ANC calls for union patience on economy

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South Africa‘s ruling ANC is calling on President Jacob Zuma’s powerful trade union allies to ease up pressure for economic policy changes, saying the government must be cautious during a recession.

The plea for patience comes two days before newly elected Zuma gives his first state of the union address expected to spell out his plans to tackle widespread poverty and crime and improve poor service delivery during troubling economic times, Reuters adds.

One of Zuma’s biggest tests is how he handles investors, as well as the trade unions which helped his rise after years of crises, corruption cases and ANC power struggles that he says nearly ruined him.

Markets fear Zuma will bow to pressure from increasingly assertive labour and allies demanding more government spending and an economic shift to the left. He has promised continuity.

“You have to be singing with the same voice on this one because this new administration has walked straight into a recession,” ANC spokeswoman Jessie Duarte told eTv. “And it has to balance recessionary concerns with worker demands.”

Labour was quick to push its agenda after Zuma’s May 9 inauguration.

The COSATU trade union federation, which says it has 1.8 million paid-up members, nearly blocked one of the biggest share listings in Africa‘s biggest economy and threatened a public service strike over a 2007 wage deal with the government.

The national metalworkers union is already complaining of the “capitalist crisis under way”, and said it would take extraordinary measures to tackle South Africa‘s central bank.

In his state of the nation speech, Zuma is expected to explain that the government may take longer to deliver on its promises because it was constrained by South Africa‘s first recession in 17 years, said Duarte.

“What will have to happen is an understanding that during a recessionary time there is a slight difference. That we might as a ruling party have to mediate and talk about all of us taking responsibility that the recession doesn’t deepen,” said Duarte.

The economy has been hard hit by global woes, with recession in developed countries slashing demand for South Africa‘s minerals and manufactured goods.

Nevertheless, Zuma faces mounting pressure to deliver on pledges to ease corruption, one of the world’s highest rates of violent crime, and an AIDS epidemic, and create jobs. Unions may not give him much time.

COSATU has been flexing its muscles, fighting the listing of mobile phone group Vodacom. It objected to the company going public because it forms part of a deal that gives UK-based Vodafone control of the company and would lead to job losses.

Meanwhile, the National Metalworkers Union of SA is threatening to stage mass strikes if the country’s central bank does not change its policies and carry out deeper interest rate cuts.

“If matters are not resolved we will have mass rolling action,” General-Secretary Irvin Jim told a news conference.

NUMSA, which says it has more than 260,000 members and is one of the three biggest unions in South Africa, staged a protest at the Reserve Bank on May 27 to demand a deep interest rate cut. Jim said at the news conference that “we will be at all” the meetings of the bank’s Monetary Policy Committee.

Meanwhile, the Sunday Tribune has reported that the ANC wants to “reprioritise” promises in its election manifesto, adding party secretary-general Gwede Mantashe even warns against the word “promises”.

“These are commitments – everything we write in that manifesto we don’t write to win votes; we write because there is an intention to do all of them,” Mantashe said in an interview with the Tribune last week.

“When there is a recession like this, one of the things to expect is that you may have a bigger budget deficit. I’m not saying there should be recklessness,” he said.

But he tried to reassure voters. “I don’t think we should cut back (on commitments). We should reprioritise,” he said.

The ANC’s manifesto was based on five key priorities: creating decent jobs; access to education; an improved public health system; rural development and food security; and tackling crime and corruption.

But the ANC heard the practical implications of its programme when Zuma’s cabinet – after its lekgotla this week – briefed the party’s leadership.

Mantashe said the newly created planning commission, under Minister in the Presidency Trevor Manuel, would give the full picture of “what is practical under the circumstances”.

However, the ANC, which won a majority on a speedy delivery ticket, is facing massive expectations amid an unfavourable domestic and international economic climate.

Gross domestic product is not expected to grow by more than 4% in the next five years, and rising unemployment will affect tax collection, forcing the government to borrow, even though Deputy President Kgalema Motlanthe said after the G20 meeting the country would not beg from the International Monetary Fund.

The paper expects Zuma will Wednesday put on a brave face and still promise that his programme will not be derailed.

While still emphasising pro-poor policies, Zuma will take steps, unpopular with leftist allies, to try to stimulate demand and recovery.



These reportedly include stabilising the rand, retaining the macro- economic policy mix and not fiddling with monetary policy, including inflation targeting.