The 12th August 2004 will go down in the history books as a turning point in South African labour history. On this day, Cosatu leaders, through the National Union of Mineworkers, NUM, marched together with Anglo-American, represented by the AngloGold bosses, to the Reserve bank. They demanded a drop in interest rates and a devaluation of the Rand. Soon after this, the Reserve bank dropped the interest rate by ½ % and the Rand, over a period of ten days, lost more than 10% of its value. This devaluation is still ongoing. This alliance between the capitalists and the union leaders marks a historic betrayal of working class interests.
With a crisis of falling profits, the bosses worked out a scheme to cut costs – where else but on wages. They could not openly ask the workers to cut their wages nor could they on their own demand the devaluation of the Rand to drop the cost of wages. The scheme would have been exposed and the workers would have revolted. So the Anglo bosses turned to their friends and comrades in Cosatu. When the capitalists and imperialists are in crisis then the leaders in the workers’ movement bail them out – such is the nature of the capitalist democracy the world over. A joint march led by the miners and supported by the bosses was a perfect scheme. The Cosatu leaders gave the impression that jobs would be saved and at the same time the bosses would have a good profit – here was a ‘win-win’ situation, the Cosatu leaders implied. What is really the case? Greater exports do not mean more jobs According to SA New Economics, at best, the capitalist only creates 1000 for every R250 million in the agricultural sector – these are largely low-skill, labour-intensive jobs. If we look at heavy industry, much less jobs are created. The drive internationally by the capitalists is for greater mechanization and consequently for fewer jobs. The idea that an export-led economy is an engine for job creation is a myth.
In 2002 when the Rand devalued to almost R13 to the dollar, exports were boosted but there were massive increases, especially in food prices. Since the Rand came down these prices have remained high and the working class is still suffering from this. Hunger and starvation is more widespread. The wave of retrenchments by the bosses did NOT stop, in fact it continued. Mining and commodity producers made super profits. Already the SA capitalists make the highest rate of profit in the world, as shown by the 300% higher bank charges that are levied in SA as compared to all the OECD countries [the major imperialist and related countries]. When they declare that they are not making enough money, the bosses are quick to shift the burden onto workers – retrenchments and wage cuts are on the order of the day. It is not that the companies cannot operate but the capitalists declare for example that a 100% profit is not acceptable, they need a 200% profit. As long as the world is controlled by monopoly capitalists, there will always be widespread poverty in the midst of plenty. The priority of the capitalist is not jobs but maximum profits.
Devaluation of the Rand means an overall drop in real wages For every $100 the capitalist is paid, they could convert this to say R500. Let us say that of the R500 the capitalist pays R100 for wages. So in this case the wages make up 20% of the total income of the capitalist. But now, with the devaluation of the Rand, for every $100 the capitalist gets, they can convert it to R600. The Rand cost to the bosses of wages is still R100. So the cost of wages is now 17% of the total income. In other words real wages have dropped by 3%. When dealing with millions and billions of dollars the extra Rands are a huge amount of money. So what happens to this extra R100 per hundred dollars that the capitalists get? Do they give workers a huge wage increase? NO. Do they employ more workers? NO. The extra billions are going to the bosses in the form of massive profits.
Moreover, the devaluation of the Rand means that imports are more expensive. For example, oil imports will be more costly which means not only another petrol and paraffin price increase/s but a general increase in the price of goods that people need. Many of the commodities such as wheat, maize, coffee, cotton, etc are priced in dollar terms. The devaluation of the Rand also means massive price increases of these and related goods. A huge part of the manufacturing in SA is really assembly of imported parts. If these imported parts rise in price, this also means that the price of locally made /assembled goods will rise. On an international scale the Rand will buy less goods. This all means a further real decrease in the wages of the working class in SA.
No doubt we will see more massive increases for executives to compensate for this devaluation. The nett result is that the crisis of the bosses is put on the shoulders of the working class, with the active help of the Cosatu leaders and their economic advisors.
An alliance with imperialism We now see the true nature of the ANC-SACP-COSATU alliance, namely an alliance foremost with imperialism and the local capitalist class. Any major step that would affect the overall rate of profit of imperialism in SA must have been given the blessing of all the major imperialist powers. A key feature of the structural adjustments programmes of imperialism has been the use of devaluation of local currency in order to aid their plunder of the neo-colonial countries. It must be a world first for Cosatu leaders that they are in the forefront of demanding increased exploitation of their own members. This follows from the Cosatu leaders taking responsibility for a system where the working class owns nothing and the capitalist class everything.
Workers in Cosatu should mobilize against their sellout leadership and replace them with working class fighters that will break the alliance with the capitalists. The very lives of the working class and their families depend on it.
In our next edition we will publish a more thorough analysis of the new depths of the alliance between monopoly capital and the Cosatu leadership.
Issued by Workers International Vanguard League,
Ph/Fax 0214476777 :wivl at sn.apc.org or: www.workersinternational.org.za