On the positive side, the budget gives tax relief to middle income earners a step towards greater progressivity of the tax system. Pressure from some quarters for increases in VAT a highly regressive tax were also avoided. Other taxes which COSATU has been calling for such as a capital gains tax, wealth tax, land tax, and a special excise tax on luxury goods appear not to have been considered. Public
sector Any such intentions would need to be reconciled with the recent agreements reached in the Public Service Co-ordinating Bargaining Council. In fact, the audit process agreed to in this body is likely to reveal serious understaffing in critical areas of service delivery. The Budget Speech also made reference to the restructuring of the Government Employees Pension Fund this will be an area to watch in the course of the year.
Targets Nevertheless, fiscal discipline and the restrictive monetary environment still limit the extent to which the budget can be used to meet basic needs. It cannot be described as a budget which will alter the current distribution of wealth. Although no specific announcements were made about exchange controls, it was indicated that there will be further liberalisation in the course of the year. This is the last thing we need in the context of capital outflows and destabilising speculative capital movements. Process
The futility of current processes led to COSATU's continuing non-participation in the Parliamentary Budget Hearings. Hopefully, one of the legislative priorities of the new government will be a democratisation of the entire budget process in line with the spirit and letter of the Constitution. Fiona Tregenna is an economist at NALEDI. This article draws on the COSATU response to the 1999/2000 budget. Change
in selected source of revenue 1990/91 - 2001/2
This issue of the Policy Bulletin focuses on the budget. We also examine the growing phenomenon of South African firms relocating to neighbouring countries, using the clothing industry as a case study. Low wages and lack of labour standards appear to be one attraction. The withdrawal of these firms from already low wage locations highlights the danger workers face in the global 'race to the bottom'. Further evidence of this is presented in the article on undocumented migrants in South Africa's construction industry. Hopefully, 1999 will see the recommendations of the Job Summit being implemented. The labour movement has launched its Job Creation Fund. Other social sectors have also made funding commitments. At the end of the day, though, it is the budget, and the vision it brings, that will determine whether or not South Africa finds its way out of the unemployment trap.
Ravi Naidoo
The above table indicates year-by-year real changes in different categories of expenditure, over the period 1996/7 to 2001/2. For example, at 5,5% inflation social services would be cut by 0,5% in real terms over last year's allocation, while if the last year's average inflation rate of 7,6% were to continue, these services would be cut by 2,6% in real terms. Even at the Department of Finance's projection of 5,5% inflation over the forthcoming fiscal year, the only functions to receive real increases in expenditure are general government services and unallocatable expenditure, police, justice, and housing. (This could change if rollovers were taken account of.) Notes
The South African construction industry has faced long term decline for several decades. Employers have responded to falling profits by using labour-only subcontractors. Accurate figures are hard to obtain, but it is possible that up to half of all the workers in our construction sector are foreign. Many come from Mozambique. Many are undocumented they either entered the country illegally or are working without proper documentation. Exploitation
It is important to note that rural South African workers are exploited in the same way in the construction sector. Organise
all workers Employers are using migrant workers to drive wages and conditions of employment down across the sector. South African workers tend to blame the undocumented migrants for 'stealing' their jobs. Worker ends up fighting worker. The employers are the only ones who benefit. Unions need to redirect worker anger towards the employers who are breaking the law with such ease. Instead of pushing for increased fines for employers who employ undocumented migrants, they should fight for more effective enforcement of labour legislation and fines for employers who break these laws.
Extending rights The unions need to move the debate on labour migrancy away from stricter policing and border controls to the struggle for better jobs, wages and conditions not only in South Africa, but in Southern Africa. The Maputo corridor development provides an excellent opportunity to consolidate cross-border organisation of construction workers.What is needed is the organisational will to do so.
Rob Rees is a researcher at NALEDI in the area of union organisation.
This article is based on a NALEDI Research Report on the impact
of Mozambican migrants in the construction sector. South Africans are not all the same. The government should spend its money on services for those who need them most. The budget should tell us which groups of South Africans will benefit from government spending and which groups will pay for it. Yet, until recently, most discussions on the budget spoke as if the 'average' South African was a white man. The
WBI In education, for example, it looked at the large allocation going to tertiary study, while only 1% of the education budget went for adult basic education and training. Yet 23% of African women aged 25 or more and 16% of African men have never been to school. In labour, it looked at the very small government allocation for UIF, despite the high unemployment rate (much higher for women than men) and the fact that UIF provides for maternity benefits. The WBI has examined the budgets of all government departments. Often people think that gender issues are only important in the social services such as education, health and welfare. However, there are 27 departments, and researchers found gender imbalances in all of them. One of the successes of the initiative is that the Department of Finance has now recognised the importance of this type of analysis. Last year's Budget Review, and this year's National Expenditure Survey both tabled on Budget Day contained some discussion of gender issues. Limitations
It tends, instead, to be confined to a few specific projects such as Welfare's Flagship Programme for Unemployed Women with Young Children, or the Department of Water Affairs and Forestry's Community Water Supply and Sanitation Programme. These programmes are important but they will have very limited impact on gender inequity if gender biases of mainstream programmes are not addressed. Accountability
Again, however, the new system will be of limited use in determining whether government is reaching development and equity objectives unless specific information is provided. We need to know where those clinics are being built and what type of services they are offering. We need to know whether the pupils are boys or girls, and what subjects they are studying. We need to know what sort of jobs are created, where, and for whom. These are the kind of changes the WBI is fighting for.
