This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
11 Apr 1996: Skhosana, Mahlmola
POM. It's almost a year, I think, since we last talked and let's start with something that must be troubling to everybody in the economy and that is the continuing slide in the value of the rand. If it continues there will be a pattern of where imports will start becoming more expensive, many consumer goods will start becoming more expensive, many capital goods that are used as input in manufacturing will become more expensive and that will have an effect on the value of real wages. Is there a possibility of this spiralling into labour calling for a general wage increase to compensate for the loss in the real earning powers of its membership?
MS. Those are all possibilities. Yesterday there was an article where they are speculating that petrol might go up, so if petrol goes up in this country food prices are going to go up, transport costs are going to go up. Obviously that's going to lead to workers demanding compensation in terms of the wages that they will earn. At the same time we are now having this problem of the IMF and the World Bank as well as South African business accusing the unions of being stubborn, refusing to accede to lower wages to create more jobs. So it is going to lead to higher salary demands but those will not simply be demands that people are demanding high salaries for the sake of higher salaries. Inflation is going to go up, it's not through the making of our people, we live far from workplaces because of the past government policy so as prices of transport go high people are going to demand higher wages. We don't have anything called free education here, parents still have to pay for the education of their children and transporting the children to the schools.
POM. There is no free education yet?
MS. There is not yet free education. Parents still pay for the education of their children, so all that is going to mean is that more money is going to be needed. Worst of all is the servicing of the debt by the government so the more the rand takes a knock, with whatever percentage, it means that debt also increased by that percentage so the government is going to need more money and where are they going to get the money? In the next budget the likelihood of increase in tax is there. I think next year they will also increase VAT and reduce the list of foodstuffs that are exempted. So they need the money.
POM. Could you talk a bit about the proposal that was released by COSATU, yourselves and FEDSA where you laid out your proposals for economic growth and development in the future and took issue with the proposals of the South Africa Foundation and in particular, I think, part of the debate was focusing on this issue of what you just mentioned: high wage versus low wage development and business pointing to low wage countries and saying that this is the model that South Africa must follow and labour saying, no, the problem here is not low wages it's that management is paid excessively, it's the gap between what management are paid and what workers are paid is the real problem. Could you explain a little bit about that debate and how in a way each side picks countries selectively to suit its own argument, so to speak?
MS. Exactly that's what is happening. For example, business will like to look at the Asian tigers and we are saying if you take Malaysia, for example, because they had almost a similar problem like us, indigenous Malaysians were poor, they were out of the social system, political system, economic system, because they were dominated by Chinese. So what the government did there, they deliberately embarked on programmes to improve the quality of those people, jobs, education and training opportunities. Here we have a different situation where there are obvious imbalances here and the government, what does it do? It starts by privatising, selling off all state assets. Now how the government is going to help to bring about equality in this country we don't know because they don't have the true programme. RDP it's the espoused policy of government. If you look at it on paper you can't find any fault but there is a difference between having something on paper and translating it into fact. There is no translation of that into fact. What business is asking for in this country is to bring in the concept of EPZs (export processing zones) without mentioning it. These are areas where labour laws and standards are not applicable so workers must be exploited, there will be no restriction on, for example, health and safety. If it's a chemical industry, it's a chemical firm, workers will not be given adequate protective clothing. There will be no compensation, there will be nothing. And we are saying we come from that history where there has been unequal sharing of resources of this country and we will not go back to that. If people are going to work in this country they must be paid like everybody else and the conditions, we will not accept people to work for slave wages under appalling conditions. We come from that and we are not going back to that. The second point is the problem of management.
POM. So as far as you're concerned the Asian model of development is not ...?
MS. It's not applicable in this country, not in this country. The cultures are different, the norms and values are different. We have known capitalism here to mean white supremacy and exploitation of black people so it's not going to work. Those are the realities of this country. Coming to management, their salaries, their packages and all that, there is just no way where managers are going to give themselves 28% salary increment and expect us to be content with less than 10%. That's number one. Number two, what is the performance of this management? A lot of the retrenchment in this country is as a result of bad management or bad planning from management side. Why should they keep their jobs when workers are being dismissed? We've got to link that, that if workers are going to go because these guys didn't perform, they must also go. Why should they remain behind?
POM. So that in a way, unlike the United States where a lot of the retrenchments in recent years have not been among workers but have been among management, here retrenchments are almost exclusively among workers, not among management?
MS. We would like to see that trend from the United States starting because once these guys can know that they are also going one day to lose their jobs and join the queue of unemployed people they will start planning properly but the fact is that they don't because they know that at no stage will they look for jobs.
