The DRC’s 'inspection générale des finances' (IGF) has identified several key figures – including Joseph Kabila's former prime minister ... Augustin Matata Ponyo – involved in the disappearance of more than $205m for the Bukanga Lonzo agroindustrial park project.
For a couple of hours at the height of South Africa’s strike season in September, the drama of the country’s class war played out in the Johannesburg studios of the state-run South African Broadcasting Corporation (SABC) in a programme headlined The Big Debate.
The cameras zoomed in on Irvin Jim, the charismatic leader of the National Union of Metalworkers of South Africa (NUMSA), the country’s largest trade union and one of its most militant.
“There is still a war between capital and labour. Nothing has changed. During the struggle, workers fought for a living wage, but the apartheid wage gap is still there. The average white wage is R19,000 ($1,900) a month, but for blacks it is just R2,500. What does that buy?
“Inferior squatter camps, inferior goods, inferior everything.” Jim paused, and then added: “The South African working class is sending a clear message to the ANC [African National Congress]. The message is that the working class is not the ANC’s voting cattle.”
Judging by the numbers of strikes each year, that message is getting louder. Each year, trade unions and businesses go head-to-head to negotiate better wages. Increasingly, these negotiations fail, and the unions strike.
This year will be a critical year for strikes, according to Nkosinathi Nhleko, director general of the Department of Labour in Pretoria.
In 2012 there were 99 legal strikes – almost double the level in the previous year
It is becoming a vicious circle: the deep frustrations with widening inequality are behind the strikes that are in turn weakening the national economy. South Africa’s real gross domestic product (GDP) growth is forecast at just more than 2% this year, far lower than the 5% the government says is needed to cut unemployment.
The dynamics of South Africa’s class war hinge on a range of economic and social factors, according to Enoch Godongwana, who heads the ANC’s Economic Transformation Committee and was formerly deputy minister for economic development.
He tellsThe Africa Report: “You cannot just look at class but also have to look at race. There’s been substantial gains in terms of improving the lives of the poor. There are now 4.2 million black people now defined as middle class, but it is still difficult to say who is winning the class war in South Africa.”
Anger is Mounting
Despite this progress, anger at social disparities is mounting. There are almost certain to be more strikes this year than last year. In 2012, there were 99 legal strikes – organised by those trade unions recognised as having the right to negotiate collective agreements with employers – that is almost double the level in the previous year.
Also, there were countless more unofficial stoppages and protests that created growing tensions with the labour movement.
The latest Industrial Action Report, Nhleko says, shows that strikes in 2012 involved 241,391 workers, cost the economy 3.3m working days and resulted in workers losing R6.6bn in wages. More than 80% of the strikes were in South Africa’s beleaguered mining industry.
The strikes cost an estimated 0.5% of GDP growth in 2012 – growth that fell to 2.5%, compared to the average in sub-Saharan Africa of 4.7% that year. South Africa’s unemployment rate is estimated at around 25%, but it is closer to 40% if those who have given up looking for work are also counted.
But Godongwana insists that South Africans should look at international conditions: “In our strategy, China and India are going to demand resources from Africa.
“Depending how we position ourselves, we are going to gain from this. There are also the government’s public investment programmes.” He adds: “We have an infrastructure deficit in the country […] [fixing this] is going to stimulate growth further and lead to job creation.”
Godongwana accepted that job creation and economic growth figures were going to take a hit in the third quarter of 2013 because of the strikes, but he was confident of an upward trend in the national economy: “We will be on track to create jobs, and we’re not going to make empty promises just before the election to create a few meagre jobs.”
The core problems are political. How can the ANC government balance its commitments to its alliance partners in the Congress of South African Trade Unions and the South African Communist Party while pushing through economic reforms?
If the government fails to convince the trade unions, its reform efforts will be worthless.
In the platinum mines AMCU has demanded wage increases of up to 150%
At centre stage is finance minister Pravin Gordhan, whose achievement of raising tax revenue and cutting the budget deficit to 5% of GDP has been widely praised.
A key ANC strategist, Gordhan emphasised the common ground: “In the mining industry we have demonstrated that government has the willingness to put business and labour around the table. Where it is appropriate, government will intervene. Our responsibility is to create and, if you like, modify the labour relations system so that it meets a new set of conditions.”
Gordhan argues that policy and practices have to accommodate the new dynamics in the unions and industry: “Our task now is to adapt the framework so that we accommodate these new developments and have a functional labour relations system because that’s in the interest of everyone – that we provide a forum, a structure and a legal framework, within which normal relationships are restored.”
Motor industry deadlock
That task looks formidable for the government. At the time of SABC’s The Great Debate in Johannesburg, NUMSA members were on strike in the motor components and retail fuel sectors.
They had just ended three weeks of stoppages at car manufacturing plants. Employers said those strikes in the manufacturing plants had cost R20bn, but the two sides agreed to workers’ pay increases of 11.5% for 2013 and 10% for 2014.
