The impact of socio-economic restructuring on the working class andthe challenges facing them

Summary notes from the Harold Wolpe Trustdebate of 17 August 2000

Participants

Ravi Naidoo	Ronald Segal	Mervyn Bennun
Norman Levy	Rob Turrell	Richard Rosenthal
AnnMarie Wolpe

Apologies: Rob Davies.

Presented by Ravi Naidoo,

Directorof the National Labour and Economic Development Institute (NALEDI)

Introduction

This short note briefly covers some of thechallenge facing the South African and international working class. Unavoidably such ashort paper cannot address all the issues it should, or in the depth that is required.Nonetheless it does reflect some of the emerging debates and ideas within the labourmovement.

1.         The immediate challenge of job creation and jobretention

1.1.         South Africa hasone of the fastest growing union movements in the world. Amidst this union growth,however, the tradition bases of unionism are being undermined by changes in employmentpatterns.

1.2.         In contrast tomost union movements elsewhere in the world where membership has declined, South Africanunion membership has increased by approximately 131% since 1985. In particular, Cosatumembership has grown from 1,3 million in 1994 to over 1,7 million today. This representsan increase of 30% since 1994. However, the current dilemma for unions is that traditionalunion-strong sectors are shedding jobs (the economy lost 300 000 formal sectorjobs in the last two years), and the hard-to-unionise sectors are expanding.

1.3.         South Africanunions are feeling the impact of this changing employment pattern. Graph 1 shows thechanging pattern of union membership in COSATU. Today public service unions are thelargest sector within COSATU, representing 37% of all membership. This sectoral breakdownfor 1999 is very different to the picture that emerged from the early days of COSATU. Tenyears ago, manufacturing was the largest sector with 55% of total membership, mining 23%and public services only 6%. The decline in the manufacturing unions has been dramatic,falling from 55% of total membership in 1998 to 28% in 1999.

1.4.         Among COSATUmanufacturing unions, membership has fallen from 530 625 in 1994 to an estimated 484 258in 1999. The decline in manufacturing unions mirrors some of the changes occurring in theeconomy. Changes in employment in these sectors are occurring on a wide scale and at arapid pace. Slow economic growth, industry and workplace restructuring have resulted injob losses.

1.5.         These decliningmanufacturing unions have accumulated considerable worker experience and struggle over theyears, qualities that cannot be easily replaced. As these unions decline, their influenceover union movement strategies and priorities may decline too. The consequences of thiscould be a loss of valuable experience of worker struggles and strategies.

Graph 1: Changes in Cosatusectoral membership, 1989-1999

1.6.         The fast pace ofjob destruction and the consequent reconfiguration of union membership pose a seriouschallenge to unions. In particular, the shrinking formal sector threatens to reduceunionism to a small enclave, easily accused of being an elite. Strategically, it isessential for unions to avoid this. Conversely, an expanding working class, throughgrowing employment, strengthens unions. There is thus an inherent pressure on unions toengage in policy dialogue at national and industry levels to reach agreements foremployment creation and retention. Part of the struggle for survival and relevance willinclude a determination to engage in national actions against job losses.

1.7.         Can this rapid increase in public service membershipcontinue, and will it compensate for the declining manufacturing sector unions? The answerto the first question is maybe Yes, and probably Not to thesecond.

1.8.         First, there isevery chance that this membership growth willcontinue for the next few years, as insecurityrises in the public service. Despite the rapid growth of these unions, thevast majority of public service workers are either un-unionised or in non-Cosatu unions.The experiences of other union movements, however, serve as a warning not to rely too muchon one sector. In many industrialised countries in the 1980s unions retreated from thedeclining manufacturing sector into the public sectors, only to find public sectoremployment shattered by downsizing and privatisation.

1.9.         Second, theolder manufacturing unions have accumulated considerable worker experience and struggleover the years, qualities that cannot be easily replaced. As these unions decline, theirinfluence over union movement strategies and priorities may decline too. The consequencesof this could be a loss of valuable experience of worker struggles and strategies.

1.10.      On the positive side, there aresigns that some Cosatu unions are alive to the challenge, and have begun to revise theirstrategies. Examples include efforts to recruit dock workers and seasonal workers at theports. A similar upward trend is also emerging among embattled union movements in othercountries. In short, for the union movement all around the world, there is only one realoption: defend existing jobs and develop strategies to organise the unorganised. 