POM. Now let's back up for a moment to the issue of privatisation. This was an issue that the unions took immediate umbrage at, that they weren't properly consulted, and many observers suggest that in fact the government backed down in the face of trade union pressure. Others argue that if you have what you call a restructuring of state assets rather than privatisation as such that you can get rid of inefficient parts of state machinery and you can use some of the assets or the proceeds from that to retire part of the state debt, just reducing the interest on the debt or the funds can be used for other more productive purposes. Do you go along with that or are you just against the concept in principle?
MS. Not entirely. For example, let's talk about firstly this setting off of the interest. If they are going to sell all state assets that will come to between 50 - 60 billion, so they will not offset that debt completely but that money will go towards that, the bulk of that money. So there is not going to be any money to improve the quality of life of people inside the country. That is a fact. So it's not true that selling those assets will benefit people inside the country, it's not going to because this economy, like any other economy in Africa or any developing world is being restructured in such a way that it must be geared to settle international debt. It has nothing to do with people inside this country. Coming to state assets and improving the quality of life, Britain is a classical example. What has the working class in Britain benefited from privatisation? Loss of jobs, that was the benefit. Few people have benefited in this country. The big conglomerates will benefit because they will buy those assets and workers will walk the streets. That's the end of it. So there is not much benefit that we will derive and Britain is a classical example. And also, you must understand, in this country we don't have social security where people can join the dole. There is nothing like that. So you are telling people go out in the streets and starve.
POM. So what's the government's logic in privatising? What's their thinking of what the benefit is to the people of the country?
MS. When we met the Minister of State Enterprises we asked the question: what is the ultimate goal? We didn't get an answer. What we were referred to was a government document which was guiding them how they should go about this thing and we said we understand that but what we want to know from you is what is the ultimate goal of this privatisation? We didn't get an answer. We then provided an answer. We said the answer is simple, you are doing this in order to service the international debt and retrench people. That is the ultimate goal we gave them because we didn't get an answer from them. I don't think this government backed off when we started making noise. I think they simply decided that they are going to consult us and continue. The government is going to continue, there is no way they are not going to continue.
POM. They are going to continue with the process of privatisation.
MS. They are going to continue with the process of privatisation.
POM. Does that mean labour will continue to oppose it?
MS. We will continue to oppose but they are like any other government anywhere, they will just continue because they have made commitments, I think, to foreign governments and to foreign business people that this is what they are going to do, so having made commitments they are going to have to live up to those commitments.
POM. Now the country, also because of its membership of GATT and its entry into free trade agreements, is embarking on more liberal trade policies which involve the lowering of tariffs and less protection which means industries within the country are open to competition from abroad and are open to competition from countries like Malaysia, from low wage countries who now can undercut you competitively. For example the textile industry is probably a good example of where already in Port Elizabeth it's under severe pressure. I think a couple of factories have closed down or they are moving facilities off-shore to do some of the manufacturing in Zimbabwe and then re-import the goods and finish the goods in South Africa. Again, what's the union policy here? It seems to be that globalisation and liberalisation will lead to loss of jobs at least in the short run, not to the creation of jobs.
MS. It's not only in the textile industry. I think your analysis of the textile industry is typical but if you look at also the motor industry, we have got a lot of imported cars in the country now and there are no plants for those cars. All those cars that are coming, they are coming - for example, in Botswana, there is an assembly plant there where these cars come into the country and that costs us jobs in the motor industry and we are going to continue to have that so long as we have this liberalisation. We have said, as unions, that the government must halt that process and go slow with that process. For example, at SADEC level we were told that Zambia has liberalised and when the Zambian minister was asked how many jobs have they created since they liberalised, he couldn't give a figure because they haven't. And I don't think unemployment will be in the short term, I think we are in the short, medium and long term. We might also have a section of working people who will be permanently unemployed because of that. So we have said the government must begin to re-evaluate that position and also what South Africa has to understand is that we are part of the SADEC region. Now if there is going to be liberalisation it has to take into account what other countries are doing in the region. It will be better if these decisions are taken at SADEC level, it should be a regional process, not an individual country because that is going to be a problem. We must also look at what other countries are doing and I don't think we should do what the Zambians have done.
POM. Do you think with the trend over the last decade towards globalisation and open markets that each individual country's capacity to develop its own economic development policy is restricted, is reduced by outside constraints? You're no longer free agents, you are now more at the mercy of world forces than any country might have been 15 or 20 years ago.
MS. The era of individualism is gone. If you take, for example, the European Union itself it's a community on its own. You look at NAFTA, you look at the Pacific Rim, there is no one single country today that can say we can take the world on and that is why we are saying that South Africa must realise that we are part of the region of SADEC and we need to develop that SADEC community and be part of that and forget that we as South Africans can do it. If United States finally recognised that they can't do it on their own, they had to have Canada, they had to have Mexico and other Latin American countries and we must also understand that South Africa imports more than it exports so we don't stand a chance unless we also participate as part of the region.
