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

Ravi Naidoo

(Director, National Labour and Economic Development Institute)

Harold Wolpe Memorial Trust forum meeting

Cape Town, 17 August 2000






This short note briefly covers some of the challenge facing the South African and international working class. Unavoidably such a short 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 labour movement.

1.         The immediate challenge of job creation and job retention

1.1. South Africa has one 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 employment patterns.

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

1.3. South African unions are feeling the impact of this changing employment pattern. Graph 1 shows the changing pattern of union membership in COSATU. Today public service unions are the largest sector within COSATU, representing 37% of all membership. This sectoral breakdown for 1999 is very different to the picture that emerged from the early days of COSATU. Ten years 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 COSATU manufacturing unions, membership has fallen from 530 625 in 1994 to an estimated 484 258 in 1999. The decline in manufacturing unions mirrors some of the changes occurring in the economy. Changes in employment in these sectors are occurring on a wide scale and at a rapid pace. Slow economic growth, industry and workplace restructuring have resulted in job losses.

1.5. These declining manufacturing unions have accumulated considerable worker experience and struggle over the years, qualities that cannot be easily replaced. As these unions decline, their influence over union movement strategies and priorities may decline too. The consequences of this could be a loss of valuable experience of worker struggles and strategies.

Graph 1: Changes in Cosatu sectoral membership, 1989-1999

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

1.7. Can this rapid increase in public service membership continue, and will it compensate for the declining manufacturing sector unions? The answer to the first question is ‘maybe Yes’, and ‘probably Not’ to the second.

1.8. First, there is every chance that this membership growth will continue for the next few years, as insecurity rises in the public service. Despite the rapid growth of these unions, the vast 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 much on one sector. In many industrialised countries in the 1980s unions retreated from the declining manufacturing sector into the public sectors, only to find public sector employment shattered by downsizing and privatisation.

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

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

2.         The underlying challenges facing workers and trade unions

2.1. Neo-liberal globalisation seeks to dismantle rights and their underpinning social justice values. The argument is that the world is changing, and national institutions and processes must adjust to keep pace with the irresistible forces of globalisation. The pragmatism of neo-liberalism seeks to posture policy as ‘whatever works’. In this event whatever works for ‘competitiveness’ is to be accepted.

2.1.1. In many social democracies those aspects of the systems viewed as uncompetitive are being dismantled or ‘adjusted’ (generally downwards). The aspects not in keeping with the imperative of competition generally are social justice and solidarity, encompassing redistributive fiscal policies, progressive taxation, social dialogue, and the concept of collectivism. It their place the concept of self-interest and market-competition is entrenched. In this regard, US Treasury Secretary Lawrence Summers’ recently appealed to South African policy makers to promote ‘greed’, the underlying self-interest value system of the capitalist market, as a basis for attracting investment.

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

2.1.3. A further Left strategy has been to argue that better labour standards are good for competition. First, there is an argument that poor labour standards in less developed countries are resulting in unfair competition and social dumping and are undermining the sustainability of liberalisation. A lack of fair play will make the public sceptical of liberalisation, undermining its legitimacy. Second, it can also 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 a people-centred economy must be built on good education, life-long learning, and inclusive work organisation able to encourage worker creativity and participation. In short, in these arguments long-term competitiveness requires policies that are very different to the promotion of EPZs and Taylorist-type hierarchical work organisation.

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

2.2. Neo-liberalism seeks to undermine society’s democratic institutions. Developing countries have been under pressure from developed countries to liberalise their financial markets. Often this has been through conditions embedded in structural adjustment programmes. Sometimes it has been the message repeatedly hammered home through ‘advisors’ from international financial institutions, with the misleading promise that this with lead to higher levels of foreign investment. The net result is that financial liberalisation has reduced states’ power over capital. With capital more mobile, governments cannot dictate terms to investors, rather it is generally investors (including domestic capital) that dictate to governments. Governments in developing countries that run national budget deficits in excess of international investor ‘benchmarks’ to finance, say, infrastructure development, risk ‘punishment’ by financial markets. As The Economist once stated, global financial markets should seek to ensure that governments are ‘well-behaved’; that is, governments should work within the parameters set by financial markets even if it means disregarding the mandate of their actual electorates. Part of this dismissal of democracy is the increasingly dominant view among mainstream economists and finance departments that credible economic policy formulation requires insulation from ‘narrow interest’ lobbies (read civil society formations). The insulation of economic policy debate in an otherwise democratic system – South Africa is a good example of this.