The WBI's research has been published in three books. These can
be ordered by email from: faldelah@idasact.org.za
Debbie Budlender works for the Community Agency for Social Enquiry
and is the coordinator and editor of the Women's Budget Initiative.
South African trade unions have argued that, in the context of differing labour standards and associated lower wage costs and lower levels of social protection, coupled with highly mobile capital, some industries will relocate to neighbouring countries. Indeed a growing number of manufacturing industries, particularly commodity type goods, are relocating to the SADC region. In South Africa, the clothing sector is an important employer of women. Women make up approximately 76% of clothing workers. The average figure for other manufacturing sectors is only 31%. Approximately 125 000, mostly black, women work in the clothing sector.
Reasons for relocation South African firms have also relocated in response to lower wage costs. It is estimated that a qualified machinist in Malawi earns between R119 and R190 per month, while in Mozambique the wage is R176 per month. In South Africa, the same worker would average about R1 474 per month (although many South African workers are currently on short-time and are earning less than this). Although productivity is lower in these countries, poverty wages and other factors still make it profitable to manufacture there. The research showed that South African firms making use of foreign processing have relatively large operations. Strategies
Claire Horton is a researcher at NALEDI. This article was based
on a NALEDI research report which looks at the reasons for relocation
of clothing and textile companies. The Lesotho and South African labour markets are closely interwoven. Like many of our neighbouring countries, Lesotho has been a source of cheap migratory labour, especially to the mining sector. Despite the differing size of their respective economies, the labour markets do impact on one another. It is for this reason that South African trade unions need to pay attention to unions in Lesotho. There are three labour federations in Lesotho. Their combined membership in 1997 (the latest figures available) was just over 12 000. Eighty percent of all union members belong to the Congress of Lesotho Trade Unions (COLETU), which was launched at the beginning of 1998. These figures occur in a context where only 99 000 employees found formal wage employment in Lesotho during 1995. Furthermore, 86% of Lesotho's population are engaged in subsistence agriculture and approximately 35% of all its male wage earners work in South Africa. A
new movement According to COLETU's General Secretary, there were two major reasons why they decided to form another federation:
A rough analysis of sector employment in Lesotho for 1995 suggests that, with the exception of the LFDU's retail affiliate (NURAW), COLETU affiliates have the largest presence in most sectors of the economy. This is true for teachers (schools are largely run by the churches), for clothing/textiles, which represents about 70% of all manufacturing jobs and for the construction sector, which has grown in relation to the Highland Water Project. Most of COLETU's membership lies in these three sectors, with two thirds of its overall membership in the clothing and textile union (LECAWU). The Lesotho government has promoted this industry on the basis of out-competing bantustan type labour areas like Qwa Qwa. The costs to workers have been considerable.
Solidarity The emergence of a militant and worker controlled labour federation in Lesotho echoes trends in other parts of Southern Africa, notably the mass labour struggles in Zimbabwe and Swaziland, and, on a smaller scale, worker struggles in Mozambique and Namibia. Such developments reinforce the COSATU Congress resolution that calls for the moving away from symbolic solidarity in international work towards concrete solidarity that 'advances the struggle for socialism by the working class.'
This article is based on a NALEDI Policy Memo which looks at trade
union federations in Lesotho (Nov '98). This research round-up lists recent NALEDI research and highlights forthcoming work. Wages
and bargaining NALEDI and the Norwegian institute, FAFO, have launched a joint project focusing on wages and collective bargaining. This project, which is expected to be completed by April, aims to provide information to unions in order to assist them with bargaining. The project is unique in that it uses actual wages paid to workers, rather than collective agreements. This enhances the significance of the results, as many workers are not covered by bargaining agreements. The project is also looking at wage determinations and wage gaps in South Africa, an international comparison of wage levels and wage gaps, wage elasticity in South Africa and a number of sectoral case studies. Co-determination One of the research papers is entitled 'Co-determination and transformation: co-optation or alternative vision'. The paper, authored by David Jarvis and Ari Sitas, proposes a system of governance of economic institutions that goes beyond the dualistic European co-determination models, where only labour and capital are represented. It argues that there have to be arrangements to govern socio-economic performance. However, the nature and meaning of economic performance has to be contested and broadened. 'Social co-determination' can and must involve a broad array of interest groups, delivery structures, urban and rural voices and NGOs. There are also possibilities for local co-determination. Hours
of work
It concludes that, while the majority of motor component companies would not reduce employment if faced with a 40 hour week and no loss of pay, a higher proportion of companies would increase or maintain employment if there was a proportional reduction in pay. This paper forms part of the long-term NALEDI project on Hours of Work. The other sectors covered by this project are gold mining, retail and long distance transport.
NALEDI undertakes labour and economic research. Its main focus is policy research which will build the capacity of the labour movement to engage effectively with the challenges of our new society.NALEDI is an initiative of COSATU, but is controlled by an independent board. NALEDI's main focus areas are labour markets, economic, trade and industrial policy, union organisation and women and work. Our activities include the production of research reports and policy memos, facilitating workshops and training and library facilities and resources.
Contact NALEDI at: |
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