NUMSA’s retail fuel workers returned to work at the end of September with an 11.6% rise, but workers in the motor components sector were still on strike in early October. The wage increases are 5.2% above the inflation rate, which was 6.4% year-on-year in August.
Also in the television studio for the debate were Frans Baleni, who heads the National Union of Mineworkers (NUM), South Africa’s second-largest union, and Joseph Mathunjwa, the president of the breakaway and more radical Association of Mineworkers and Construction Union (AMCU).
The NUM had just ended a strike in South Africa’s gold mines, reluctantly accepting an 8% wage increase after having demanded 60%. AMCU refused the wage offer. In the platinum mines, where it is now the majority union, it has demanded wage in- creases of up to 150%.
The NUM and AMCU have been enemies since the massacre of miners by the police at Lonmin’s Marikana platinum mine last year. AMCU accuses the NUM of complicity in the shootings, a charge the union strongly rejects.
Mathunjwa and Baleni traded insults during the broadcast, not just about Marikana but also on the politics of class war. Those NUM and AMCU supporters in the audience shouted, sang and stamped in approval or denunciation as the argument heated up.
A busload of AMCU supporters had come from Marikana, including relatives of the dead, many sporting red berets with the logo of ex-ANC Youth League leader Julius Malema’s new party, the Economic Freedom Fighters (EFF).
AMCU supporters derided the NUM for securing just 8% for the gold miners. Mathunjwa claimed that this proved it was a “sweetheart” union, in bed with the company bosses and with capital.
NUM supporters, more subdued than AMCU’s, said the real issue was what AMCU’s strike action would win for its members.
Philip Frankel, a former professor of industrial relations at the University of the Witwatersrand, argues in his book Between the Rainbows and the Rain that despite the crisis at Marikana, AMCU was able to secure real increases – above what Lonmin had originally offered – of just 3%.
In the SABC studio, panellist Niall Reddy of the Alternative Information and Development Centre said that he supported AMCU’s wage demands: “They want R12,500 a month as an entry-level wage. I support that. R12,500 is a living wage.”
In the paper ‘Real Wages and Labour Revolt’, Reddy wrote that median real wages for most workers have been almost static since 2007 and have only risen on average because management and white-collar workers have been doing so well.
Reddy says South Africa should trade its export-driven growth strategy for one of consumer-driven growth. That would require significantly higher wages for lower-paid workers.
Statistics South Africa, a state agency, paints a picture of sharply widening inequalities. Its reports show that the top four categories of wage earners secured average nominal income increases of 40.2% between 2005 and 2010, while income for the bottom four categories increased by just 15.6%.
Separate research by academics from the University of South Africa (Unisa) has shown that pay for government employees rose 145.6% in nominal terms between 2005 and 2012, with the largest percentage increases again reserved for senior management.
Although higher-paid workers are getting bigger wage rises, more workers are moving into the higher-paid categories, pointing to growing social mobility – even if millions are still trapped by poverty and unemployment.
Skills shortage at the top
More conservative economists dispute Reddy’s policy prescriptions. Mike Schussler of Economists.co.za says: “Big salary hikes won’t boost local production but will push up the import bill. We already have a trade deficit of 6.5% of GDP. Our workforce is overpaid for what it does. South Africa has a problem with its education system, so labour does not bring much intellectual capital to the job. And at the top, there is a skills shortage, which pushes up the wages of the people with skills.”
Reddy strongly disagrees: “Workers’ wages have lagged productivity gains in this country and are anyway not based on market forces. Workers get what they are prepared to fight for.”
Two guests invited to The Great Debate did not show up: ANC secretary general Gwede Mantashe and former Chamber of Mines president Xolani Mkhwanazi.
Their absence probably saved them from a verbal mauling from hostile unionists.
Their failure to join the debate points to the gulf between the ANC hierarchy and workers angry about low pay, previously core constituents of the ruling party.
Anger at widening social inequities is higher than at any time since 1994
However, in government the ANC has transferred resources from richer South Africans to those who are poorer through more public-sector jobs and the growth of social grants.
Despite a raft of new labour laws, the ANC has had markedly less success in closing the apartheid-era wage gap.
At the same time, the close association between the government and the emerging black business class, exemplified by magnate Cyril Ramaphosa’s elevation to deputy president of the party last year, makes it harder for the ANC to claim that it sides with the workers.
Worse still, it emerged that Ramaphosa, as head of Lonmin’s black economic empowerment partner Incwala Resources, had emailed Lonmin directors a day before the massacre that AMCU’s actions were “plainly dastardly criminal”, that “concomitant action” was required to address them and that he was lobbying government to take firm action.
Few understand the ANC’s growing distance from militant organised labour better than Julius Malema, the expelled ANC Youth League leader who launched his EFF party this year.
Malema, a frequent visitor to Marikana during the strikes, has been campaigning in in- formal settlements. His message that the ANC has become a party of fat cats resonates with residents there.
Malema is coming
Adamant that the EFF will not pose a national threat, Godongwana says: “I get the sense the EFF will win a few parliamentary seats, but that is it. If you look at the United Democratic Movement [Bantu Holomisa’s party] in 1999, they made considerable gains in the Eastern Cape. Now those gains have been largely reverted back to the ANC.”
