Being part of a political economy notorious for its world-beating inequality and in a country where Africans are 80% of the population, guarantees that most Africans will be poor. This is Part 2 in a two-part series.
Read Part 1 here.
The main media coverage on the morning of 12 March 2025 was about the budget speech to be delivered that afternoon. Absent from this mass coverage was any sense of the drama — and trauma — perforce endured by the ANC caught between wanting to do what it knew was needed by most South Africans, and the neoliberal market — its chosen god — for whom good intentions have no place.
Instead, two cold issues confronted the commentators: A political one — would the Government of National Unity (GNU) survive? — and an economic one — how would the substantial fiscal gap be filled in the absence of a near-unanimous prediction of there being no VAT increase? Given the latter, Finance Minister Enoch Godongwana and his Treasury faced a stark choice between significant spending cuts, other tax increases or increased borrowing.
The principal danger market analysts could see was that deviating from fiscal discipline at this juncture could severely erode supposed investor confidence, thereby undoing recent alleged incremental gains in international credibility. No evidence other than their own ideological wish fulfillment was offered for either claim.
For DA senior strategist Ryan Coetzee, the whole matter was very simple: “The real crisis is our abysmal growth rate. Without faster growth every budget will be a crisis, and each crisis will be bigger. It has to stop now, before it’s too late.”
Although presented with such assurance, the question is whether the equation between growth and jobs is merited.
Jobs
Striking how investors and their spokespeople metamorphose into socialists concerned about jobs when it comes to the possibility of increasing their profitability. Recall, for instance, John Steenhuisen’s media release of 24 February 2025, headlined: “A Growth and Jobs Budget is the Only Path to Success for South Africa.”
Even more noteworthy is that the premise of growth being the precondition for jobs is knowingly reliant on the ignorance of the public.
Hence:
- No mention is made of jobless growth, unlike only two decades ago when trade unions were at least painfully aware of the exclusivity of growth. This was particularly the case during the early years of the ANC’s macro-economic policy known as Gear – Growth, Employment and Redistribution. With explicit claims of not only generating a healthy level of economic growth, Gear additionally sought to assure workers that its approach would generate a substantial number of new jobs each year. Instead of Gear’s promise of 126,000 new jobs in 1996 and 252,000 new jobs by the end of 1997, government statistics estimated that 71,000 jobs were eliminated from the formal non-agricultural sector in 1996, and an additional 42,000 jobs disappeared during the first quarter of 1997. This led James Heintz, of the then National Labour and Economic Development Institute, to conclude that “job creation is perhaps Gear’s weakest point”.
- In August 2008, the Sunday Times, under the headline of “Jobs Drying Up”, reported a new survey showing that over the previous five years, the economy grew at 4.6% — yet employment in the formal sector grew by only 2.1%.
- There is no longer any mention of how much growth is required to trigger job creation. It now suffices to say that “the economy will not realise the much-needed economic growth required to drive job creation”. With GDP growth currently being less than 1%, the silence is not surprising. When growth still had a meaning, economists were ready to speak about job creation requiring a minimum growth of about 5-6%.
- South African economists seem unable to acknowledge that the disorder of jobless growth is not a uniquely South African phenomenon, despite all the South African specificities they provide to suggest that it is. Jobless growth is, indeed, so common worldwide that it’s covered by many global institutions, including the World Social Forum, as well as the more expected International Labour Organisation (ILO).
- While the International Labour Organisation remains committed to “decent” jobs, South African advocates of growth-creating jobs say little if anything about the quality of the work. The organisation is less coy about such matters. Its World Employment and Social Outlook Trends 2023 is forthright: “Workers are likely to face deteriorating working conditions.” Globalisation is, as intended, the “race to the bottom” for workers of the world.
- Such is the economists’ contempt of the public that being self-contradictory doesn’t seem to matter. While seeking to assure the public that austerity is the unavoidable price everyone has to pay for the growth needed to create employment — There Is No Alternative (Tina) made notorious by Britain’s neoliberal leader Margaret Thatcher — they simultaneously attack the public service for allegedly being “bloated”. (For the first two parts of a 3-part critique of this crudeness, see here).
- On the other hand, such is their ideological blindness that they seem not to know about the austerity that makes unaffordable the 102,153 vacant funded posts in the public service at the end of January 2025. The key health and education departments are the most severely affected by these funded-though-unfilled posts.
- While the connection between growth and jobs is an ideological delusion, growth is a real precondition for …
‘Transformation’
“It so happens that the unpreparedness of the (leaders of the independence struggles), the lack of practical links between them and the mass of the people, their laziness, and, let it be said, their cowardice at the decisive moment of the struggle, will give rise to tragic mishaps.” — Frantz Fanon, “The Pitfalls of National Consciousness” in “The Wretched of the Earth”, 1961.
This insight is largely unknown to those most ready to quote Fanon because few have actually read his last major book.
