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The Democratic Left Front (DLF) rejects the Democratic Alliance’s Growth Plan and Jobs Campaign launched at the weekend. This Plan and Campaign are false solutions to the country’s structural and chronic unemployment crisis. At the heart of these is more of the same neo-liberalism that has destroyed millions of jobs, that has impoverished many of the working poor and that favours the interests of the wealthy at the expense of the majority. As the Jacob Zuma-led African National Congress (ANC) is stagnating, failing to break with neo-liberalism and mired in corruption, the DA is opportunistically stepping into the breach and contesting the political space to become the alternative executive committee that administers the country in the interests of the wealthy.

The DLF regards the DA’s Growth Plan as based on erroneous assumptions about high economic growth as the basis for employment creation. The DLF exposes the DA’s Growth Plan as a set of ideological prejudices not based on evidence or any objective research or any engagement with the unemployed. Without any evidence, the DA wrongly believes that workers’ productivity is low whilst their pay is high. The DA creates false divisions between workers as insiders and the unemployed as outsiders. The DLF asserts that the real insiders the DA is silent on are those in the enclaves of Camps Bay and Sandton, who own and control firms, banks and mines. Taken together, the real outsiders are the workers employed in Isando, the informal and insecure workers exploited by Shoprite and other retailers, and the millions of unemployed in the informal settlements and rural areas of our country.

Ultimately, the DA’s Growth Plan amounts to a maintenance and reproduction of the inherited enclave economy albeit now to be hopefully legitimated by some semblance of support from the unemployed. Most importantly, the DA’s Growth Plan does not see capitalism as the main structural and systemic cause of unemployment, inequality, under-development and ecological crisis. Instead, the DA proposes more capitalism as the main solution. In light of the systemic global crisis, such a solution is doomed to condemn millions more to lives of squalor, misery and poverty.

The failure of the ANC to overcome and restructure the inherited capitalist economy and its attendant social and economic crises, the unresolvable tensions in the ANC-SACP-COSATU alliance to develop and implement redistributive economic policies that restructure the economy away from the minerals-energy complex, and the state of poor organisation of the unemployed open the door to this sickening DA propaganda. The DA now seeks to win over the poor as a battering ram in promoting and legitimating neo-liberalism and capitalism.

The DLF calls on the unemployed to reject and expose the DA’s Growth Path and Jobs Campaign for what they are. As an alternative to the false solutions proposed by the DA, the DLF calls for the mobilisation and organisation of the unemployed to challenge the owners of wealth and capital, and government to adopt and implement redistributive policies that create sustainable decent jobs and transform the economy to a collectively-owned and democratically-controlled low-carbon economy based on sustainably meeting social needs.

Flawed logic of high economic growth

In essence, the DA sees the solution as lying in high economic growth thereby setting a target of annual GDP growth of 8% as basis for addressing unemployment in less than a decade. To achieve its high economic growth target of 8%, the DA promotes liberal macro-economic policy which would go together with tax reduction, no increased taxation for companies and the wealthy, inflation-targeting, restrictive fiscal policy, low wages, a youth wage subsidy, privatisation, employee share ownership schemes (ESOPS), vouchers for job seekers and potential entrepreneurs, and improvements in competition, trade and investment policies.

All of these DA policy proposals have been the staple of preferred policy options promoted by the National Treasury and the DA since Nelson Mandela’s government. In other words, the DA has offered nothing substantially new to economic policy debate. The main change is how the DA NOW seeks to dress up pro-rich policy proposals with the cloak of mass support from the unemployed.

The DA’s logic of endless growth ignores finite ecological resources and assumes that growth automatically creates jobs which is not necessarily the case. Completely absent in the DA’s growth or nothing policy arsenal is redistribution which is crucial in creating jobs.

Policy proposals not based on evidence

In its slick propaganda, the DA claims to have based its policy proposals on solid and objective research. Yet, the research conducted, the sources and data used have not been released for public scrutiny. Research, sources and data used must be transparent and in the public domain. Anything less than this is questionable and cannot be legitimately used for public discussion. Reports which are based on material which is secret or private property of the DA, business or other reasons cannot be accepted. The DLF challenges the DA to publicly release all its data, sources and research that it used to develop its Growth Plan.

As a whole, the DA’s diagnoses and policy proposals have no foundation in evidence, either the historical record of job-creating economic development or the current job-destroying impacts of neo-liberalism. This record shows how the state has historically played a role in job-creating industrialisation in countries as diverse as the US, Britain, France, Brazil, South East Asia and many others. The DA’s Growth Plan is an ideological fantasy dressed up as pragmatic and workable policy proposals. No matter what the evidence from history and current realities, like Adcorp and the Centre for Development Enterprise (CDE), the DA simply promotes neo-liberal economic policies based on unproven and untested mythical claims.