2.         The underlying challenges facing workers and tradeunions

2.1.           Neo-liberalglobalisation seeks to dismantle rights and their underpinning social justice values. Theargument is that the world is changing, and national institutions and processes mustadjust to keep pace with the irresistible forces of globalisation. The pragmatism ofneo-liberalism seeks to posture policy as whatever works. In this eventwhatever works for competitiveness is to be accepted.

 

2.1.1.     In many social democracies those aspects of the systemsviewed as uncompetitive are being dismantled or adjusted (generallydownwards). The aspects not in keeping with the imperative of competition generally aresocial justice and solidarity, encompassing redistributive fiscal policies, progressivetaxation, social dialogue, and the concept of collectivism. It their place the concept ofself-interest and market-competition is entrenched. In this regard, US Treasury SecretaryLawrence Summers recently appealed to South African policy makers to promotegreed, the underlying self-interest value system of the capitalist market, asa basis for attracting investment.

 

2.1.2.     What has been the response of the Left to the crisis ofeconomy and paradigm? The mainstream left response in developed countries has been tosearch for a form of progressive competition, generally some notion of an openeconomy social democracy. In this case it is argued that rising productivity, exports andincomes can be simultaneously achieved. This appears to be the general strategy of choicefor the majority of centre-left governments subscribing to the Third Way approach ofreconciling markets with societal needs. It also appears to be the strategy of developednation trade unions from the European Union and United States, who add an emphasis oncontrolling social dumping (cheap imports) from developed nations.

 

2.1.3.     A further Left strategy has been to argue that betterlabour standards are good for competition. First, there is an argument that poor labourstandards in less developed countries are resulting in unfair competition and socialdumping and are undermining the sustainability of liberalisation. A lack of fair play willmake the public sceptical of liberalisation, undermining its legitimacy. Second, it canalso be argued that knowledge-based economies, the backbone of the so-called New Economy,cannot be built on sweatshops and through ignoring worker rights. Rather such apeople-centred economy must be built on good education, life-long learning, and inclusivework organisation able to encourage worker creativity and participation. In short, inthese arguments long-term competitiveness requires policies that are very different to thepromotion of EPZs and Taylorist-type hierarchical work organisation.

 

2.1.4.     There is clearly a tactical value to recasting thecompetitiveness debate in favour of labour rights. However, terrain of competitiveness isa slippery slope for workers and trade unions. With capital mobile and labour not, thecall for international competitiveness can be a call for working classes in differentcountries to go to war against each other to attract capital basically, the valuesof competitiveness are antithetical to worker solidarity. More crucially, however, is thefact that in the event that labour rights can be shown to be against the interests ofcompetitiveness, the underlying motivation for labour rights is undermined. After all,havent you already accepted that competitiveness is the over-riding imperative?

 

2.2.           Neo-liberalismseeks to undermine societys democratic institutions. Developing countries havebeen under pressure from developed countries to liberalise their financial markets. Oftenthis has been through conditions embedded in structural adjustment programmes. Sometimesit has been the message repeatedly hammered home through advisors frominternational financial institutions, with the misleading promise that this with lead tohigher levels of foreign investment. The net result is that financial liberalisation hasreduced states power over capital. With capital more mobile, governments cannotdictate terms to investors, rather it is generally investors (including domestic capital)that dictate to governments. Governments in developing countries that run national budgetdeficits in excess of international investor benchmarks to finance, say,infrastructure development, risk punishment by financial markets. As The Economist once stated, global financialmarkets should seek to ensure that governments are well-behaved; that is,governments should work within the parameters set by financial markets even if it meansdisregarding the mandate of their actual electorates. Part of this dismissal of democracyis the increasingly dominant view among mainstream economists and finance departments thatcredible economic policy formulation requires insulation from narrow interestlobbies (read civil society formations). The insulation of economic policy debate in anotherwise democratic system South Africa is a good example of this.

 

2.3.           Neo-liberalglobalisation[1]is at the centre of the high incidence of labour rights violations, particularly the rightto organise. From the Philippines to Central and Latin America to southern Africa,there are growing instances of governments deliberately violating labour rights. In the maquiladoras of Central America, for instance,workers (60 80 % women) do not have the right to organise, and work 65 hours a weekfor less than $1 a day. In the Southern African Customs Union (SACU), governments attractforeign direct investment in export processing zones on the understanding that labourregulations will be disregarded. There are numerous further examples of governments usingthe argument of competitive pressures to justify, and indeed advertise, lowlabour conditions and submissive workforces as a requirement of investment.