Imagining his response to the “mishap”, which in South Africa goes under the name of “Transformation”, is not too difficult. Transformation has become the generic term for affirmative action, employment equity, Black Economic Empowerment and the gamut of other measures all taken in the name of redress, of levelling the playing fields for Africans pot-holed by apartheid.
This is — has always been and remains — the ANC’s first priority. This is why “transformation” has never been subject to, what for everything else, is presented as the inescapable imperatives of austerity. Indeed, this unconditional protection — this Tina to transformation — has never even been subject to debate.
It stands instead majestically supreme in the ANC’s repertoire of cynicism.
Transformation excludes the very people in whose name it is legitimised — “our people”. Compounding the “mishap” are the privileged African political and economic beneficiaries of “Transformation”, who unconscionably use, to their own advantage, the poverty and inequity of those they’ve knowingly excluded from empowerment. (“African” is here used as in official statistics. See below.)
Being part of a political economy notorious for its world-beating inequality and in a country where Africans are 80% of the population, guarantees that most Africans will be poor. This poverty is the basis enabling the African rich to prove the failure of “Transformation”. The consequent need for still more stringent measures to achieve African equality follows easily, notwithstanding the permanent inequality exacerbated by neoliberalism.
There’s still more to add. “Transformation” requires the perpetuation of the once hated “races” manufactured by apartheid to prevent any unity among the oppressed.
Although done under the rubric of “black”, transformation is overwhelmingly reserved for Africans. This is why the ANC (and the largely African Parliament) chooses to ignore the unambiguous definition of “black” in what is still the foundation of all related legislation, the Employment Equity Act (EEA) of 1998. The apartheid “races” — African, Coloured, Indian — appear in that act only once and do so solely to explain why those terms don’t appear anywhere else in the act. The act uses “black” as the generic term for those oppressed by apartheid.
Thanks entirely to the complicity of the ANC (and Parliament) these apartheid “races” still populate all relevant official statistics. The statistics of non-racial South Africa remain the once-reviled ones from those of apartheid South Africa.
(I have developed all these arguments in numerous articles published over the years by Daily Maverick.)
Without these extra-legal apartheid races — to mention a most recent measure of the manipulation — how would Cricket SA have known that one of its clubs began a recent match without the requisite three specifically African players being available? Without this knowledge, it wouldn’t have been able to fine the club for its breach of the cricket quotas evidently set by the government (which, itself, is in breach of longstanding international sport rules that prohibit government interference in sport).
And then, there’s the cost of this exclusionary transformation pursued in the name of equity and justice.
Quantifying this cost has still to be done comprehensively. To my knowledge, it hasn’t even been attempted. What can instead be said with confidence is that it’s on an (almost) unthinkable scale. Moreover, a large proportion of the costs are most likely to be perfectly legal. The combined thefts of State Capture are tiny by comparison.
In the stinging words of Peter Bruce, a former editor of Business Day and the Financial Mail: “Forty years ago, corporations in the advanced economies were encouraged to empower their employees with incentives and share schemes. In SA (this) is applied to race. This breeds resentment and discourages investment. We need to find ways to talk about how to make BEE work more clearly for the poor.”
The unseen financial alternatives
With the budget speech having now been delivered, we know its details. The ANC still wants some of the best of both worlds. Hence, its retention of an above-inflation public-workers’ wage increase, and the small relief given to people dependent on welfare grants.
These measures, however, have left it having to find R60-billion in extra revenue. It seeks to do this by increasing VAT by 0.5% for each of the next two years and by smuggling in an additional tax by not compensating for inflation.
Led by cheerleaders of what it still chooses to see as the free market, the DA, and other members of GNU, have reaffirmed their opposition to any tax increase, beginning with VAT.
With standard economics making investment the claimed basis for growth, I alluded in Part 1 to the fact of inward investments also involving outward flows of the healthy profits made. Thanks to my Alternative Information and Development Centre (AIDC) colleague, Jaco Oelofsen, we know that about R100-billion in tax revenue alone leaves South Africa annually.
The tables below provide the latest details in dollars:
Research by another AIDC colleague, Chloé van Biljon, shows that, by allowing for above-inflation compensation for tax creep, the Treasury knowingly forfeits R198-billion a year.
And then, led by AIDC’s senior economist, Dick Forslund, the Government Employees Pension Fund (GEPF) has long been identified as an immediate source of funds for South Africa’s R400-billion sovereign debt.
Drawing on the latest of his many articles, this time in Daily Maverick of February this year — “Rethinking fiscal policy: Can SA break free from austerity to fight child malnutrition?” — he shows that the gigantic state pension fund shouldn’t continue to maximise returns from the government’s debt service. It doesn’t need those returns to fulfil its obligations to members and their spouses.
Ten years of Government Employees’ Pension Fund performance. Financial years end in March. (Annual Reports, bottom line added by author). It’s the bottom line in the table that is the most important one.
