South Africa’s biggest labour federation said private pensions must be used alongside those of government workers as part of a plan to rescue the state power company from crippling debt and spur economic growth.
The Congress of South African Trade Unions advocated the use of so-called prescribed assets, alongside funds held on behalf of state workers by the Public Investment Corp., in a copy of a submission to parliament seen by Bloomberg and confirmed by Cosatu.
A discussion must begin between government, the PIC, labour and the retirement industry “on a sustainable and progressive balance and phasing in plan to be agreed to on prescribed-assets investment,” Cosatu said.
This would be “in support of key public goods and infrastructure that will protect the interests of pensioners and spur inclusive economic growth,” it said.
Cosatu is proposing a plan that would utilize some of the R2.1 trillion ($135 billion) held by the PIC mainly on behalf of the Government Employees Pension Fund.
It would be used to cut the debt of struggling power utility Eskom Holdings SOC Ltd. to R200 billion from R454 billion. Eskom, which has been mired in corruption, is struggling to repay its debt and supply South Africa with sufficient power.
Cosatu has previously argued that other state institutions, such as the Development Bank of Southern Africa, should cover some of Eskom’s debt. The document now clearly states that the private sector should also contribute.
“Cosatu’s approach is based upon a social compact, where all parties from government to labour, business and society make a contribution and, where necessary, a sacrifice for the sake of the national interest,” the federation said.
The approach on prescribed assets is likely to spur a clash with business.
“That issue is off the table. We have agreed that financial resources must be mobilized from all sources and sectors,” subject to conditions agreed to by business, said Martin Kingston, vice chairman of Business Unity South Africa, the nation’s main business lobby. “
We will not compromise the integrity of the financial-services sector.”
Cosatu also advocated that coal suppliers to Eskom and renewable- power producers reduce their prices or have “their contracts canceled and assets expropriated.”