A wage agreement, universal income and a new ‘cash tax’ – what unions want from Mboweni’s budget

The Congress of South African Trade Unions (Cosatu) says that a lot is riding on finance minister Tito Mboweni’s Mid-Term Budget Policy Statement (MTBPS) on Wednesday, with the trade federation expecting long-term commitments to the cutting of wasteful expenditure and further support to workers.

Cosatu said that the MTBPS should address the detrimental issues that stifle economic development, including the vast scale and deepening levels of corruption and wastages within the state.

The federation said that some of its expectations for the MTBPS include:

  • Universal income –  Cosatu welcomed the extension of the R350 long term unemployment grant, however it said it needs to be extended beyond the three months and should be used as the foundation for a basic income grant for the unemployed. Further relief measures must be provided for, these include the extension of the UIF TERS relief to affected workers.
  • Procurement controls – The federation wants the fast-tracking of the public procurement bill and the introduction of the national online public procurement system
  • Stimulation – To save jobs, the government needs to inject new money into the economy to stimulate it., Cosatu said, adding that it expects details on the announced government infrastructure programme. “We hope Treasury will abandon its austerity strategy because it is bound to depress demand and thus cause an economic depression.”
  • Loan Guarantee Scheme – Cosatu called for interventions in the Loan Guarantee Scheme, which seven months later has ‘shamefully’ only managed to approve 8% of its committed to R200 billion funding.
  • New tax to boost investing –  The federation said that the government needs to discourage cash hoarding and an investment strike by imposing a tax on those who hoard cash. The country also need capital controls to protect the currency and deal with illicit financial flows.
  • Fixing SOEs – Cosatu said that government needs a solid proposal on how to fix and turnaround State-Owned Enterprises. “These SOEs need to be sorted and fast , we expect a solid and comprehensive plan on how to rationalise and merge them. Many of these entities are depended on the fiscus and are actually redundant and duplicate each other whilst some have no clearly defined roles, not to mention the fact that some of them are simply ineffective in implementing their mandates.”
  • No private consultants – The policy statement needs address the issue of private consultants who take billions from municipalities, government departments and state entities every year with no results, it said.
  • Private sector should come to the party – Cosatu said that the private sector needs to honour its own commitments to urgently inject funding into the economy, in measures that will save and create jobs, support fragile economic sectors and infrastructure.

“The reality for South Africa is that we are where we are because of previous decisions taken by the policymakers and decision-makers,” Cosatu said.

It said that the deepening socioeconomic crises that is currently engulfing South Africa, can partially be attributed to the misguided macroeconomic policy framework that has been implemented over the years – especially since the beginning of the year.

The unemployment rate has continued to climb in 2020, a consistent trend since the 2009 recession, reaching 50% in the second quarter of 2020 in real terms. This means that there are about 14 million unemployed people, in which women and the youth bear the worst brunt of the economic stagnation.

“This is the reason workers hope that government will rise to the occasion and table an MTBPS that speaks to and is in sync with the Economic Reconstruction and Recovery Plan tabled by the president at parliament last week.

“What we cannot afford is government policy incoherence, where the National Treasury says one thing, whilst the president says another,” it said.

Read: The big hitch in Mboweni’s budget plans

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A wage agreement, universal income and a new ‘cash tax’ – what unions want from Mboweni’s budget