Publications
Partners
WITH the the usual flurry of comment and analysis, another mini budget has come and gone. But for the majority of workers, whether employed, un- or under-employed, such policy machinations are of little interest.
READ: How analysts view Gordhan's mini budget address
Even the government’s trade union ally, Cosatu, noted: “We remain deeply concerned that [the measures announced] will not enable South Africa to escape its long-term 36% unemployment crisis.” However, promises to tighten fiscal policy, tweak tax rates, adjust elements of state spending and revise one or other revenue stream could gain the approval of rating agencies, international lenders and business.
READ: BUDGET AS IT HAPPENED: Our long walk is not yet over, says Pravin Gordhan
These factors may lessen the prospect of the country’s credit rating being downgraded to junk, making loans more difficult and more expensive. But, in Cosatu's view, this amounts to the fact that “the demands of rating agencies reign supreme over those of 8 million unemployed South Africans”.
However, this comment fails to acknowledge Gordhan’s underlying theme: that it is necessary to mobilise citizens in the cause of democracy and the rule of law. He also admits that South Africa is a grossly unequal society and that this must be changed.
Part of that inequality is the fact that the majority of South Africans already suffer junk status. Where credit is available to the working poor, it is usually at rates that would make the most hardened seller of junk bonds blanch. Even under existing small loan regulations, those who qualify and know how to access such funds face rates that start at 60% a year before admin fees and other legal “add-ons”.
But many of the people in work also form the bulk of the more than 10 million South Africans who have “impaired credit records”. They cannot access any additional funding other than through the mashonisas - the loan sharks - whose methods of collection and rates of interest can generally be described as brutal.
Even workers already earning at the level deemed by the labour movement to be a suitable minimum wage - R4 500 a month - and who are not in debt, face a dire time ahead. This was summed up for me in an interview with a 37-year-old shuttle bus driver permanently employed by an hotel group.
Lungisile earns R4 500 a month, and, although a union member, fears he might risk his job if he complains about often working 12-hour shifts with no overtime pay. After standard deductions, his take home wage is little more than R4 100. But because he cannot afford to live near his workplace, he has to spend R1 100 a month on transport from the township room he rents for R950.
With a wife and young child to support as well as helping an unemployed brother, he is finding it impossible to manage on little more than R2 000 a month and fears he will have to go into debt. This is the reality of inflation for the poor: it is always much higher than the official cost of living increase, has risen steadily, and looks likely to rise still further.
In the year to the end of September, for example, that staple of poor households, mealie meal, rose in price by more than 32%, with a 25kg bag now costing R170.80 more than it did a year ago. According to the food monitor maintained by the Pietermaritzeburg Agency for Community Social Action, five “priority foods” bought by poorer households rose in price by an average of 25% over that 12-month period.
However, three of these items - mealie meal, cooking oil and rice - were at least zero rated for value added tax (VAT), the regressive taxation that the labour movement has long complained about. But cake flour and sugar that are also regarded by many poor households as a priority, also incur 14% VAT.
And when wage increases are below double digits while the cost of living is consistently above, it is understandable that there is a great deal of anger and bitterness among low paid workers and the unemployed. It also gives rise - in a grossly unequal society - to unionised workers demanding a fairer share of the wealth they generate.
Against this background, it seems essential that some radical, transformative policies should be put in place if a junk status generation is to be placated, let alone inspired. However, there appears to be little collective political will to break from the orthodox, sticking plaster remedies of the past; instead of dealing with inadequate and often rotten foundations, the priority is to patch up the crumbling superstructure.
This will almost certainly mean that what is, in essence, a junk generation’s struggle for survival in a grossly unequal society will become more intense. Hardly a recipe for economic or social stability.
* Add your voice or just drop Terry a labour question. Follow Terry on twitter @telbelsa.