2.3. Neo-liberal globalisation[1] is at the centre of the high incidence of labour rights violations, particularly the right to 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 week for less than $1 a day. In the Southern African Customs Union (SACU), governments attract foreign direct investment in export processing zones on the understanding that labour regulations will be disregarded. There are numerous further examples of governments using the argument of ‘competitive pressures’ to justify, and indeed advertise, low labour conditions and submissive workforces as a requirement of investment.

2.4. At another level multinational corporations (MNCs) are engaging in a process of ‘concentration at the core’, through mergers and acquisitions, whilst at the same time increasing ‘competition at the periphery’ through increased subcontracting. This effort to increase competition at the periphery appears primarily through subcontracting production by getting small and medium enterprises (SMEs) to engage in cutthroat competition for the contract. Thus MNCs can contract out functions for lower costs than if they performed them. However, to get these contracts 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 their subcontractors to be ‘jointly liable’ for adherence to labour laws, meaning that the MNC cannot simply turn a blind eye to labour violations. However, this has often led to SMEs forcing their employees to sign on as ‘independent contractors’, making it difficult to hold anyone other than the worker legally liable for violating her own rights! In short, at various points of the production chain, such as MNC-SME or SME-worker, there is an attempt to convert employment contracts (employer: employee relationships) into commercial contracts (assuming equal partners).

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

3.Outline for a strategic approach

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

3.2. Build strong trade union organisation. Organisational strength is the first priority in fighting for change. In this regard, the changing forms of employment (part-time, casual and temporary) threaten to confine unionism to the shrinking enclaves of full-time employment. To engage this challenge, unions need a much bigger emphasis on recruiting and organising these new forms of employment. Some union movements are already setting a minimum of 30% of their total funds for this purpose. Related to this organising effort is the need to find new forms of unionism to accommodate the needs of informal/ ‘commercial contract’ workers. Membership is of course only one indicator of union strength. A second indicator is the extent to which unions are democratic and controlled by their members. Unfortunately, many labour movements do not have freedom of association/ right to organise laws, and are often vulnerable to government patronage. Internal union democracy, requiring unions to be free of external control, is crucial if unions are to challenge neo-liberal government policy choices.

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

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

b) Target multinational corporationsMNCs are central to the implementation of the neo-liberal agenda. However, although globalisation has many advantages for corporations, it can also make them vulnerable. Technology, supply chains and growing consumer awareness on issues related to labour rights and environmental practices could make ‘worst practice’ behaviour bad for the bottom line. In this regard, unions can pro-actively target MNCs. By pro-actively targeting MNCs, unions can move away from their traditional defensive posture, and pick the most favourable timing for their campaigns. Proactive targeting also assists unions to get the most impact out of their limited resources. The current ‘Clean Clothes Campaign’ (focusing on Nike and sports goods production) linked to the Euro2000 championship in Netherlands and Belgium is a case in point. Apart from these consumer campaigns, there have been some recent examples of successful internal union solidarity against multinationals (such as the Australian Maritime dispute).

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

d) Promote asset-based redistribution – Private investment is attracted by the possibility of higher profitability. Therefore efforts to increase real wages in less developed countries, to the extent that it increases the relative labour share of income, are often portrayed as being contrary to the national effort to attract private investment. Yet most people rely on wages and salaries as a primary source of income. Since ownership is relatively concentrated, fewer people rely on profits. As such profit-driven investment strategies can lead to a situation of greater job creation and greater inequality. One way around this so-called ‘competitiveness-equity’ trade-off is asset-based redistribution. In the South African case this broadening of the economic ownership base (including land and financial holdings) to could lessen distributive conflict while decreasing inequalities – and without necessarily disrupting the process of investment or competitiveness.

e) Build democratic institutions and processes for ‘voice regulation’ – Neo-liberal globalisation seeks to insulate policy formulation, paving the way for the imposition of unpopular policies of finance capital. Counteracting this, unions and progressive social formations need to fight for expanding and deepening democracy. This form of democracy needs to go beyond the ‘low intensity’ democracy of regular electoral competition to embrace a concept of ‘high intensity’ democracy, giving organised formations an ongoing influence over policy formulation. The establishment of South Africa’s socio-economic council the National Economic Development and Labour Council (Nedlac), which includes participation from ‘community groups’, is a case in point. Informal workers could, for example, be included within community or labour delegations, depending on their level of organisation. Such high-intensity forms of democracy are essential in countering social exclusion. A crucial point, though, is that solutions should not be imposed from the outside, whether from the Right or the Left.