 

2.4.           At another level multinational corporations (MNCs) areengaging in a process of concentration at the core, through mergers andacquisitions, whilst at the same time increasing competition at the peripherythrough increased subcontracting. This effort to increase competition at the peripheryappears primarily through subcontracting production by getting small and mediumenterprises (SMEs) to engage in cutthroat competition for the contract. Thus MNCs cancontract out functions for lower costs than if they performed them. However, to get thesecontracts SMEs are often indirectly forced to violate labour rights[2].As a result, labour laws are being changed to get the MNC/ contracting firm and theirsubcontractors to be jointly liable for adherence to labour laws, meaning thatthe MNC cannot simply turn a blind eye to labour violations. However, this has often ledto SMEs forcing their employees to sign on as independent contractors, makingit difficult to hold anyone other than the worker legally liable for violating her ownrights! In short, at various points of the production chain, such as MNC-SME orSME-worker, there is an attempt to convert employment contracts (employer: employeerelationships) into commercial contracts (assuming equal partners).

 

2.5.           Labour standardsand trade unions are portrayed as primary obstacles to job creation. The UShire-and-fire model is put forward as the example of good practice. Of coursethis model also results in undermining the right to organise. In South Africa, promotersof this approach argue that job creation for the poorest of the poor trumpsthe interests of better off unions and their members. This argument,invariably made by the richest of the rich, is a clear attempt to positionunion membership (which includes the working poor) as an elite class, separate to thetruly needy classes. This fragmentation of the working class sets out to clear a path forthe erosion of unions and labour rights.

 

3.       Outline for astrategic approach

3.1.           A three-pronged approach can be identified to tacklethese challenges.

 

3.2.           Build strong tradeunion organisation. Organisational strengthis the first priority in fighting for change. In this regard, the changing forms ofemployment (part-time, casual and temporary) threaten to confine unionism to the shrinkingenclaves of full-time employment. To engage this challenge, unions need a much biggeremphasis on recruiting and organising these new forms of employment. Some union movementsare already setting a minimum of 30% of their total funds for this purpose. Related tothis organising effort is the need to find new forms of unionism to accommodate the needsof informal/ commercial contract workers. Membership is of course only oneindicator of union strength. A second indicator is the extent to which unions aredemocratic and controlled by their members. Unfortunately, many labour movements do nothave freedom of association/ right to organise laws, and are often vulnerable togovernment patronage. Internal union democracy, requiring unions to be free of externalcontrol, is crucial if unions are to challenge neo-liberal government policy choices.

 

3.3.           Develop new andcreative strategies. In recent times several creative strategies have been suggested.These include the following:

 

a)     Link labour rightsto trade rights the International Confederation of Free Trade Unions (ICFTU)called for a labour clause to be part of the World Trade Organisation system, penalisingcountries which violate basic labour rights. This question caused some controversy withmany developing nation governments and otherwise progressive intellectuals viewing it as aprotectionist measure by the developed countries. There is a clearly a danger of vestedinterests in developed nations pushing for a protectionist arrangement. However, a labourclause that entrenches the basic organising rights is not protectionist, and will greatlyenhance trade union strength in the developing world. In view of the inability of theInternational Labour Organisation to enforce international labour rights, the need forbetter intra-national unionism is critical.

 

b)     Targetmultinational corporations MNCs are central to the implementation of theneo-liberal agenda. However, although globalisation has many advantages for corporations,it can also make them vulnerable. Technology, supply chains and growing consumer awarenesson issues related to labour rights and environmental practices could make worstpractice behaviour bad for the bottom line. In this regard, unions can pro-activelytarget MNCs. By pro-actively targeting MNCs, unions can move away from their traditionaldefensive posture, and pick the most favourable timing for their campaigns. Proactivetargeting also assists unions to get the most impact out of their limited resources. Thecurrent Clean Clothes Campaign (focusing on Nike and sports goods production)linked to the Euro2000 championship in Netherlands and Belgium is a case in point. Apartfrom these consumer campaigns, there have been some recent examples of successful internalunion solidarity against multinationals (such as the Australian Maritime dispute).

 

c)     Use worker capital(pension and provident funds) to leverage worker interests in corporations Inmany countries, pension funds, which legally belong to their worker members, are thebiggest owners on stock exchanges. In South Africa, for example, these funds are estimatedto own 45% of the Johannesburg Stock Exchange. If unions succeed in getting control overthe estimated $6 trillion of worker pension capital worldwide, these funds could be usedto pressure MNCs and all other corporations that access equity markets. Unions could fightfor better corporate governance, worker seats on the boards, different forms of workorganisation, and investment strategies. The ICFTU is convening an international workgroup to put together strategies for control and leverage of worker capital.

