COSATU’s Expectations Statement
for 2013/2014 Budget
Patrick Craven, National Spokesperson, 27 February 2013
Context
COSATU has huge expectations from the 2013/14
budget to be presented by Minister of Finance Pravin Gordhan on 27th February
2013.
We expect
the Minister to allocate more resources towards the five key priorities set by
government in 2009: decent jobs, education, health, rural development and fight
against crime and corruption.
The
priorities are meant to address the triple challenges of high levels of
unemployment, poverty and inequalities.
We know already that whilst a lot has been done,
government is still far in realising the objectives set in 2009, particularly
as they relate to the creation of decent work. The Quarterly Labour Force
Survey (QLFS) for the fourth quarter of 2012 shows a decrease of 68,000 in
employment.
The
official rate of unemployment declined marginally from 25.5% in the third
quarter of 2012 to 24.9% in the fourth quarter. If people who had stopped
looking for work due to hopelessness are included, the unemployment rate fell
from 36.3% to 35.9% in the same periods.
This rate
of unemployment is still very high by international standards. Compared to the
4th quarter of 2011, there has been a marginal increase of 80 000 jobs, which
represents a mere 0, 6%, in the 4th quarter of 2012. In the same period,
unemployment rate increased by 6, 1%, which represents 257 000 job losses.
Manufacturing, trade and private households
industries shed 139 000, 59 000 and 42 000 respectively between the 4th quarter
of 2011 and the 4th quarter of 2012. The community and social services
industry, which includes the public sector, saw employment growth of 126 000
between the 4th quarters of 2011 and 2012.
The QLFS
also shows that the proportion of the unemployed persons without matric has
remained largely unchanged since 2008 at around 60%.
In the 4th
quarter of 2012 the share of the unemployed persons with matric was about 32%
and for those with tertiary education at 6%.
This once
more demonstrates the centrality of education in addressing the triple
challenges of unemployment, poverty and inequalities.
Accordingly to the Human Development Report, 44% of
workers in South Africa live on less than R10 a day. Income inequality is still
rampant; on average, each of the top 20 paid directors in JSE-listed companies
earned 1728 times the average income of a South African worker.
All sectors
of the economy, the financial, manufacturing, machinery and equipment,
pharmaceuticals and mining are highly concentrated and dominated by a few
companies, which in many instance are foreign owned.
Agricultural land-ownership remains concentrated
and colonial. Estimates are that Black people own between 13-16% of
agricultural land in South Africa.
Only 10% of
the 30% land earmarked for land restitution has been transferred to black
farmers, the target date for the 30% is 2014. Efforts at land redistribution
have largely been unsuccessful because of lack of post-reform support to
beneficiaries. It is estimated that more than 70% of redistributed land became
unproductive after the reform process.
The crisis in education persists and the quality of
education is declining, despite improved matric results in 2012.
The poor’s
children remain trapped in inferior education with wholly inadequate
infrastructure.
Many
schools depend on boreholes, rainwater or have no access to water on or near
site,
have no arrangement for disposal of sewage and many still depend on pit
latrines, have no source of electricity on or near site, have no libraries or
libraries are not stocked, have no laboratories, or laboratories are not
stocked and have no computers or more than 100 learners share a computer.
A huge
number of schools have class sizes of above 40 learners.
There are many challenges ranging from the shortage
of staff to equipment and medicines in the public health sector and we note the
10-Point-Plan of the Department of Health is meant to address many challenges
in the public health sector.
Our
Expectations from the Budget Speech
The 27th February Budget Speech would be the
Minister’s penultimate speech before the 2014 general elections.
We do not
expect business as usual and the speech must be in synch with the resolve of
the ANC, which we are in alliance with, that the next decade of democracy must
be dedicated to radical economic transformation.
We expect the Minister to dramatically increase the
funds allocated for land reform. Sufficient funding must be allocated to reform
support programmes that can ensure the success and sustainability of land
reform beneficiaries.
We expect the Minister to allocate more resources
to ensure the realisation of the expansion of the FET sector to accept 1
million learners per annum by 2014, compared to the current 400 000 per annum.
This will
in turn reduce the youth labour force, by extending their stay in the education
and training system, so that they acquire basic and high-level cognitive
skills.
We expect the education budget to be increased
substantially to ensure that the education infrastructure is improved; the mud
schools are eradicated and that there should be no teaching under the trees.
This must
also enable government to overtime establish its own publishing company to
eliminate corruption in the procurement of books.
We call on the Minister to announce a process to
introduce tax reforms which in our view should ultimately result in the
following:
* Introduction of progressive tax system, with an introduction of a tax
category of the super rich
* Introduction of solidarity tax, whose aim is to cap the growth of
earnings of the top 10% and to accelerate the earnings of the bottom 10%
* Introduction of tax on both domestically produced and imported luxury
items, but a higher tax on luxury items which are imported
* Increase in the secondary tax on companies to encourage
re-investment, job-creation and to reduce the financialisation of company assets
* Imposition of a land tax to aid the process of land redistribution
* Zero-rating of medicines, water, domestic electricity and public
education
* Introduction of export taxes on strategic minerals, metals and other
resources to support downstream industries and to promote value-addition
* Introduction of investment tax credits to encourage local procurement
of machinery and equipment
* Increase tax on financial transactions including capital gains tax
above a certain minimum threshold to limit short-term capital flows and to
encourage productive investment, and speed pumps on short term capital flows to
discourage hot money
* Introduction of tax on firms that are stubborn in closing the wage gap
* Taxation of firms that pay below the statutory minimum wage, and the
distribution of such tax proceeds back to the workers concerned
We repeat our call for abandonment of inflation
targeting and target economic growth and employment targets.
We call for
the reinstatement of capital controls to prevent the asset stripping of South
African industry.
We expect the Minister to announce the phasing-out
of the use of tenders to enable the state to directly absorb the unemployed in
the delivery of a range of basic services, including the building and
maintenance of infrastructure.
In so
doing, the state is supposed to support local supplier industries through
targeted procurement and to build and broaden industrial linkages in order to
increase the labour absorptive capacity of the economy.
Health budget must be increased substantially to
enable the speedy implementation of NHI.
This must
also enable the integration of the Community Care Workers into the public
service and the reopening of nursing colleges to ensure the training of more
nurses in order to increase the nurse/people ratio from 4 (per 1000 people) to
8 per 1000.
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