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

3.4. Establish an approach of principled values – The tactical approach of arguing that labour rights are good for long-competitiveness is useful, but there is a stronger argument: we believe in labour and human rights regardless of whether it is good for ‘competitiveness’ or not. Indeed, if competitiveness and labour rights cannot be reconciled, then it is the competitiveness imperative that must be changed. Internationally, however, this question of an alternate value system to neo-liberalism is hampered by the lack of a common labour movement answer to the question ‘What do we want 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 maintain and increase their levels of union density if they are to exercise political economic influence. It goes without saying of course that union membership is only one indicator of union strength; internal union democracy and political strategy are others, though these are less effective in the absence of critical membership mass.

4.2. Neo-liberal globalisation, with international competitiveness and MNCs at its centre, is pivotal in undermining labour rights and organisation.

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

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



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

Three years ago, after a lot of debate, Cosatu became an affiliate of the International Confederation of Free Trade Unions. The ICFTU was the West’s organised labour arm during the Cold War but it was one of a number of bodies which started to change ideologically because the issues which began to emerge were very difficult to deal with. New voices became heard in the West’s labour movements, there was a change in leadership and, as a result, South Africa, 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 a few things that interest me in particular:

1. ‘Who do you represent?’ The organised working class is quite powerful because of who it represents – something which is changing. The ANC looks at Cosatu as a driving force behind democratic transformation. At the ANC National General Council a month ago, branches and others said the organised working class is a driving force, as opposed to a motive force such as black business.

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 personally influential, he carried himself well, he built up networks.

4. How socio-economic restructuring is impacting on these things.

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

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

There has been a stagnation of the formal sector, and growth in the informal sector to part-time, temporary, hard-to-unionise McDonald’s-type companies. Over time, the labour movement will represent a smaller group. We are now being asked to accept that our role is to represent the interests of workers and nothing else. Historically, South African unions have been interested 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 the neoliberal assault is to try to dismantle the whole notion of social justice, social solidarity 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 to do them now’. All over the world, even in Western Europe, the welfare state is being trimmed. At the level of government policy, officials say ‘we don’t care about ideology, we are concerned about the facts and what works’, but these ‘facts’ 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 we should be doing to attract foreign investment. He said although people say we will never get investment money back, at the end of the day, the one value to get foreign investment is greed – if you offer the right rate of return, investors will come back. This is the same person who, when he was at the World Bank, said Africa is underpolluted and should therefore import toxic waste. Summers got Joseph Stiglitz fired from the World Bank. Stiglitz said neo-liberalism is irrational because it undermines the strengths of government.

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

In South Africa, as elsewhere, policies must be made, governments must govern, but the question is how they do it. The International Monetary Fund/World Bank theory is that the formulation of economic policy should be insulated because as soon as you expose the process to debate and the influence of interest groups, it creates uncertainty. This is a code for saying only certain groups will be given access, not civil society. When South Africa’s Growth, Employment and Redistribution macroeconomic strategy was developed, it did not go through Parliament or the ANC alliance, it did not even go through the ANC’s National Executive Committee. GEAR was developed in the Department of Finance (now called the National Treasury) by a small group of people who showed various government departments only the parts which applied directly to them. The original national Growth and Development Strategy was linked to Reconstruction and Development Programme, but debate on this latter strategy was shut down in government. Our Parliament is very democratic, even compared to established democracies, but it cannot affect budgetary policy making – Parliament does not have the power to amend the Budget.

Even though 38 per cent of the people are below the poverty line, 10 per cent of the formal sector earns less than R500 a month. Some formal sector organisations governed by bargaining agreements pay as little as R100 per week, and there is no minimum wage. There have been attempts to fragment the working class. This has been done by creating a new class called ‘the poorest of the poor’ against which working people with jobs are favourably compared. This analysis sees redistribution as being confined to these two groups – from the poor (but relatively fortunate) to the poorest of the poor.

In the US, there has been a rise 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 incomes of top 20 per cent have shot through the roof.

What can the labour movement do about it? Build strong organisation. Increase membership, avoid being caught in an enclave. As much as we don’t like new forms of employment, we have to learn to recruit in a different way. There are more women in the service sector who do not identify with old union image. Employers are trying to rearrange employment so that their workers are independent contractors who are paid by output instead of employees. Such contracts fall under the commercial law rather than the labour law. The International Labour Organisation is trying to come up with a convention to deal with new forms of contract work such as outsourcing and labour broking. When I get a plumber to fix something in my house, he is not my employee, I don’t pay his pension. In other cases, a person is doing regular work and is effectively an employee, but if he or she is described as an independent contractor, this enables the employer to avoid employee obligations and lower the cost.