 

d)     Promote asset-basedredistribution Private investment is attracted by the possibility of higherprofitability. Therefore efforts to increase real wages in less developed countries, tothe extent that it increases the relative labour share of income, are often portrayed asbeing contrary to the national effort to attract private investment. Yet most people relyon wages and salaries as a primary source of income. Since ownership is relativelyconcentrated, fewer people rely on profits. As such profit-driven investment strategiescan lead to a situation of greater job creation and greaterinequality. One way around this so-called competitiveness-equity trade-off isasset-based redistribution. In the South African case this broadening of the economicownership base (including land and financial holdings) to could lessen distributiveconflict while decreasing inequalities and without necessarily disrupting theprocess of investment or competitiveness.

 

e)     Build democraticinstitutions and processes for voice regulation Neo-liberalglobalisation seeks to insulate policy formulation, paving the way for the imposition ofunpopular policies of finance capital. Counteracting this, unions and progressive socialformations need to fight for expanding and deepening democracy. This form of democracyneeds to go beyond the low intensity democracy of regular electoralcompetition to embrace a concept of high intensity democracy, giving organisedformations an ongoing influence over policy formulation. The establishment of SouthAfricas socio-economic council the National Economic Development and Labour Council(Nedlac), which includes participation from community groups, is a case inpoint. Informal workers could, for example, be included within community or labourdelegations, depending on their level of organisation. Such high-intensity forms ofdemocracy are essential in countering social exclusion. A crucial point, though, is thatsolutions should not be imposed from the outside, whether from the Right or the Left.

 

f)       Forge socialmovement unionism around union and wider societal demands To avoid beingoutflanked as narrow interests, and to reflect the reality of common interests, unionsneed to build bridges with other social formations. The union demands for better wages forpublic servants, for example, have more weight if they incorporate wider societal concernsfor expanded service delivery. Indeed, unions can galvanise the support of progressivesocial formations (such as churches and NGOs) by showing that decent teachers salaries aregood for ensuring qualify education. Further, it is widely recognised that labour rightsand human rights are interwoven concepts, laying the basis for wide societal campaigns.

 

3.4.           Establish anapproach of principled values The tactical approach of arguing that labourrights are good for long-competitiveness is useful, but there is a stronger argument: webelieve in labour and human rights regardless of whether it is good forcompetitiveness or not. Indeed, if competitiveness and labour rights cannot bereconciled, then it is the competitiveness imperative that must be changed.Internationally, however, this question of an alternate value system to neo-liberalism ishampered by the lack of a common labour movement answer to the question What do wewant in its place? Answering this question is crucial in setting bottom-line values,at national and international levels, that must never be violated.

 

4. Conclusion

4.1.           South African unions have an immediate need to maintainand increase their levels of union density if they are to exercise political economicinfluence. It goes without saying of course that union membership is only one indicator ofunion strength; internal union democracy and political strategy are others, though theseare less effective in the absence of critical membership mass.

 

4.2.           Neo-liberal globalisation, with internationalcompetitiveness and MNCs at its centre, is pivotal in undermining labour rights andorganisation.

 

4.3.           The challenge of globalisation is forcing workers andtrade unions to focus seriously on international campaigns that build strong nationaltrade union organisation. International campaigns and collective action strategies arecoming to the fore.

 

4.4.           In practice, this struggle must be built on principledvalues, creative strategies and strong independent union organisation.

R. Naidoos introduction to his notes

Some of the ideas in the paperpresented here have been circulating in different formations in the union movement. I amfrom Naledi, a policy research organisation established by Cosatu, but which is not partof Cosatu. We do work with NGOs, churches and international organisations.

Three years ago, after a lot ofdebate, Cosatu became an affiliate of the International Confederation of Free TradeUnions. The ICFTU was the Wests organised labour arm during the Cold War but it wasone of a number of bodies which started to change ideologically because the issues whichbegan to emerge were very difficult to deal with. New voices became heard in theWests labour movements, there was a change in leadership and, as a result, SouthAfrica, Korea and Brazil all fairly left-wing militant labour movements affiliated to the ICFTU to try to influence its stance on globalisation. I will cover afew things that interest me in particular:

1.     Who do you represent? Theorganised working class is quite powerful because of who it represents somethingwhich is changing. The ANC looks at Cosatu as a driving force behind democratictransformation. At the ANC National General Council a month ago, branches and others saidthe organised working class is a driving force,as opposed to a motive force such as blackbusiness.

