Face facts: Pravin's a commie, Cyril's a union man
It’s a big ask for the economy to expect much help from two solidly ANC figures with both eyes on the election
The opening weekend of the Fifa World Cup produced no end of surprises, if Eskom load shedding allowed you to view the spectacle.
The country of my second allegiance, Argentina (given Bafana’s dismal non-qualification, my home team as it were), was held to an improbable draw by tiny Iceland, which in population terms (337,000 versus 43.85 million) is around 100 times smaller than the South American football-rich country. And Iceland’s coach has a day job as a dentist. So a country with Randburg’s population holds off the land of Messi and Maradona!On Sunday evening Mexico not only beat Germany but also managed to upend the conventional wisdom of decades, pithily captured in England great Gary Lineker’s definition: “Football is a simple game; 22 men chase a ball for 90 minutes and at the end the Germans always win.”
Not in the Luzhniki Stadium in Moscow where Germany’s opening effort to repeat its 2014 tournament win took a severe, though not fatal, knock.But here on the freezing home front, midst the winter of South Africa’s discontent, the Eskom load shedding could deliver a fatal knock to the lingering hopes of Cyril Ramaphosa’s political and economic reset of our national fortunes.
The incontestable truth was spoken by Public Enterprises Minister Pravin Gordhan: our weak economy – with population increases outstripping GDP growth, spiralling government debt, dismal retail and manufacturing performances, a cratering currency and petrol price surge – would go from critical to endangered if load shedding persists.
However there is another more inconvenient truth Gordhan did not utter: he cut the ground from under the feet of new Eskom CEO Phakamani Hadebe’s proposal to zero-rate all current salary increase demands made by unions on behalf of its 47,000 employees. Hadebe announced this (non) proposal to meet the unions’ extraordinary demands for a 15% salary hike was “off the table”. Simply put, at the first sign of grapeshot being fired by the trade unions the government ran for cover.
Less simple, but no less urgent, is how to resolve the real risk that Eskom poses to the whole economy. Among a welter of statistics provided by sharp-eyed analysts in past days the standout figures are these: over the past decade, the staff complement at the state electricity provider has increased by 46%, its debt is R366-billion (around 8% of the entire country’s economic output) and after 10 years it today produces less electricity than in 2008. The price of electricity, in the same period, has escalated to 356% according to economist Stuart Theobald, while Eskom’s staffing costs have jumped by 287% since 2007.These past few days or nights of load shedding darkness have also been caused by sabotage of electricity and power stations by wildcat Eskom strikers, who according to the law (observed only in its breach) are not allowed as essential workers to undertake strike action. But, as is wearyingly familiar, breaking the law is a risk-free enterprise around here.
Little wonder that our economy stutters and stumbles, and at the moment of international peril for emerging markets, buffeted by a dollar surge and withdrawal of investor demand, we are literally pricing ourselves out of the market.
I suppose the unions do not think beyond their members’ interests. The pillaging by past senior management at Eskom led by looter-in-chief Brian Molefe (who managed to extend the corrupt practices he presided over at Transnet to Eskom until he was ejected) gives the unions some moral purchase.
But what they propose, or even meeting them half way, will move Eskom from a critical threat to the entire economy into new territory as mortal danger to it.Ramaphosa and Gordhan have been correctly commended for their determination to rid SA of state corruption at the ground zero of state-owned enterprises, of which Eskom is the most important. And as Gordhan reminded us at the weekend, completing the task is neither simple nor quick.
But what if “uncapturing” the state from the tentacles of the Zuma-Gupta-Molefe triad proves far easier than staring down the unions and their demands and reducing the staff components at these massively obese enterprises? That is likely to prove much more difficult.
But there is a starting assumption here which might be completely wrong.
Frans Cronje, CEO of the SA Institute of Race Relations, described the Eskom standoff as a critical moment in the early months of the Ramaphosa presidency. He told Bloomberg News: “Capitulating to unions at Eskom would signal significant political weakness and embolden Ramaphosa’s adversaries, while drawing into question his capacity to deliver on any degree of real structural reform.”
But there are two huge suppositions in that statement. First, that Ramaphosa desires to head off the unions; second, that he has a real plan for transcending economic reform beyond an anti-corruption agenda.
Ramaphosa might be a multibillionaire but the idea that he is “business friendly” is about as certain as the phrase is meaningless. His background is embedded in the trade unions and he desperately needs their goodwill for the crucial 2019 elections. Gordhan, both a pragmatist and highly ethical, is a communist, not a business-hugging free enterprise admirer.Early signs of the Ramaphosa view of the world arrived last month when the Treasury was obliged to bust its own budget by R30-billion to meet public servants’ above-inflation wage demands. Little wonder the government refused the following month to back up its new CEO at Eskom and his zero-increase wage offer.
I advised readers before to temper their optimism on the new dawn with the reminder that our president heads the ANC, not the DA, and will make his decisions accordingly.
He is not Margaret Thatcher either. She stared down the mighty coal unions in the UK’s own winter of discontent in 1984. But she ensured the power utilities had stockpiles of coal to prevent interruption of the energy and electricity supply. Before her action, which changed the face of British industry and reignited its economy, the National Union of Mineworkers led by Arthur Scargill was regarded as the breaker of governments, just as it had broken prime minister Ted Heath in 1973-74. Instead Thatcher broke them.
This year, in France, President Emmanuel Macron has prevailed – so far – in his clash over wages and entitlements with the equally mighty train drivers’ unions. They were also regarded, pre-Macron, due to their power of national disruption, as untouchable by government.
But both Thatcher and Macron had a clear economic reform agenda which they had spelt out with blinding clarity. Beyond his warm smile, morning walks and “come let us reason together” approach to national issues, Ramaphosa has offered no such prospectus.
Perhaps, as we head into a winter plunged into anarchic darkness by some wrecking elements in the unions, Ramaphosa should spell out a prospectus. Or else you can listen to the World Cup on the radio.