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Rising inequality may destroy us

When South African-born companies become foreign investors, the nation's interests become secondary - something that should concern us, says the writer. The axing of miners, for instance, when it is not a last resort, is out of touch with our nation's goals. Picture: Antoine de Ras

When South African-born companies become foreign investors, the nation's interests become secondary - something that should concern us, says the writer. The axing of miners, for instance, when it is not a last resort, is out of touch with our nation's goals. Picture: Antoine de Ras

Published Aug 7, 2015


SA firms have been allowed to migrate and list overseas, but executives instead of workers have benefited, says Gwede Mantashe.

Johannesburg - The July 2015 lekgotla of the ANC’s national executive committee had an opportunity to ask the most difficult questions that the governing party must answer.

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Among these was the fact that the various progressive economic policies we have in place continue not to yield the desired results with regard to economic growth and employment creation.

We described the economy as growing at a disappointingly low rate. We acknowledged that even with the moderate growth, there is no moderate growth in the number of people employed. Of great concern was the emerging narrative that described slow growth as the new normal globally.

The new normal is premised on the current reality since the global financial crisis, where global economic trends reflect a downward spiral. This is with the exception of the US, where there are some positive indications. Further, there are no indications that this situation will change soon.

One of the factors we took to heart in our discussions was that slow economic growth, even in China, will translate into the decline in the demand for commodities in South Africa, and the continent at large.

Against this backdrop rose the appeal for mining companies to review their plans. The industry intends cutting costs which, in the main, translates into thousands of workers being laid off.

When companies encounter difficulties, what tends to come to the fore is the competition between shareholder interests and workers’ livelihoods. In such situations, workers become victims and are treated like commodities.

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Surprisingly, the reaction to our call has been incomprehensible, reflecting an inability to give thought to the national imperatives and the global challenges.

Resulting from such a myopic view, the industry retorts by asking: What else can be done?

Skills development is one such response, where more people are trained in real skills as opposed to short training, which does not necessarily skill the worker, but gives him or her false satisfaction. Hard skills are the basis for entrepreneurship. It is time companies developed long-term partnerships with institutions of learning, universities, colleges and technikons, towards this end. The downward cycle in commodity prices with the over-supply of commodities, creates the opportunity for such reputable training.

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Such skilled workers will be in a better position to opt for voluntary separation.

Another option for a mining company is opening up a more mineable face. In this case, the company is preparing itself for the upswing in the price of commodities. Where this is considered an option, instead of high grading and thus sterilising marginal deposits, we will all be thinking long-term.

What is required is that, as a country, we should start a dialogue about the effects of a high unemployment rate. In an environment where there is no national champion, besides the Congress Alliance, dialogue becomes very difficult. For example, an attempt to have a discussion with the South African born and grown Anglo-American or Gencor, from which Billiton originates, becomes more complex because they have become foreign investors. Consequently, South African interests become secondary.

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The situation worsens when we try to engage real foreign companies like Glencore, that are not the least concerned about our national laws and objectives, let alone our country’s workers.

For such companies, programmes about the transformation of the sector are without meaning; and so their procurement is done from India. When Glencore dismisses or ignores young professionals coming from Xtrata, we doubt the genuineness of the company’s intention. A BBBEE company, Optimum, gets mopped up and it is immediately its flagship operation.

Optimum Colliery is now shutting down and we are expected to believe what this global company is saying about the market.

These reflect brutality in the extreme and a contrary outlook to our national objectives and goals. Yet when these things happen, especially in relation to the concern about high unemployment, the usual outcry is that it is a government or ANC issue.

But the objective reality indicates that the state has been the main creator of jobs, both before, during and post the global financial crisis. In fact, it is a result of the various interventions of government – such as the expanded public works programme, subsidies and incentive schemes to industries and the social wage investment – that jobs were created and the poor could stave off complete destitution.

On the contrary, the private sector has only gone public about retrenchment programmes. In an attempt to conceal its failure, the private sector has consistently blamed our country’s progressive labour framework, intimating some undefined rigidity of labour laws. Strangely, when there are no problems, this debate is not tabled.

But the discussion about job creation is not limited to the mining industry. It applies to all sectors, including state owned companies, such as Telkom. Retrenching workers must be genuinely a last resort and not one of the first options considered.

It is workers who convert the shareholders’ investments into wealth. People should be treated with respect at all times. They are human assets, not mere tools of production.

The debate about the capacity of our economy should be opened.

At the time when neo-liberalism was on the ascendancy as an ideology, it became fashionable to allow companies to migrate and list in the stock exchanges of developed economies. This reduced the size of the economy in real terms, as was the consequence with regard to some mining companies.

The economic debate should include the successes and failures of that outward migration. We should probe whether the South African economy benefited from these initiatives, as was promised at the time.

For example, what was, and is, the benefit of the de-mutualisation of Old Mutual, its listing in London and its primary domicile being in a global financial centre? With the efforts of acquiring businesses in many countries, including the US, having proved disastrous, has the time not come for the national debate to include questioning the wisdom of allowing a company like Old Mutual to have its domicile in London when 70% of its global profits continue to be generated in South Africa?

Should the primary listing be allowed to remain in London when there are no obvious benefits, except for executives whose salaries are paid in pounds?

This should be part of the proposed national dialogue, with our regulators being given a clear signal of the direction to be taken.

The dialogue we must have should be about us, as South Africans, taking responsibility for the direction of our economy. This will give us an opportunity to come to terms with the reality that high unemployment, deepening poverty and growing inequality pose a real threat in the long term. We must agree on a sustainable approach to deal with this threat.

If the private sector, which owns 70% of the economy, does not participate in finding solutions, we will fail. The state has been giving out incentives and subsidies to certain sectors. We have now resolved that the state must demand results from such incentives and subsidies. The results expected are not only “hold results”, which are based on the argument that if they were not there the situation would be worse.

We must have a visible contribution to both economic growth and an increase in the numbers of people employed.

There must be an effort in putting money in the labour-intensive sectors, which have been identified to have the potential of absorbing more of the unemployed. More people must be given opportunities to enter the labour market. But the state alone will never succeed in addressing this crisis.

We should have have the ability to imagine what a successful future looks like, steeped in common nationhood and partnership.

* Gwede Mantashe is the |secretary-general of the ANC.

** The views expressed here are not necessarily those of Independent Media.

The Star

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