2.     Who you are allied to?Cosatu is a formal part of the ANC alliance.

3.     How the labour movement does things.For example, Mbhazima Shilowa when he was general secretary of Cosatu was personallyinfluential, he carried himself well, he built up networks.

4.     How socio-economic restructuring isimpacting on these things.

Internationally, labourmovements have been in decline, especially with the rise in right-wing governments overthe last two years. South Africa, the Philippines and Korea are exceptions all havestrong labour movements which are growing. Since the 70s, the labour movement in SouthAfrica has grown because it is vibrant, and because laws governing labour relations havechanged for the better. The public sector is one of the main sources of growth inmembership. Public service unions have grown sharply in the last ten years becauseapartheid rules against unionisation of public servants fell away. Cosatu could not copewith the growth, running out of money because it was spending money on things like officesfaster than it was able to set up the subscription systems.

The global competition scenarioin manufacturing has led to a reduction in tariffs, for example, on clothing, an increasein imports from Asia, restructuring by employers and 10 000 workers losing their jobsevery six months. Even though Cosatu has grown, there has been a strong change in thecentres of power within the union movement. Unions with a lot of experience and struggleare in decline. This is undermining an important source of strength in the unions. Thepublic sector itself is due to be downsized.

There has been a stagnation ofthe formal sector, and growth in the informal sector to part-time, temporary,hard-to-unionise McDonalds-type companies. Over time, the labour movement willrepresent a smaller group. We are now being asked to accept that our role is to representthe interests of workers and nothing else. Historically, South African unions have beeninterested in wider struggles, social struggles. It is important to maintain this energy,and not to get trapped in a downward cycle.

One of the first goals of theneoliberal assault is to try to dismantle the whole notion of social justice, socialsolidarity by trying to impose in its place a view that we must be pragmatic,work is changing, we have to change, be flexible,be competitive, some things are nice to do, but it is old fashioned todo them now. All over the world, even in Western Europe, the welfare state is beingtrimmed. At the level of government policy, officials say we dont care aboutideology, we are concerned about the facts and what works, but thesefacts are of course framed in a certain way. During a visit to South Africa,US Treasury Secretary Lawrence Summers was asked by influential business people what weshould be doing to attract foreign investment. He said although people say we will neverget investment money back, at the end of the day, the one value to get foreign investmentis greed if you offer the right rate of return, investors will come back. This isthe same person who, when he was at the World Bank, said Africa is underpolluted andshould therefore import toxic waste. Summers got Joseph Stiglitz fired from the WorldBank. Stiglitz said neo-liberalism is irrational because it undermines the strengths ofgovernment.

The agenda of neo-liberalismwill always include the liberalising of financial services. Neo-liberalism is trying topresent itself as being pragmatic, but it is not. Internationally the Left has realised itis a difficult thing to resist, so its response is framed in the paradigm ofcompetitiveness. The Left is now saying that good labour standards are good forcompetition, you cant build economies on sweatshops and if, for example,you allow Thailand to use child labour, this is unfair competition. Human rights areexpensive.

In South Africa, as elsewhere,policies must be made, governments must govern, but the question is how they do it. TheInternational Monetary Fund/World Bank theory is that the formulation of economic policyshould be insulated because as soon as you expose the process to debate and the influenceof interest groups, it creates uncertainty. This is a code for saying only certain groupswill be given access, not civil society. When South Africas Growth, Employment andRedistribution macroeconomic strategy was developed, it did not go through Parliament orthe ANC alliance, it did not even go through the ANCs National Executive Committee.GEAR was developed in the Department of Finance (now called the National Treasury) by asmall group of people who showed various government departments only the parts whichapplied directly to them. The original national Growth and Development Strategy was linkedto Reconstruction and Development Programme, but debate on this latter strategy was shutdown in government. Our Parliament is very democratic, even compared to establisheddemocracies, but it cannot affect budgetary policy making Parliament does not havethe power to amend the Budget.

Even though 38 per cent of thepeople are below the poverty line, 10 per cent of the formal sector earns less than R500 amonth. Some formal sector organisations governed by bargaining agreements pay as little asR100 per week, and there is no minimum wage. There have been attempts to fragment theworking class. This has been done by creating a new class called the poorest of thepoor against which working people with jobs are favourably compared. This analysissees redistribution as being confined to these two groups from the poor (butrelatively fortunate) to the poorest of the poor.

In the US, there has been arise in polarisation even though it has the lowest unemployment ever (around 4 per cent) because the incomes of 80 per cent of working families are stagnating and incomesof top 20 per cent have shot through the roof.