Rob Turrell: The weakest workers are being outsourced – the University of Cape Town did it some time ago, and the University of the Witwatersrand is currently doing it.

Richard Rosenthal: UCT saved R8 million to 10 million a year by outsourcing certain functions. The big saving comes from the outsourcer who has the opportunity to renegotiate the remuneration package. Some staff have been re-employed but are earning substantially less than when they were employed by UCT.

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

Rob Turrell: UCT won the court case about this. What is Nehawu’s strategy to deal with this?

Ravi Naidoo: UCT went very fast into this programme, it went past the union, and the matter is over and done. Wits want to bring down their costs by a third so Colin Bundy [vice chancellor of Wits] tried to do what UCT did and outsource certain functions, but Nehawu has learnt from the UCT experience and is opposing the plan. This course of action is surprising, given that Wits has a progressive senate, including Edwin Cameron, Leila Patel and Colin Bundy. Wits spent R6 million on consultants to advise them on this.

The Johannesburg Metro is trying 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 for wanting to do so. Unions cannot strike on retrenchments, and employers only have to consult with the union.

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

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

Ronald Segal: All the phenomena that you have cited are evident in Britain under New Labour. This intellectually disreputable action is being subjected to criticism from the chattering classes. Why is South Africa engaged in this process to thunderous intellectual silence? It is a whole system of stripping labour of rudimentary rights.

Richard Rosenthal: Parliament’s capacity to influence the Budget is limited to interrogating it and making recommendations. Parliamentary committees’ finding are theoretically taken into account, but when the matter is before the plenary session of Parliament, it must either be accepted or rejected in toto. There is a case of legislation going through with drafting errors in it which were picked up too late to change.

Ravi Naidoo: Financial capital is very powerful, we must access some of this money for our own purposes. We have to ‘make yourself presentable’ as Lawrence Summers would say. A double transition is underway. We have movement towards democracy which is a huge thing to deal with. At the same time our economic policy is inherently conservative – ‘free trade’, few exchange controls, downward pressures that are reflected in the statements of the finance 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 and government. Government struggled the most to come up with a document because it could not achieve agreement between finance and the other ministries. The National Treasury controls the budgets of all departments. It is a ‘super department’ which sets the terms of reference for other departments. The problems we have largely stem from problematic views in the National Treasury. There are a number of things raised as specific strategies for unions to use [see in my paper section 3.3 above]. The interesting ones have to do with the way the international labour movement is changing because they are feeling the need to do something about international solidarity, not just talk about it.

Multinationals are being targeted proactively, especially on consumer goods, for example, Nike in Thailand. We have a bigger focus on democracy and institutions – the more you can expose the policy and budget to pressure, the more you remove the hiding places for particular interest groups to impose policies that are not in the interests of people.

A low-intensity democracy is proposed by the powerful, restricted to having a vote every five years. We are proposing a high-intensity democracy – government must still govern, but with consultation. Chairs of parliamentary committees complain that they are not listened to. The focus is on what we can do to bring up democratic institutions. The labour movement is facing pressure to back off from social movement unionism because, as membership shrinks, it is being caught 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 that the US labour federation AFLCIO, which at one stage was an instrument of US government policy, would have participated in such a protest?

There is no point in debating how rights serve competitiveness. We like the fact that the advent of rights is good for the economy because this supports a high-skilled new economy. But human rights cannot be made flexible in the service of competitiveness. Rights are a core value. Labour movements over the world are beginning to converge on a set of core values. This year we hosted the ICFTU 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 with others. We need to develop a network of organisations to take up strategic issues.

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

Ravi Naidoo: In Finance.

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

Ravi Naidoo: Yes, there are alternatives. There always are. Globalisation is not a natural phenomenon, it is a driven process. Policies get made on power, not necessarily on economics. According to the views of the heads of the ILO and Joseph Stiglitz who used to be in the World Bank, it is a policy-driven process. Political and institutional mechanisms make a big difference. There is 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 at productivity in exchange for a policy on poverty and reinvestment. Kerala State in India has a higher human development index than many countries, and it has a high level of social mobilisation. It is the only state in India that has banned child labour, and it is doing well. In Brazil, participatory budgeting for local government takes place and 44 cities have a basic payment grant. This disregards World Bank advice. Kerala accepts that companies which want to use child labour will move to West Bengal or somewhere else.

Norman Levy: Where are these options in the work of the SACP, Cosatu? We don’t have a consistent well worked-out industrial policy for the country. We protest against the policies of others and their consequences, why don’t we have an alternative?

Ravi Naidoo: A lot of work has been 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 the independence of the Reserve Bank in the Constitution.

