CAN SA AFFORD THE ANC?  Cont'd

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through privileged access to public funds. In SA, when such are caught out, there are neither apologies nor amends. The handful who have been brought to book are mostly small fry.

The authoritarian potential of the ANC - its politically perceived need to transform SA into an egalitarian utopia, its belief that government should control every single aspect of our lives - is now blindingly obvious. Day by day, inch by inch, the socialist, totalitarian state grows bigger and stronger. The slogan of the left, parroted at the very highest levels of government - "Growth Through Redistribution" - is a devastating illustration of the ruling party’s economic illiteracy. Redistribution of wealth (manifesting itself in high taxes and the flight of the entrepreneur) is now taking place much faster than its creation.

Finance Minister Trevor Manuel has repeatedly described policies laid down in the government’s Growth, Employment & Redistribution (GEAR) document as "non-negotiable." Yet from its initial launch, the policies implied in Gear have been subject to negotiation and distortion, progressively missing one GEAR target after another.

The "virtuous cycle" envisaged by Gear, of lower government expenditure, lower taxes, higher growth, higher direct and foreign investment and high employment, have run dangerously off course. The growth, deficit and employment targets established by Gear are not being met. Instead of growing at 2,9%, GDP growth for 1997 was estimated to be 1,5%, while the population grew by 3%. There has been lack of strong, protective supply side measures. The joint empowerment goals were disregarded. There was no strategy aimed at attracting direct foreign investment.

At the same time, government spending exceeded targets. In some provinces, consumption spending rose as high as 90% of total expenditure. For 1997/8 a deficit overrun of R2,5- to R3 bn was expected. With the meltdown of the rand, and general economic recession, the deficit could go as high as double that projected. In contrast, job creation did not take place. While 190 000 jobs were expected to flow from Gear, 80 000 have been lost.

Employment in the public sector is rising, but so is unemployment generally. According to the Central Statistical Office, around 30% of the active work force is unemployed. Others claim that unemployment, hugely swollen by millions of illegals, is more realistically around 40%. There can be little hope of turning this around while labour policies are designed to suit Big, Big Business and the unions effectively shut the unemployed out of competing on the open market, keeping the unskilled on the streets and away from income generation.

What we have already seen this year is:
1. A rapid rise in accumulated household debt as a ratio of personal disposable income. This ratio increased to a new high of 66,6% in 1997. And now? 2. A drop in household savings, from 3,5% of GDP in 1993 to a lowly 0,5% in 1997.

This year it will probably disappear off the map.
3. Because savings are penalised at the upper incomes, there has been a discernible increase in luxury consumption spending. This will no doubt now be severely curtailed. And all of this will still further boost unemployment to frightening new levels.

The hoped-for growth in 1998 was forecast at 2,5%. A dismal economic growth of 0,7% was registered in the first quarter of the year, forcing economists to revise a growth for the full year down to 1,5%. In present prospects, it could be zero or below.

The cost of doing business in SA has been rising steadily and expectations are that it will continue to do so, on an even more marked scale. Returns available to investors in SA are lower than in almost all other emerging nations. Among the reasons for this, together with the monstrous jumps in the bank rate, are crime, fraud, excessively low productivity and the huge increase in the costs of security. Others are labour laws that increasingly favour the unionised worker over the employer, thereby still further enhancing the power of the trade unions.

Alleviating unemployment is SA’s greatest single challenge. Yet the ANC has an appalling record in labour relations, invariably pro-union, not pro-labour. Under Labour Minister Tito Mboweni, whose economic understanding is seemingly based on Marx’s Das Kapital, first printed in 1848, we have some of the most restrictive labour legislation on the planet, intended to ensure the prosperous survival of unionised workers, while ensuring a closing of competitive opportunities for SA’s vast army of unemployed.

Not least because of the ANC’s massive and widespread social engineering, industry and commerce alike continue to operate in what economists (and investors) term "an oppressive climate." Under the Labour Relations Act, the ANC has permitted the closed shop, making it difficult if not near-impossible, to dismiss workers or hire replacements for striking workers. It makes extensive provision for company "workplace forums," costly training schemes and onerous payments for overtime and maternity leave.

Mboweni is presently seeking to railroad through Parliament the ill-conceived and deeply damaging Employment Equity Bill, legislation which makes no economic or common sense whatsoever, and providing draconian powers to interfere with the allocation of labour resources. Showing himself totally contemptuous of public opinion ("The Arrogance of Power") Mboweni claims this Bill will cause growth. That is blatant deception. It is a State-mandated and monitored affirmative action programme in the public sector in which compulsory race categorisation overrides skills criteria.

Not only will it have highly negative economic implications but above all it highlights the extent to which government crudely and increasingly intrudes in areas where it has no business. It will hugely impact on small business, on the national economy and job creation.  

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