What can the labour movement doabout it? Build strong organisation. Increase membership, avoid being caught in anenclave. As much as we dont like new forms of employment, we have to learn torecruit in a different way. There are more women in the service sector who do not identifywith old union image. Employers are trying to rearrange employment so that their workersare independent contractors who are paid by output instead of employees. Such contractsfall under the commercial law rather than the labour law. The International LabourOrganisation is trying to come up with a convention to deal with new forms of contractwork such as outsourcing and labour broking. When I get a plumber to fix something in myhouse, he is not my employee, I dont pay his pension. In other cases, a person isdoing regular work and is effectively an employee, but if he or she is described as anindependent contractor, this enables the employer to avoid employee obligations and lowerthe cost.

Comments and questions

Rob Turrell: The weakestworkers are being outsourced the University of Cape Town did it some time ago, andthe University of the Witwatersrand is currently doing it.

Richard Rosenthal: UCT saved R8million to 10 million a year by outsourcing certain functions. The big saving comes fromthe outsourcer who has the opportunity to renegotiate the remuneration package. Some staffhave been re-employed but are earning substantially less than when they were employed byUCT.

Ravi Naidoo: There is a savingin terms of money, but 600 workers are being retrenched at Wits.

Rob Turrell: UCT won the courtcase about this. What is Nehawus strategy to deal with this?

Ravi Naidoo: UCT went very fastinto this programme, it went past the union, and the matter is over and done. Wits want tobring down their costs by a third so Colin Bundy [vice chancellor of Wits] tried to dowhat UCT did and outsource certain functions, but Nehawu has learnt from the UCTexperience and is opposing the plan. This course of action is surprising, given that Witshas a progressive senate, including Edwin Cameron, Leila Patel and Colin Bundy. Wits spentR6 million on consultants to advise them on this.

The Johannesburg Metro istrying to do the same thing and is being opposed by Samwu. In terms of the labour law,employers who want to retrench employees only have to show an operational reason forwanting to do so. Unions cannot strike on retrenchments, and employers only have to consult with the union.

Rob Turrell: There are highlyprofessional staff that have been outsourced and are doing better than before, the weakeststaff lose out.

Ravi Naidoo: It has to do withskills. If I, for example, were to become a consultant, I would earn more than I currentlydo. For certain grades of employee, it is the complete opposite. They lose out. Anoverclass is developing executives pay each other huge amounts of money.

Ronald Segal: All the phenomenathat you have cited are evident in Britain under New Labour. This intellectuallydisreputable action is being subjected to criticism from the chattering classes. Why isSouth Africa engaged in this process to thunderous intellectual silence? It is a wholesystem of stripping labour of rudimentary rights.

Richard Rosenthal:Parliaments capacity to influence the Budget is limited to interrogating it andmaking recommendations. Parliamentary committees finding are theoretically takeninto account, but when the matter is before the plenary session of Parliament, it musteither be accepted or rejected in toto. There is a case of legislation going through withdrafting errors in it which were picked up too late to change.

Ravi Naidoo: Financial capitalis very powerful, we must access some of this money for our own purposes. We have tomake yourself presentable as Lawrence Summers would say. A double transitionis underway. We have movement towards democracy which is a huge thing to deal with. At thesame time our economic policy is inherently conservative free trade,few exchange controls, downward pressures that are reflected in the statements of thefinance people. There is no one view in government. During the Jobs Summit in 1998,individual proposals had to be made by labour, the community, employers andgovernment. Government struggled the most to come up with a document because it could notachieve agreement between finance and the other ministries. The National Treasury controlsthe budgets of all departments. It is a super department which sets the termsof reference for other departments. The problems we have largely stem from problematicviews in the National Treasury. There are a number of things raised as specific strategiesfor unions to use [see in my paper section 3.3 above]. The interesting ones have to dowith the way the international labour movement is changing because they are feeling theneed to do something about international solidarity, not just talk about it.

Multinationals are beingtargeted proactively, especially on consumer goods, for example, Nike in Thailand. We havea bigger focus on democracy and institutions the more you can expose the policy andbudget to pressure, the more you remove the hiding places for particular interest groupsto impose policies that are not in the interests of people.

A low-intensity democracy isproposed by the powerful, restricted to having a vote every five years. We are proposing ahigh-intensity democracy government must still govern, but with consultation.Chairs of parliamentary committees complain that they are not listened to. The focus is onwhat we can do to bring up democratic institutions. The labour movement is facing pressureto back off from social movement unionism because, as membership shrinks, it is beingcaught in an enclave. We are therefore looking at partnership with NGOs, churches,environmental groups, strategic partnerships. The anti-World Trade Organisation (WTO)campaign in Seattle included a broad variety of organisations. Who would have thought thatthe US labour federation AFLCIO, which at one stage was an instrument of US governmentpolicy, would have participated in such a protest?

