By Norm Dixon
South African President Nelson Mandela surprised and disappointed many supporters when, after returning from a trip to Germany to woo foreign investors on May 24, he declared: "Privatisation is the fundamental policy of the ANC, and it is going to be implemented. The responsibility for creating an investor- and trade-friendly environment is for us to take." The blunt statement has added fuel to the debate about the direction of the South African economy.
The Congress of South African Trade Unions (COSATU) responded by saying it would not back down on its opposition to privatisation. "We accept that business represents the rich", COSATU secretary general Sam Shilowa said. "We don't expect them to suddenly speak on behalf of the workers. What we do expect is for the government to accept that the positions of the poor are paramount."
The privatisation debate has brought to the surface differences within the Tripartite Alliance (the ANC, COSATU and the South African Communist Party) over the direction of economic policy. The ANC in government has emphasised controlling government spending and reducing the budget deficit in order to boost "investor confidence", and moved to liberalise and restructure the economy to be "internationally competitive".
It has shied away from increased taxes on business and the wealthy to fund much-needed programs to redress homelessness and unemployment. As a result, the ANC has made little progress in delivering on the ambitious promises it made before the 1994 elections.
Broadly speaking, two trends are emerging within the alliance. One, which seems to dominate the top ANC leadership and cabinet, favours a market-directed economy with reduced state involvement which encourages the growth of a black business class. The other, which holds sway within COSATU and the SACP, argues for an interventionist state with a strong public sector and a pro-working class policy.
Supporters of both trends can be found throughout the alliance. Trade and industry minister Alec Erwin, a leading member of the SACP, is widely considered to belong to the first camp, while many non-SACP members of the ANC can be found in the latter.
COSATU's Sam Shilowa, also a leading SACP member, has vocally opposed privatisation. "We view privatisation as one of the major threats to the vision of a better life for all ... COSATU is not naive to the fact that the call for privatisation forms part of an international trend to reduce the role of governments in their economies. It is our view that much of the impetus for this trend is as a result of the desire of multinational competitors to expand their markets and increase their profit margins."
COSATU's opposition was backed by the head of Transnet, the state-owned transport group that operates SAA. He told the Weekly Mail and Guardian, "Wholesale privatisation is not a good idea. The country cannot afford it. For every job lost, up to six people lose their support system; we have to be careful not to exacerbate the already serious unemployment problem."
Privatisation was first mooted on December 7, when deputy president Thabo Mbeki announced the intention to privatise up to 49% of South Africa's telecommunications utility Telkom, South African Airlines, airports and other state assets. The announcement was made without consultation with the ANC's allies, COSATU and the SACP. The unions responded by threatening a 24-hour general strike.
The crisis was defused in January when the government agreed to delay final decisions on privatisation while the government and unions discussed the "restructuring of state assets".
Senior ANC government members have begun to apply pressure on COSATU to put the "national interest" before those of their members and to work together with business in a "partnership". Deputy finance minister Gill Marcus said in parliament on May 23 that business and labour's "unseemly, aggressive and confrontational approach denies the critical economic imperatives of the moment, including the creation of an investor-friendly environment".
ANC secretary general Cyril Ramaphosa, soon to become head of a major black business group, echoed this sentiment soon after Mandela's pro-privatisation pitch: "After resolving the apartheid question, one would have thought we would all be marching in tandem, hand in hand together, to build our nation. Sadly, that is not the case."
Addressing the SA Chamber of Business's annual banquet, Ramaphosa went further: "The public squabbles between labour and business are not furthering the country in any way. We need to get these two sectors to put the interests of the country first." Ramaphosa told South Africa's business elite that the ANC and the government supported "a reduction of the public sector in areas where such a move would increase efficiency and promote affirmative action".
Joining the chorus on June 2 was the chair of the peak employers body Business South Africa, Leslie Boyd, also deputy chair of Anglo American, South Africa's largest conglomerate. It was time, he said, "to focus on key issues to get to a common vision for growth and development. Business and labour must pursue the long-term national interest in the knowledge that some of the policies may in the short term negatively affect our constituencies."
Privatisation is viewed by big business as a test case for the government. The big business press has continually pointed to policies that it claims are "capitulations" to COSATU: the failure to increase levels of indirect taxation in the last budget; the refusal to include the right of employers to lock out workers in the draft of the permanent constitution; and agreement to consult with the unions over privatisation in January. COSATU has too much influence over the ANC, has become the refrain of big business.
The press, South African and foreign companies and the National Party are all calling on Mandela and the cabinet to "stand up" to COSATU and make a rapid decision on privatisation. The Financial Mail, a mouthpiece of South African big business, on June 7 editorialised: "Mandela has not yet won investors over, as the recent flight of short-term capital proved. The way he handles the looming confrontation with COSATU over privatisation is crucial. He will have to show that the ANC is prepared to face down the unions. Loyalty to old friends is commendable. If he has to choose between misguided old friends and the good of the country, though, he owes his allegiance to SA ... The issue is broader than just privatisation. The spectre of petulant unions and an unproductive labour force raises the cost of foreign capital."
The big business agenda also includes deregulation of the labour market. A recent report from the South Africa Foundation, which groups South Africa's 50 biggest companies, called for the creation of a "two-tier" labour market that would protect the conditions of workers currently unionised while the wages and conditions of new entrants to the work force would be given minimal protection. Such a strategy would be a disaster in a country where almost 50% of the work force is outside the formal economy.