Ronald Segal: My information is that the MERG report was shown to high-ranking representatives of the UK and US who said they found the report unacceptable and that there would be serious implications if it were put into place. When I was involved in working for the ANC before the 1994 elections, the head of Sanlam said he was disappointed that there was no ANC economic policy. The MERG report was worked on by about 100 South African and international economists, but it was not distributed. Although MERG was cautious and conservative, it was suppressed on the grounds that it was irrational and radical. This was the beginning of the end.

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

Norman Levy: MERG was on the table but it was rejected. Since MERG we have not had an alternative to the neo-liberal approach. 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 policies to back the criticisms up.

Annmarie Wolpe: We need to address questions of power and power relations. In Zimbabwe, the Zimbabwe Congress of Trade Unions called back its planned three-day stayaway to one day because of power relations. The trade union movement with a socialist agenda is no longer unified in terms of its aims, it is disparate. To what extent are unions supporting an elite aligned not only with MNCs, but globalisation outside of government and government power in which the IMF and the World Bank call the tune? There are tensions and contradictions and the absence of a uniform left-wing position, confused by unions which support a form of capitalism which will benefit the workers.

Ravi Naidoo: It is not all doom and gloom. In the 60s and 70s, the unions were not united – there were Christian unions, the Left block, and the AFL-CIO (and some asked whether the ‘CIO’ part of the name is actually ‘CIA’). Cold War divisions have come down, which is a positive 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 (for example 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 more complex and sanguine. The corporate fundamentalism of neo-liberalism is inherently unstable and divisive and is facing increasing revulsion by countries, by consumers who dislike the loss of choice and the indifference to the environment. For the first time in US politics under Ralph Nader consumer power is part of a powerful ecological lobby concerned about the apocalyptic things like changes in the weather which have caused unstoppable fires across 11 states. I am not seeing South Africa attracting the capital that it says it risks losing if it had a different policy. A lot of investment decisions have been based on moral arguments, for example, the bursary funds committed to SA. There is more than just one force – the global superpower – affecting SA policy. In the next short while, we will see stirring in the undergrowth of the jungle. New Labour is finding a profound disenchantment in the classes it expected to support its programme.

Ravi Naidoo: In the UK they have set up a social exclusion unit, and there are 750 000 more people in it since New Labour came to power. Policy is made in different ways – through power, and through rationality (a research-based approach). Cosatu’s website contains more research than many government sites. The World Bank is in the throes of policy regression. Since it kicked out Joseph Stiglitz, a lot of the staff he brought in are also being purged. Before, such things could be kept quiet, with the Internet, this purge is well known. The World Development Report of 1990 said we would have made inroads into poverty under the neo-liberal policies of the time. Lawrence Summers wanted the 2000 report to say we would be overcoming poverty if there were not a few abberations in how the policies were applied. This is an exercise of power – if you are saying ‘the right things’ you will be heard, if not, you won’t.

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

Ravi Naidoo: Labour had an interest – there would have been a loss of 10 000 jobs in Standard Bank if it went ahead. There are also consumer interests – we already have a very concentrated financial sector. The new group would have had too much power. Cosatu and others put pressure on the Competition Tribunal and Competition Commission,who research for the tribunal, not to allow the takeover.

Mervyn Bennun: Ravi’s paper is very depressing, we seem to face defeat on all fronts, everything we struggled for is running through our fingers.

Ravi Naidoo: There have been a lot of important things that have gone right. SA is better than it used to be, and things are better for Cosatu too. For a black person, SA is better than it used to be. There have been changes in a whole range of apartheid laws. This is one of the reasons Cosatu is close to the ANC. There has been major service delivery rollouts in water, telecommunications, electricity and housing. User charges are bad, but a number of good things have emerged. The economy and employment have been the worst hit. We have an extremely 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 all sorts of minorities. In the time that the government has been in power, how much of the apartheid legacy could have been reversed? We must be realistic. But the unions think the wrong choices have been made with regard to the economy and employment – we have adopted policies that are quite job-destroying.

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

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

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

Rob Turrell: What about underspending of government poverty alleviation money – does Cosatu have a stance on this?

Ravi Naidoo: They cannot spend money because they don’t have people, or they get in money which comes in shortly before it has to be spent. There is an incentive to cut expenditure, and there are administrative delays. The response should not be to give government less, the squeeze is making 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 love consultants and are short of advisors.

Ravi Naidoo: The underspending in 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 raised a number of issues. Many things are wrong, but many things are right. There is no outlet or stimulation of debate, people are not talking to each other, a need which this forum tries to meet. Thank you.