By Ebrahim Khalil Hassen

"The extreme contrast of wealth and poverty in South Africa makes redistribution a necessary condition for economic growth. A trade union strategy for state-directed redistribution is at the same time a strategy for economic growth". This excerpt from COSATU’s September Commission sets out both a challenge and a warning.

The challenge remains one of creating a state that leads a fundamental process of redistribution as a catalyst for poverty eradication and economic growth. The implicit warning is that without addressing material inequalities, the legacy of poverty based on race and gender will continue. These powerful ideas have shaped COSATU’s engagements on public policy since the transition to democracy.

The 8th Congress of COSATU will again take up this theme with draft resolutions on the Basic Income Grant, National Health Insurance and other means of redistribution being tabled for discussion. This theme of the conference remains important due to several negative trends in our society.

Trends and Outcomes

There has been a bevy of activity in government departments as it attempts to reconstruct our society. The delivery of over a million houses and six million water connections are achievements that indicate a commitment of government to the poor. However, while the output of government programmes in most instances has been good, the outcomes have not created conditions for poverty eradication.

Currently, economic growth is low, hovering at between 2,5% and 3,0 % over the last few years. Current projections indicate that low levels of economic growth are likely to continue. Yet, both Labour and government agree that a 6% rate of economic growth is needed to reduce unemployment. The low levels of projected growth are thus unlikely to make a dent in the unemployment rate – estimated at 29,4%. Everyone agrees that economic growth must increase. However, debates rage on who will benefit from economic growth and how to kick-start the economy. Policy makers thus need to rectify the twin problems of low growth, and growth that fails to improve the lot of the South African poor.

Statistics South Africa (Stats SA) recently released a report on earnings and spending in South Africa between 1995 and 2000 that paints a bleak picture. In 1995 the poorest 20% of households received only 1,9% of total income in our country. In 2000 the picture got bleaker with the poorest fifth of our population only receiving 1,6% of total income. Equally worrying is that racial inequality remains high. According to Stats SA the average African household experienced a 19% fall in income, while the average white household experienced a 15% increase. This means that the poorest people in our society have not benefited from the low levels of economic growth that we have experienced.

Many groupings in society including unions, churches and NGO’s predicted these results in 1996, when government unveiled its Growth, Employment and Redistribution Strategy (GEAR). Critics of GEAR charged that the strategy was too focused on the formal sector, would limit redistribution efforts through cuts in social spending and de-emphasise the role of the state in eradicating poverty.

The role of government is crucial to ensuring that redistribution takes place. First, equity enhances growth. Through a redistribution of incomes and assets, society becomes more equal and just. In turn, the poor have the capacity to participate in the economy. Through creating opportunities for the poor to participate in the economy job creating may be stimulated. Without providing the poor with the means to participate in the economy, they will remain outside the benefits of growth.

One area of enhancing equity and promoting growth is that of land redistribution. Land redistribution in countries like Malaysia and South Korea created the conditions for the rural poor to participate in agricultural production. In contrast, research for the People’s Budget Campaign shows that, at the current rate of spending, it will take over 100 years to redistribute only 15% of land!

Second, the focus should be on both formal and informal economic activity. Current government policy is too focused on formal activities, often in the form of the foreign investor. The incentives from government, the rules of business and even access to credit are all biased to formal activity. Yet, approximately half of all South Africans engage in informal activity. Whether through hawking bananas or sewing dresses at home, government support for these informal workers is virtually non-existent. Through providing legislation, incentives, capacity building and supporting access to markets, government could make informal businesses more dynamic, and in so doing create linkages between informal and formal businesses.

Third, government’s capacity to act on behalf of the poor needs to be enhanced. Playing this role skillfully requires the development of a cadre of public service workers able and willing to carry out programmes with and for the poor. This requires a reorientation of the public service away from working in offices, to working in communities. At the same time, strategic direction of resources by government in productive investment may lay the bases for long-term income streams for the poor.

Fourth, at the centre of redistribution activities is the need to redistribute incomes. According to research in the water and electricity sectors, one of the major reasons for disconnection is that poor people cannot afford these services. At the same time, the absence of money makes enjoying schooling, health care and other services extremely difficult. The proposal for a Basic Income Grant (BIG) could provide a sustainable way to provide a minimum level of income security

Strategies for Redistribution

Trade unions need to work across a range of areas to raise questions of redistribution. Within the Tripartite Alliance, this challenge is being taken up by COSATU. This includes renewed commitments to increased social spending, encouraging co-operatives and introducing a larger public works programme.

These important developments cannot however remain discreet initiatives; instead what is needed is a bolder strategy that places redistribution at the core of our development processes. COSATU has not shied away from these challenges and actively participates in a range of coalitions aimed at developing and mobilising around a redistributive programme. COSATU’s involvement in the Treatment Action Campaign, Basic Income Grant Coalition and the People’s Budget Campaign all point to growing importance of redistribution in the trade union agenda. This is essentially a social mobilisation strategy, that government needs to engage with.

Coupled to this, unions have utilised Section 77 legislation to bring mass mobilisation to bear on key social questions. The issues have ranged from anti-privatisation to highlighting the effects of a strong Rand. This indicates that social questions are increasingly being interwoven with ‘bread and butter’ issues in the work place. At the same time, unions have engaged in consensus seeking arrangements, like the Growth and Development Summit.

Detailing a programme of redistribution will however need to look at union engagements with capital, as well as the states engagement with capital. The redistributive strategies adopted at Congress, will thus need to understand and shape power relations in society.

In the 8th national congress one of the challenges facing COSATU is the strategy needed for reclaiming redistribution. This may include engaging in a range of forums and processes, or it may involve adopting a mobilisation strategy. At the centre of this debate, must be a recognition that redistribution is the foundation on which to transform material conditions created under apartheid.