Wages and worker productivity

The DA argues for a decrease in real wages on the basis of a claimed but unsubstantiated fall in labour productivity and increase in labour costs. Publicly available data from the South African Reserve Bank (SARB) show that average labour productivity quarter by quarter, year on year, on the average has grown with over 3% during between 2000 and 2010. Real wages have increased at an average yearly rate of only a little more than 2% during the same period or at a 0.9 percentage points lower rate. Given this publicly available data from the SARB, what alternative data, sources and research did the DA rely on and use to present its false claims as credible policy proposals? On this score alone, the DA’s Growth Plan must be rejected out of hand.

Given trends confirmed by SARB data, the DLF firmly believes that the gap between higher productivity increases and lower wage increases explains why the wage share of GDP (the yearly national income) has been falling for most of the period. Workers produce more and more and share less and less of the income. The real economic elites in South Africa, not the workers in COSATU, inherited extreme profit shares of the national income from apartheid and colonialism. Those profit shares are growing, instead of decreasing.

Higher (decent/living) wages are necessary to transform the economy

Based on peer-reviewed research, in 2011 the United Nations Conference on Trade and Development (UNCTAD) concluded that “Slow wage growth is endangering the recovery. Wage income is the main driver of domestic demand in developed and emerging market economies. Therefore, wage growth is essential.” In other words, paying higher wages will create jobs.

The DLF firmly believes that raising wages would raise the incomes and employment of millions of ordinary poor and working class families. This would place spending and other economic power in the hands of ordinary people who actually spend in the real economy, and not the super-wealthy who hoard wealth or invest in speculative finance. With more income, workers will be able to buy clothes, stoves, food and cover other living costs. Higher wages will also help poor and working people to get out of debt. To limit wage growth as the DA proposes would further weaken the low economic demand for goods and services thereby further fuelling the unemployment crisis.

The DA’s policy proposals also belie the fact that South African workers do not earn high wages. As SARB data show, real unit labour costs fell by 10 percent from 2000 to 2011. The SARB also shows that at least about 5 million formally employed workers earned a measly R4,750 per month or less in 2010. Government’s National Planning Commission also showed that more than half of all workers earn poverty wages (less than R2,500 per month), and 33% of all workers earn less than R1,000 per month. In a ground-breaking study, UCT and Cornell University economists (Haroon Bhorat, Ravi Kanbur and Natasha Mayet) demonstrated how the minimum wage is violated primarily by the private security, forestry and farming sectors in South Africa. Out of all workers covered by minimum wage legislation in 2007, 45% were paid less than the minimum wage and, on average, they were paid 36% less than the legislated minimum. All this research exposes the DA’s policy proposals as unfounded, prejudiced and purely ideological. Despite DA propaganda, there is simply no high wage regime in South Africa.

False diagnosis of causes of unemployment

The DA repeats the lie that employed workers and the wages they earn are preventing the unemployed from getting work. By falsely attacking employed workers as the main cause of unemployment, the DA deliberately ignores the real systemic and structural causes of poverty. As research by the United Nations Development Programme (UNDP) and the International Poverty Centre showed in 2006, the real causes of unemployment in South Africa include increased capital intensity, job-destroying de-industrialisation which was caused by a liberalised and deregulated economy, the lack of protection of infant industries (in particular the manufacturing sector), the hoarding of profits (amounting to R520 billion in January 2012) as financial investments by owners of capital instead of investment in jobs, low wages, and cheap labour (through casualisation, outsourcing, below-inflation wages linked to inflation-targeting).

The DA ignores how the day-to-day survival of the unemployed is linked to income earned by employed workers. Government’s own National Planning Commission shows that on average every wage earner supports approximately ten people. Employed workers support their unemployed sisters, brothers, children, relatives and neighbours. Through sharing their little income, employed workers sustain the economies of many townships, informal settlements, rural areas and inner cities of our country where the unemployed live.

Organise the unemployed

The DLF calls for a mass campaign to mobilise and organise the unemployed into a united force fighting side-by-side and in solidarity with employed workers for decent climate jobs and a just transition to a collectively-owned and democratically-controlled low-carbon economy based on sustainably meeting social needs.
The DLF calls on the unemployed people of South Africa not to fall for the snake-oil quackery and gutter economic policies of the DA. These policies are a race to the bottom. These policies are cheap political points-scoring aimed at exploiting the failures of the ANC as a basis for the DA to win more votes for the 2014 elections.

In the coming weeks and months, the DLF will provide ongoing detailed critiques of, and responses to the DA’s Growth Plan in particular its problematic and untested proposals on the Youth Wage Subsidy, its claims of having created thousands of jobs through such a subsidy in the province and municipalities it governs, as well as its proposals for ESOPS, a National Venture Capital Fund, the promotion of vouchers to enable those willing to start up enterprises and the privatisation of state-owned enterprises. In addition, the DLF will also put forward alternative economic policy proposals to create 1 million sustainable decent climate jobs as a foundation for the transition to a low-carbon economy. Forward to a wage-led and job-creating transition to a low-carbon economy!