Yet some seem rattled. The ANC-aligned South African Students Congress (SASCO) and National Education, Health and Allied Workers’ Union forcibly blocked an attempt in September by Malema to speak at a UNISA event in Pretoria. SASCO justified the move on the grounds that it had a duty to “protect the rainbow nation”.
EFF supporters turned up at the campus chanting “One Zuma, one idiot” and “Malema is coming”.
Mathunjwa tells The Africa Report that while AMCU will not campaign for the EFF during next year’s election, the ANC had “not done enough” and that there had been no change in conditions in the mines.
The government’s core strategy is to push the National Development Plan (NDP), crafted by former finance minister Trevor Manuel, to create jobs and modernise the economy.
The NDP states that “decades of racial exclusion are still reflected in both employment levels and income differentials,” but adopts a business-friendly position on wages. It advocates boosting economic growth and then increasing pay, rather than, as the left wants, the other way round.
Wages, says the NDP, must be “linked to productivity” and “support economic expansion”. At the same time they should be “fair” and include “some sacrifices from management” in the overall dispensation. President Jacob Zuma has called on everyone to rally behind the plan.
NUMSA has denounced the NDP as anti-worker and neoliberal. Its leadership has said it will not campaign for the ANC in next year’s election if the plan is included in its manifesto. The business sector likes the NDP but is sceptical about its implementation.
The ANC leadership is torn between the demands of militant workers and business. A leading corporate lobby, Business Unity South Africa (BUSA), says it is “very, very worrying” that the government has ignored its concerns about changes to labour laws. BUSA claims the government gave unions everything they wanted.
In politics, the business establishment’s concerns about the economy and wages are shared by the Democratic Alliance (DA), the country’s biggest opposition party, and also, it appears, by Agang South Africa, a new party led by Mamphela Ramphele, a former chairwoman of Gold Fields, one of the biggest mining companies in South Africa.
Another warning voice is that of Reserve Bank governor Gill Marcus, an ANC stalwart, who has said that the country’s competitiveness is being “further undermined by unit labour costs rising relative to competitor countries”.
Marcus says excessive wage settlements are helping drag down gross fixed capital formation, on which future economic growth depends, from 24% of GDP in 2008 to just 19% today. That is “well short of the 25% ratio that is generally seen to be the minimum to sustain the growth rates that we require to make inroads on unemployment,” she explains.
Such talk cuts no ice with Mathunjwa, who says that South Africa “is very rich” and can afford workers’ pay demands.
Mathunjwa says that class war was still being waged, that the working class had not yet won it and that the country is “sitting on an atomic bomb”. Next year, Malema’s EFF will be actively courting the votes of South Africans who feel the same way.
At the other end of the spectrum, the business community, DA and Agang argue the government is killing the economy by pandering to union demands.
Yet the statistics paint a more nuanced picture, showing that income for the middle classes in general and civil servants in particular has risen faster than for the working class, but also indicating that more South Africans are becoming middle class.
The challenge for the ANC in next year’s elections will be to take the credit for the rise of the new black middle and business classes while keeping its appeal to the poor and working classes, who remain its largest constituency.
In previous elections, the ANC succeeded comfortably, but 2014 will be different.
The economic future is more troubled, partly because of international factors, but anger at widening social inequities is higher than at any time since the ANC won power in 1994.
Adding to the party’s troubles, some of its most effective and enthusiastic campaigners are now working for the opposition or have simply quit party politics. ●
Who’s who in South Africa’s class war
Irvin Jim : NUMSAthe former Firestone tyres shop steward is now poster boy of the left, and fast-climbing the union movement. With his comrade Zwelinzima Vavi out of the limelight it is now up to Jim and his metalworkers union to take on the anc.
Mamphela Ramphele : Agang SAa former anti-apartheid activist, ramphele threw her hat in the political ring this year with the launch of agang-sa, appealing to the middle class. in the interest of transparency, the former chairperson of Gold Fields declared her financial interests.
Helen Zille : Democratic Alliance
the former political journalist has led the opposition da since 2007, and is premier of Western cape. Zille is an outspoken critic of government and corruption but has been silent on major economic issues like the recent mining strike.
Cyril Ramaphosa : ANC
the anc number 2, and one of africa’s richest men, ramaphosa once bid for a bull worth 18m rand. With millions of anc supporters living on less than a dollar a day, he later apologised. He has now turned his back on business, wearing anc t-shirts rather than his tux.
Joseph Mathunjwa : AMCUMathunjwa focuses on the plight of the working class. During the violent Marikana strike, the Association of Mineworkers and Construction Union grabbed the headlines, changing the mining landscape and challenging the ANC-aligned union, the NUM.
Julius Malema : EFF
the bad boy of politics and former AnC youth league boss has swapped designer suits for army jackets and red beret, trademark of his economic freedom fighters, who want to nationalise mines and redistribute land to marginalised black people.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options