Back in May, I worked for a now-defunct Taxpayers’ Union organisation for two weeks. I wrote several articles for them which were never published. I feel they are still relevant today, and hope you find them interesting.
In a press release by Tito Mboweni, the governor of the Reserve Bank, the intension was announced to change legislation to reduce the pressure unions can place on employers. In the same statement, Mboweni gave tentative support to the party’s proposal for a Basic Income Grant (BIG). In his wording, Mboweni appeared to portray himself as a classical pragmatist and a conventional neoliberal, performing a sceptical attitude to the policy while still offering support – after all, could South Africa really afford to simply pay everyone who didn’t want to work, not to work?
While the ANC has relied on union support for votes for 27 years, it has long been known to both ordinary people and to policy analysts alike, that the ANC’s core voters are not the working class, but those who are unemployed, who vote more for the ANC than the employed do, by over 10 percentage points. Furthermore, the unions on which the party relies have burdened the economy with some of the highest figures for labour hours lost to union disruptions in the world, with 68% of all workers having gone on strike at some point in 2018.
But the ANC’s strategy of governing by creating material dependency has now dovetailed with their strategy for attracting foreign investment. While structural changes to the party’s involvement in the economy are considered out of the question, regulations are here to stay, and progress against corruption is almost entirely a fiction, there is one dimension along which Ramaphosa and Tito Mboweni have reached common ground with international investors –unions are a problem.
When Mboweni mentioned the two policies (labour reforms and BIG) side by side, he painted the picture of a two-prong strategy for hemming in the labour union component of the Tripartite Alliance. While they can often be troublesome for the bottom line, and disruptive for economies (especially when they lose sight of practical fiscal limits), unions form one of the few means by which people are capable of organising in their own interest in the economy. This is why the Solidariteit Movement has found it essential to organise along these lines.
For the past 25 years, the ANC has managed their conflict of interest between industry, the public sector and the unions, through a patrimonial relationship where unions are controlled by the party and prevented from disrupting operations in key sectors without party support, in exchange for cooperation with corrupt BEE structures and bribes.This (as we learned from the disaster that was Marikana)results in building tensions, as party-loyal shop stewards suppress demands from below until disgruntled union workers break away to perform “wildcat strikes” – where workers strike without the approval of police or recognised labour unions. When AMCU broke away from MUN, the union controlled by Ramaphosa, he sent police to destroy them with violence for using the very tactics he taught them coming up through the struggle era.
But the ANC cannot afford another scandal like Marikana which reminds so many of the previous regime’s worst moments, and attracts global attention. As the economy groans under mismanagement, red tape, broken infrastructure and a slowing global economy, the government has reached for a strategy to ease the drawing power of the unions. While it is not much studied, it stands to reason that rich and easily available welfare reduces the negative incentives which push people into unionisation – after all, it isn’t so bad to lose your job if you can collect a check while unemployed. And what research there is does back up this logic.
While Tito Mboweni insists that “we do not want to create a system which makes people be totally dependent on the State,” this contradicts the actions and interests of the ruling party, who have increased and expanded grant payments and welfare with every fiscal cycle, so that those dependant on grants for their income (11.4 million) now outnumber taxpayers (6.9 million) nearly twice over.
This is completely unsustainable, and forces the government to extract more taxes, which people simply cannot afford. But if it means gaining control over the slippery levers of power, the ANC appears prepared to do it. Universal basic income is a popular idea overseas with those who would pursue “Modern Monetary Theory”. This idea is already very popular within ANC circles as well as foreign financial institutions, and it claims that debt is meaningless, because the government can simply print more money, and lower the interest rates to make borrowing cheaper. In this way, it uses inflation to indirectly tax all people who hold the national currency, making debt meaningless to the state.
But this is the same pattern of behaviour we all once saw in Zimbabwe – a brief and limited restructuring after accepting an IMF loan (as South Africa has just done), followed by political instability, welfare spirals, land expropriation, and hyperinflation. Whether South Africa will go all the way down this path is anybody’s guess. But judging by the signs, we are in late 90s Zimbabwe, and our government’s spending aspirations are just as ambitious.