Salient points about the Government Employees Pension Fund:
- The fund is the biggest pension fund in Africa. The fund is the largest buyer of shares on the JSE, and — which is the subject matter here — the largest lender to the Treasury.
- Via its manager, the Public Investment Corporation (PIC), the Government Employees Pension Fund owned about 12% of the government’s R4,667.8-billion domestic debts in March 2024. The fund has invested 23.8% of its R2.382-trillion investment portfolio in the government’s debt: R566.3-billion.
- Its total investments in the state and parastatals’ debts comprise 28% of its portfolio — R84.2-billion of the fund comes from Eskom’s permanent debt crisis. The fund’s claim on Eskom has comprised about 20% of Eskom’s debt and unaffordable interest payments.
- The two main sources of the fund’s income are contributions based on the wage bill, and interest payments on the public sector bonds that the fund buys on the market. That interest income comprises more than half of “Incomes” in the above table. The fund uses the bulk of its income from the state to lend more money to the state at market rates, cashing in the old Treasury and parastatal bonds when they mature and buying new ones.
- Meriting repeating is that the huge surpluses accruing to the fund occur after all benefits have been paid to its members and their spouses.
- All the above provide the government with a range of options. They unlock the austerity cage in which we are supposed to be imprisoned and to which the government claims there is no alternative.
- In addition to these Government Employees Pension Fund options there is also a staggering R450-billion that SARS commissioner Edward Kieswetter says could be raised by improved compliance and collection, if given the proper resources.
- Inclusivity would be integral to the fund’s multiple options for using its resources.
Growth revisited
Viewing growth through a lens of those excluded by it would be an additional step forward. This has been brilliantly — if somewhat unexpectedly — done by Peter Bruce.
Snippets of his article include:
- “The fact is that anyone expecting… an SA budget to be about actual policies that might lead to actual growth is simply living in the wrong country.”
- “Building infrastructure is good only if there are real prospects of it being used to increase the wealth of the nation. Are investors lining up? A few, maybe. Not nearly enough.”
- “Enoch Godongwana might have said yesterday that his budget was ‘bold and pragmatic’, but that’s a little like travellers taking comfort from the fact that though their aircraft has just lost both engines it is still, technically, flying.”
- “The DA also talks about growth without explaining exactly why the voting poor should care.”
- “What may have to happen now is a new conversation. Why is growth good? Can someone please explain?”
No one wins – There Is No Alternative’s ironic redemption
The ultimate tragedy is that even the beneficiaries of growth are its losers. Daily Maverick recently published an article by Charmain Naidoo, titled, “Fantasy, Fomo and Our Search For Fulfilment”.
Her article begins: “We humans have never been more connected to one another, yet we live in a world where loneliness is an epidemic and we seem to have lost our humanity.”
She informs us of US Surgeon-General Vivek Murthy, who, in the 2024 Harvard Graduate School of Education report, declared loneliness an epidemic, a major public health risk for individuals and society. He explained loneliness as more than just “a bad feeling”, but as “a subjective distressing experience that results from perceived isolation or inadequate meaningful connections”. Loneliness was essentially “a gaping chasm between expectation, unmet needs and actual experience”. She reminds us that Ernest Hemingway noted: “In our darkest moments, we don’t need solutions or advice. What we yearn for is simply human connection.”
The need for human connection is so much part of humanity that it is to be found even in the most inhuman of places. Norman Finkelstein, the well-known US academic, recounts, in February 2025, his mother’s liberation from a Nazi concentration camp. It was, he says, the “most horrible day in her life” because she was suddenly overcome by the realisation of “being alone in the world”.
The US sociologist David Riesman’s “The Lonely Crowd”, considered by some to be among the most important of 20th century books, was published as long ago as 1950. The connection between psychosocial loneliness and antagonist social relations, however, goes even further back to the mid-19th century. Getting to the top of this political-economic world is for the most ruthless — and, hence, lonely.
And this is the easy part. Staying at the top of the dog-eat-dog world is even more demanding. There’s a full library of novels on this theme.
Preserving the exclusivity of inclusivity leaves few, if any, longtime winners.
The ANC’s 33-year addiction to economic policies — now further compounded by its GNU camouflaged de facto marriage to the DA — precludes inclusivity as there is no alternative to the exclusivity it produces and reproduces. This is a harsh reality many in the ANC are still unable to recognise. Thus, as a recent example, our current Minister of International Relations and Cooperation, Ronald Lamola, invokes ubuntu to assert that: “South Africa’s G20 presidency is not confined to just climate change but also (to) ensuring an equal global system for all.”
This is the last laugh of Thatcher’s There Is No Alternative. All that is still needed is neoliberalism’s long-awaited burial as the precursor to system change. This fundamental shake-up is not only the precondition for climate change, but for a world in which the free development of each is the precondition for the free development of all.
In a word, for the realisation of global inclusivity. DM
This article is a joint publication with Amandla.