Date: 22/09/2009
Source: The Presidency
Title: SA: Mothlanthe: Address by Deputy President, at the Cosatu Conference, Johannesburg

Chairperson
Fellow comrades,
I feel truly honoured to have been invited to address the momentous 10th Cosatu National Congress. The theme of this Congress "Consolidating Working Class Power in Defence of Decent Work and Socialism" is indicative of Cosatu's militancy as well as its world outlook.
As government, we are therefore pleased to be associated with this conference, further confident that its outcomes will give more impetus to the pace of social transformation and the development and growth of our country.
Chairperson,
This conference is happening at the time of deep global recession whose effects continue to be felt across the world on a daily basis.
In our case the impact of this crisis exacerbates difficulties that we had identified from our past; which difficulties are in our sights to address as a country.
In terms of these challenges, historically, this government has the duty to the South African people to address issues of under-development, poverty, creation of decent work, homelessness and communicable diseases, among others.
In particular, the negative consequences of this economic downturn are reflected in the high number of job losses, factory closures, repossession of bonded houses, cars and other purchased articles, as well as termination of life cover policies and Medical Aid Scheme.
Working in partnerships with our social partners, including Cosatu, we have developed a comprehensive response to the economic crisis.
Chairperson,
This economic crisis, which was triggered off by inadequate regulation of the financial sector, mainly in the United States of America and the accompanying global imbalances, has left a trail of social disorder throughout the whole world.
What started as a financial crisis, moved swiftly to the mainstream economy as aggregate demand fell, and as a result has now become a social crisis as workers lose their jobs and government faces declining revenues.
The Receiver of Revenue has attested to this negative impact in stating that revenue collection in this financial year will fall short by approximately R70 billion.
In South Africa alone just between the first and second quarter of 2009 employment decreased by
2 percent and a total of 267,000 jobs were registered lost.
Government revenue has declined and the budget deficit - which is the gap between revenue collection and government spending - is estimated to rise from 1 percent of GDP in the previous fiscal year to about 8 percent of gross domestic product (GDP) in this fiscal year.
Fortunately our financial sector remains relatively robust and strong, thanks to enhanced oversight, including the National Credit Act.
Our only Achilles Heel being the massive negative balance of trade/payment.
We also need to bear in mind that we were using capital inflows to finance our investments and that needs to change.
Let us appreciate that this crisis has however given us a chance again as a nation to once more focus on what is best for South Africa.
As we have proven on countless occasions we are a winning nation and a people steadfast in its determination. Let us turn this recession into opportunity for laying down a solid foundation for economic recovery and growth.
For instance, it is by focusing and having a common vision of purpose that we came up with the Framework Response to the Economic Crisis.
You would all know this because as a federation you participated in crafting the framework response, the interventions contained in that framework which were supposed to be "timely, tailored and targeted" are anchored on three principles:
• protection of the poor, the vulnerable, the unemployed and low-income workers;
• strengthening the capacity to grow and create decent work in the future; and
• maintaining high levels of investment.
Furthermore, many other practical interventions were identified, and include:
• Maintaining the R787 billion investments in public infrastructure and jointly finding innovative ways to finance it;
• Engaging on monetary and tax policy with the responsible institutions including the South African Reserve Bank to advise on and encourage alignment between fiscal and monetary policy;
• Parties agreeing to jointly develop sector strategies and response packages for industries in distress;
• Strengthening interventions to combat illegal trading practices that allow for inflow of illegal imports;
• Strengthening flow of credit;
• Increasing public sector employment and Expanded Public Works Programme II;
• Ramping up the training and skills development regime to better respond to the crises.
Though slow, progress is commendable, for example the extensive programmes of social grants are counter-measures meant to alleviate poverty.
The child grant has been progressively rolled out to children of up to 15 years old and by May 2009 about 335,182 children between the age of 14 and 15 were receiving grants.
Programme Director,
This according to experts from the Department of Social Development (DSD) not only reduces poverty but also encourages desirable social behaviour like school attendance, improved nutrition and accessing of health care.
Government has stepped up efforts to ensure that the vulnerable are not worse affected by this recession by, among others, the extension of social grant.
Clearly there is some progress towards equalization and reducing vulnerability of retrenched workers, some of whom are sole breadwinners.
This situation is especially dire in rural areas where women shoulder the brunt of unemployment and feel disempowered to provide for and nurture their families.
I do not have to remind you that poverty in South Africa and in the continent has a feminine face.
Indeed the negative impact of unemployment is articulated well in a soon to be released pledge by Social Partners "on avoiding early or unnecessary resort to retrenchments".
The training layoff scheme is designed as an optional and voluntary scheme, will be launched this September 2009.
In this instance, R2.4 billion will be placed in a National Jobs Fund, drawn from resources in the National Skills Fund (NSF) and the Unemployment Insurance Fund (UIF), among other sources, for funding purposes.
I am pleased to say an agreement has been reached in respect of the principles underpinning the scheme as well as most of the detail regarding its implementation.
About seven SETAS are on board and more are finalising details. Doors opened for the scheme yesterday on 21 September 2009.
Programme director,
Working with our social partners we have also succeeded in implementing the SMME payment Assistance Hotline launched on 21 September.
On that date, the government launched the long awaited hotline for payments to SMMEs and other businesses within 30 days.
As said earlier, the framework committed tougher action against illegal custom activities and the team working on this reports that a number of companies are already being investigated for smuggling, roundtripping, quota fraud and rebate item abuse.
Counterfeit goods have been seized and The Competition Commission is doing sterling work in this regard.
It is unacceptable that food prices should be artificially inflated through the collusive scheming among the major suppliers, resulting in more misery for the poor.
The state will be and is unrelenting in dealing with these sorts of crime. For example in these industries:
• Bread: Commission is already prosecuting the case;
• Milling (Maize): Commission is referring the case to the Competition Tribunal for prosecution;
• Dairy: case is already before the Tribunal;
• Poultry: one case is before the Tribunal, with the wider conduct being investigated by the Commission;
• Fats and oils: already under investigation by the Commission;
• Supermarkets: Commission's investigation is beginning; and
• Fertilizer: settlement with Sasol, with others being prosecuted. For example, market enquiry into firms in the food supply chain is ongoing.
Chairperson,
The Industrial Development Corporation (IDC) has made R6 billion available over the next two years to respond directly to the current economic crisis.
In addition, there were 23 requests for R1.2bn emanating from existing IDC clients in distress, computing to a total 47 number of applications to a potential value of R3.8bn from IDC for distressed companies.
I am also heartened that the National Debt Mediation Association (NDMA), a business initiative to assist over-indebted consumers, has been established to provide rules, standards and processes that will be applied by debt-counsellors to address debt restructuring.
Programme director,
The Community Work Programme (CWP) - an innovative way to deal not only with the crisis but with South Africa's structural unemployment - has been launched in 21 sites of the community works programme.
The CWP is an area-based, local programme targeted at marginalised areas that are unlikely to generate market-based employment opportunities at the required scale any time soon.
It is an employment safety net, not an employment solution for participants!