There is no point in debatinghow rights serve competitiveness. We like the fact that the advent of rights is good forthe economy because this supports a high-skilled new economy. But human rights cannot bemade flexible in the service of competitiveness. Rights are a core value. Labour movementsover the world are beginning to converge on a set of core values. This year we hosted theICFTU conference. We are starting to see blocks of unions for example, Brazil,Korea and South Africa. The labour movement has taken on the WTO in partnership withothers. We need to develop a network of organisations to take up strategic issues.

Rob Turrell: Where is theproposed change to the labour law due to come up?

Ravi Naidoo: In Finance.

Norman Levy: You talked aboutbuilding civil society, and needing to empower Parliament to change the budget. Is therean alternative in the light of declining membership of unions worldwide? We are part ofthe present financial system and globalisation. You spoke about deregulation, thereduction of clothing industry tariffs and the impact on South Africa, the deregulation oflabour conditions. The growth in the informal sector is not taxable. It undermines thewelfare system. Are we caught? Are there viable alternatives which will not make capitaljust transfer its direct investment somewhere else? The strategies you adopt would dependon your answers to this.

Ravi Naidoo: Yes, there arealternatives. There always are. Globalisation is not a natural phenomenon, it is a drivenprocess. Policies get made on power, not necessarily on economics. According to the viewsof the heads of the ILO and Joseph Stiglitz who used to be in the World Bank, it is apolicy-driven process. Political and institutional mechanisms make a big difference. Thereis a global competitiveness imperative. A number of countries avoid zero sum games,especially the old social democracies. An agreement could say, for example, we can look atproductivity in exchange for a policy on poverty and reinvestment. Kerala State in Indiahas a higher human development index than many countries, and it has a high level ofsocial mobilisation. It is the only state in India that has banned child labour, and it isdoing well. In Brazil, participatory budgeting for local government takes place and 44cities have a basic payment grant. This disregards World Bank advice. Kerala accepts thatcompanies which want to use child labour will move to West Bengal or somewhere else.

Norman Levy: Where are theseoptions in the work of the SACP, Cosatu? We dont have a consistent well worked-outindustrial policy for the country. We protest against the policies of others and theirconsequences, why dont we have an alternative?

Ravi Naidoo: A lot of work hasbeen done in, for example, Naledi, and the Macroeconomic Research Group (MERG) report.MERG was much better than GEAR, but it was shot down because MERG opposed entrenching theindependence of the Reserve Bank in the Constitution.

Ronald Segal: My information isthat the MERG report was shown to high-ranking representatives of the UK and US who saidthey found the report unacceptable and that there would be serious implications if it wereput into place. When I was involved in working for the ANC before the 1994 elections, thehead of Sanlam said he was disappointed that there was no ANC economic policy. The MERGreport was worked on by about 100 South African and international economists, but it wasnot distributed. Although MERG was cautious and conservative, it was suppressed on thegrounds that it was irrational and radical. This was the beginning of the end.

Ravi Naidoo: You have to be inwith a certain perspective to be heard.

Norman Levy: MERG was on thetable but it was rejected. Since MERG we have not had an alternative to the neo-liberalapproach. There is no systematic alternative economic policy that one might consider.Opposition to neoliberalism in the SACP, Cosatu and ANC is gestural, there are no policiesto back the criticisms up.

Annmarie Wolpe: We need toaddress questions of power and power relations. In Zimbabwe, the Zimbabwe Congress ofTrade Unions called back its planned three-day stayaway to one day because of powerrelations. The trade union movement with a socialist agenda is no longer unified in termsof its aims, it is disparate. To what extent are unions supporting an elite aligned notonly with MNCs, but globalisation outside of government and government power in which theIMF and the World Bank call the tune? There are tensions and contradictions and theabsence of a uniform left-wing position, confused by unions which support a form ofcapitalism which will benefit the workers.

Ravi Naidoo: It is not all doomand gloom. In the 60s and 70s, the unions were not united there were Christianunions, the Left block, and the AFL-CIO (and some asked whether the CIO partof the name is actually CIA). Cold War divisions have come down, which is apositive thing. In terms of what is it that people want to replace the existing system,union movements are coming from different histories. There is no social democracy (forexample a Keynesian closed economy) anywhere. We need something qualitatively different.Giddens speaks of a third way an open economy within social democracy,but this fits into the competitiveness paradigm.

