Vavi,+The+South+African+economy+since+1994



=The South African economy since 1994=

Zwelinzima Vavi, General Secretary, COSATU – Walmer High School, Port Elizabeth, 27 August 2005

 * Dear friends and comrades,**

Thank you for the chance to speak at this banquet for Walmer High School. I am grateful for this opportunity to pay tribute to the silent heroism of the people who are struggling to make our education system work. Their efforts are critical for national development and for democracy. Only people equipped to understand and analyse the political, social, cultural and economic realities can help us address the huge challenges South Africa faces.

The greatest challenges for us today lie in the economy. As the Presidency’s ten-year review pointed out, we have made enormous strides in establishing democratic institutions. We have begun to improve access to basic services, especially in the towns. But our economy remains heavily inequitable, characterised by mass unemployment and poverty as well as slow growth and low investment.

The roots of extreme inequalities and joblessness lie in apartheid. The system sought explicitly to impoverish the majority of our people, especially in the then-homeland areas, by denying black people, and especially women, economic and labour rights. Our people could not own land in most of the country. They could only gain an education or training with great difficulties. They could not easily access the financial or marketing systems.

The aim of this system was simple. It was to ensure our people had no option but to work for the bosses in the mines and farms. It set out deliberately and cruelly to create mass unemployment, especially in the former homeland regions, so that people would work for any wage because they had no choice.

Inequalities were also aggravated by the structure of the economy. South Africa has grown on the foundations of the mining industry. This industry tends to support just a few huge companies, with little scope for smaller enterprise. In the 1980s, the apartheid state invested heavily in strategic industries, especially new kinds of mining, arms and heavy chemicals. Again, these are large, capital-intensive sectors that encourage high levels of concentration of ownership.

The production structure, then, encouraged the power of a few huge companies. This deepened the inequalities that grew out of apartheid.

By the 1980s, the apartheid economic system was in crisis. Increasingly high-tech and heavy industry could not create enough jobs for our people. The decline in the gold mining industry aggravated the problem. Meanwhile, international companies lost interest in investing or trading with South Africa, as the sanctions effort intensified.

At the same time, the system faced on-going mass unrest. Ultimately, our struggle led to the transition to democracy in 1994.

In reviewing economic developments over the past ten years, we have to measure ourselves against our progress in overcoming the legacy of apartheid. Have we transformed our economy to ensure prosperity, equity and employment for our people? Or do we still have to address the mass poverty, unemployment and concentration of economic power crated under apartheid?

Certainly progress toward democracy and improvements in government services for black communities have supported greater equity and given many of our people better lives and new economic opportunities. We appreciate these advances, although we recognise that we still have far to go.

The fact remains, however, that unemployment and income inequality have actually worsened since 1994. On the one hand, over four million people are looking for paying work, and can’t find it. The number of unemployed people has risen from two million ten years ago.

The problem is worst for the youth. Two out of three young people now have no jobs. Look at the young people here in this hall: for every three, two will have trouble getting paid work when they matriculate.

On the other hand, wages for workers have remained low. Workers who belong to unions have generally maintained their standards. But workers outside of the labour movement, such as farm, domestic and informal workers, have seen declining pay, if we take inflation into account. Today, 40% of workers earn under R1000 a month.

While workers have suffered such hardships, the economy has only grown slowly, at under 4% a year. That is not enough to create employment on a mass scale. Investment is needed to drive our economy – but business has remained slow to invest in South Africa, and quick to list overseas. That means they have grown foreign economies, while ours remains relatively stagnant.

COSATU and the SACP have concluded that business actually gained most in economic terms in the past ten years. This is clear from the statistics published by the government. Between 1993 and 2004, the share of profits in the economy rose from 25% to 30%. Meanwhile, the share of wages and salaries dropped from 51% to 45%.

We have heard that in the past six months the economy has grown well. But as workers, we still see rising joblessness and poverty. And the share of wages and salaries in the economy has continued to fall.

The basic question, of course, is why the legacy of apartheid still shapes our economy. The fact is that we have failed to address two basic problems: the ownership of our economy by a few huge companies, and the focus on heavy industries and mining, which cannot create jobs or opportunities for most South Africans. At the same time, we have still not overcome the huge inequalities in access to infrastructure, credit and retail markets.

The government’s adoption of GEAR aggravated the situation. In line with GEAR, the government cut protection for our industries against imports, reduced its own spending, and tried to privatise or at least commercialise the state-owned enterprises. As a result, the public sector shed hundreds of thousands of jobs. Meanwhile, economic growth slowed down and infrastructure saw little improvement in the late 1990s, while the government was cutting the budget.

Since 2000, the government has at least begun to spend more and to develop plans for strategic investment by the parastatals. We hope and expect that these plans will be taken forward rigorously. They have already stimulated somewhat faster growth and higher investment.

But the fact remains that business and the government must still do far more to reach our target of halving unemployment by 2014. The pressure is becoming urgent. The strikes in our workplaces and the unrest in our townships points to the fact that people’s patience is running out. Over ten years since democracy, our people expect real changes in their economic conditions.

Education has a special role to play in meeting these demands. We all know that the education system today is really in crisis. True, it has in theory been opened to all people equally. But in fact barriers of race and class still keep most black learners out of good schools. Meanwhile, township and rural schools remains underfunded and understaffed. Our teachers struggle with inadequate textbooks, poorly resourced and overcrowded classrooms, and a lack of support and on-going training.

In these circumstances, your economic prospects are still determined largely by where you live and how much your parents earn, not by your own abilities and national needs. That is not acceptable in a democracy.

At COSATU’s recent Central Committee, we focused on industrial strategy and economic policies as well as on our own organisational needs. We agreed that the state must do far more to drive development. Above all, it must prioritise the creation of decent work in all its programmes. That means we have to do more to support light industry and services. But we also have to restructure the major social services, including education, better to meet the needs of all our people and the economy.

The story of our economy since 1994 has important lessons for all of us individually, including for learners who are now at the point of leaving school. Above all, it points to the need to act collectively to change our circumstances. Today, only a lucky few can gain a decent livelihood, no matter how smart, competent and strong they are. It is only if we unite to transform our economy that we can ensure opportunities for our young people, and a sustainable future for us all.