Its purpose is to ensure a minimum level of regular work for those who have no alternatives - namely it offers 2 days of work per week, or the equivalent over a month.
Programme Director,
Working together we can and are able to do more. Indeed we should not underestimate the unsaid gains made possible by the Framework Response to the Economic Crisis.
As we all know it is a product of concerted efforts of all four chambers of Nedlac.
The challenges lie in implementation and giving effect to the framework, which is itself a proudly South African moment.
Chairperson,
This global recession has induced different approaches from different nations.
Different nations responded to the crisis differently. Even then many nations' initial response under-estimated the depth of the crisis.
Others have opted for bail-outs to reactivate their economies, which necessarily meant going the borrowing option in order to meet this imperative.

As the saying goes; "borrow from Paul in order to pay Peter". Debt upon debt!
As a country we have always believed that working together, stakeholders and other partners at a global level, we could bring our collective strength to bear on charting a successful way forward.
Thus we subscribe to the view that the G20 countries' Summit offers a critical global platform to coordinate a common global response to this condition, rather than each country retreating into protectionism.
In this regard I am pleased to state that our own South African initial response to the recession provided a useful model that has inspired other countries at the ILO in Geneva this year.
Once again, when it mattered the most, we have not been found wanting.
Chairperson,
Capitalism is based on commodity production. Even labour power is a commodity. In terms of the basic formula of the capitalist system, capital layout is followed by commodity and then money or profit in a continuously repetitive manner. Money - commodity - more money.
So recession, as a result of unemployment, among others, will mean that there is no demand for commodities, resulting in the risk of not recovering the initially invested capital, or not breaking even.
The result of this is that workers are laid off - with no money there is obviously no buying power, since consumption is the function of liquidity.
Yet, chairperson, as a country we remain relatively less affected by this financial meltdown due to the precocious credit control measures we introduced earlier to protect our people.
In addition, our country has attracted considerable investment as a result of the FIFA 2010 World Cup competition which we will be hosting soon in the next 261 days.
Hosting this global event has meant massive investment in public infrastructure, which has helped shield us from some of the pointed effects of the recession.
Once again, working together, we can fruitfully build on these foundations
Chairperson
This congress is quite important for our country since Cosatu is an indispensable social partner in the rebuilding of our country.
Similarly, Cosatu has to help provide leadership not only to its members and the Alliance but to all South Africans.
In our deliberations and in working out a way forward we should always be mindful of this national imperative-the responsibility to all our people. It must never be that we lose our sense of purpose and direction about the need for solidarity. Solidarity for ever is our mantra. (example).
Lastly, chairperson, over the years we have as a country contended with serious odds and triumphed over adversity, based on our partnership approach.
Similarly, with government leading the way, we are of a firm belief that working together with our social partners we will, eventually, prevail over the current debilitating effects of the economic recession.
It is my sincere hope that your discussions and deliberations have been productive and will contribute to charting a positive way forward that changes the lives of all our people for the better.
Allow me to leave you with the following important message from Comrade Oliver Tambo: "It is our responsibility to break down the barriers of division and create a country where there will be neither Whites nor Blacks, just South Africans free and united in diversity".
The unity of all our people remains our strategic goal. Even as we respond to the ravages of the impact of recession we must never lose sight of this important, goal.
Solidarity! Unity!
I thank you.