Ronald Segal: It is morecomplex and sanguine. The corporate fundamentalism of neo-liberalism is inherentlyunstable and divisive and is facing increasing revulsion by countries, by consumers whodislike the loss of choice and the indifference to the environment. For the first time inUS politics under Ralph Nader consumer power is part of a powerful ecological lobbyconcerned about the apocalyptic things like changes in the weather which have causedunstoppable fires across 11 states. I am not seeing South Africa attracting the capitalthat it says it risks losing if it had a different policy. A lot of investment decisionshave been based on moral arguments, for example, the bursary funds committed to SA. Thereis more than just one force the global superpower affecting SA policy. Inthe next short while, we will see stirring in the undergrowth of the jungle. New Labour isfinding a profound disenchantment in the classes it expected to support its programme.

Ravi Naidoo: In the UK theyhave set up a social exclusion unit, and there are 750 000 more people in it sinceNew Labour came to power. Policy is made in different ways through power, andthrough rationality (a research-based approach). Cosatus website www.cosatu.org.za contains more research than manygovernment sites. The World Bank is in the throes of policy regression. Since it kickedout Joseph Stiglitz, a lot of the staff he brought in are also being purged. Before, suchthings could be kept quiet, with the Internet, this purge is well known. The World Development Report of 1990 said we would havemade inroads into poverty under the neo-liberal policies of the time. Lawrence Summerswanted the 2000 report to say we would be overcoming poverty if there were not a fewabberations in how the policies were applied. This is an exercise of power if youare saying the right things you will be heard, if not, you wont.

Rob Turrell: Did labour haveany influence over the failure of Nedcor to take over Stanbic?

Ravi Naidoo: Labour had aninterest there would have been a loss of 10 000 jobs in Standard Bank if itwent ahead. There are also consumer interests we already have a very concentratedfinancial sector. The new group would have had too much power. Cosatu and others putpressure on the Competition Tribunal and Competition Commission,who research for thetribunal, not to allow the takeover.

Mervyn Bennun: Ravispaper is very depressing, we seem to face defeat on all fronts, everything we struggledfor is running through our fingers.

Ravi Naidoo: There have been alot of important things that have gone right. SA is better than it used to be, and thingsare better for Cosatu too. For a black person, SA is better than it used to be. There havebeen changes in a whole range of apartheid laws. This is one of the reasons Cosatu isclose to the ANC. There has been major service delivery rollouts in water,telecommunications, electricity and housing. User charges are bad, but a number of goodthings have emerged. The economy and employment have been the worst hit. We have anextremely useful Constitution. We have rights which exceed the rights of many countries,and SA has the only constitution in the world that expressly guarantees rights for allsorts of minorities. In the time that the government has been in power, how much of theapartheid legacy could have been reversed? We must be realistic. But the unions think thewrong choices have been made with regard to the economy and employment we haveadopted policies that are quite job-destroying.

Mervyn Bennun: The deliverythat has taken place has been done with the resources that were available at the time ofthe changeover. These resources are running out, they are not being replenished. The wrongchoices have been made at the central level. It is indescribably bleak.

Norman Levy: A lot is positiveinstitutionally, a lot is positive in terms of access, but 40 per cent of the labourmarket is unemployed. Are we able to buck the neo-liberal trend and replace it withpolicies that will provide jobs? We could find employment for a good proportion of thoseif we moved away from a neo-liberal economic policy.

Ravi Naidoo: In the last yeargovernment has given away R26 billion in tax exemptions in an environment where many jobshave been lost. Exemptions are intended to attract investment, but you attract investmentby ensuring that the economy grows. A lot of the states institutions are in trouble,but response is just to privatise them, lowering the cost to government.

Rob Turrell: What aboutunderspending of government poverty alleviation money does Cosatu have a stance onthis?

Ravi Naidoo: They cannot spendmoney because they dont have people, or they get in money which comes in shortlybefore it has to be spent. There is an incentive to cut expenditure, and there areadministrative delays. The response should not be to give government less, the squeeze ismaking it difficult for government to spend.

Norman Levy: This is not true.I have been round the country and interviewed finance MECs, premiers and others. They loveconsultants and are short of advisors.

Ravi Naidoo: The underspendingin the Department of Welfare came out because it had spent only 1 per cent of its money.People did not pick up on other departments which underspent.

Annmarie Wolpe: You have raiseda number of issues. Many things are wrong, but many things are right. There is no outletor stimulation of debate, people are not talking to each other, a need which this forumtries to meet. Thank you.