POM. So you would like to see a trade policy that would be more trade links developed not with the European Union or even with the United States, not putting primary emphasis there, but putting a primary emphasis on developing a coherent trade and investment policy with the countries in the SADEC region?
MS. No we need to trade with Europe, with the Pacific Rim, we need to trade with the United States, but I am saying that those trade links must also take into account the region, SADEC, we must be part of SADEC in developing those trade links. It is wrong for South Africa to think that as a country we can go on our own and go and establish trade links with the European Union as well as NAFTA. I think it is wrong, I think we must have those links but those links must encompass the region and South Africa be part of the region.
POM. But coming back to trade liberalisation. On the one hand you seem to have the government appearing to want to speed the process up, you have the unions saying slow down. Again, is there an adequate consultative process in the works that will prevent this becoming a crisis of major proportions? If your members start losing jobs because of trade liberalisation how do you answer the government? Do you revert to mass mobilisation, do you revert to the tools at your disposal?
MS. That is the problem, that is why I am saying that the government must first - we don't have studies here to analyse what the impact is going to be but this cannot go on and on and on. For example, this country has a serious problem of unemployment. Now we have a whole lot of youngsters who joined the labour market who cannot be employed because there are no jobs and if those who are already employed are going to lose their jobs again it's a problem for this government and what they must understand also is that the more people lose their jobs the fewer people will be able to pay tax to them and it means they have to increase tax all the time to the few and people are going to get tired of this. That's why I'm saying one way of dealing with this problem is also to be part of the region, these decisions, because what happens is that a lot of people leave those countries, SADEC countries, to come into this country and this country is also having its own problems of unemployment. Then we are going to have a lot of tensions so we don't need to do that.
POM. Are the number of illegal immigrants coming into the country who, as in all countries, are prepared to work for lower or next to nothing wages or at subsistence level, is that becoming a real problem?
MS. It is a problem, particularly in the farms. We have a union in agriculture, the farms around Mpumalanga which is north east next to Mozambique, the Free State people cross from Lesotho to come and work in the Free State for next to nothing. In the northern parts of the country where we share the border with Zimbabwe we have a similar situation. It's not only in those, but the farming industry is one of the areas that you can pick up very easily. It is a problem.
POM. Is there any good estimate of the number of illegal immigrants, within a range, that are in the country?
MS. I think there are estimates but I don't think you can find an accurate figure because no-one knows the number of people. The figures that you can get are the figures of people they have repatriated back to their respective countries. Mostly these will be Mozambicans but you are now not dealing with SADEC countries, you are dealing with people from West Africa, they are here, people from Zaire are here, almost the whole of sub-Saharan Africa is here so I don't think it's easy to estimate.
POM. What would NACTU use just as a working figure? If it had to say ...?
MS. I will hesitate to guess. The figure is high. I don't think you can guess. Home Affairs, I don't think they have got figures because even them they don't have correct figures because you have a situation here where you have the army patrolling the border in the northern part but then you have other people who fly into this country, get into the country and then disappear. You can't reach those, there are a number of those in the country. So it's very difficult to estimate a figure but it's a huge figure.
POM. I want to go back to the question of jobs. This is a big failure of the government. The unemployment rate probably has increased because the number of jobs being created each year is not even sufficient to take the new entrants into the labour market, to absorb the new entrants into the labour market. What can be done to create jobs? I will put it in two contexts. One, again, that like it or not you're going to be faced with these other economies like Malaysia out there fighting for a share of the market here and, two, there was an article in one of the papers yesterday which stated a fact that's been well known for years and that in Europe if you're over 50 years of age and you're unemployed you can take it that you are going to be unemployed for the rest of your life. There are something like 12 million people unemployed and it's only the fact that they have a very developed welfare system, the dole, social security benefits that allow those people to maintain an adequate standard of living but essentially the message is that if you're over 50 and you lose your job you've lost your job for life. Now if you're entering a world economy where one's life span as a worker is diminishing all the time even in developed countries, what chance do developing countries have to compete against high technology, highly productive economies like the Japanese economy or the German economy which combine high wages with high productivity?
MS. I think the situation in our situation is even worse. We are going to get to a situation where people become permanently unemployed because those youngsters who come into the labour market and are unable to find jobs, what hope is there for them to get jobs? Part of what we need to do in this country is that we do have money in this country, there is money in this country. If you take the Insurance Companies they control up to five billion rand; if they could release that money to job creation programmes before they ask other people to come and invest here, but they are not doing it. All what they are saying now is to say that the central bank, the Governor, Dr Chris Stals, should do away with exchange control and arguing to say that if he does away with exchange control then a lot of people will bring their money into the country, which is not true. What they actually want to do is to take their money out of the country. Now if they are going to take money out of the country those people who have money to invest have no obligation in this country, why should they bring their money when they are taking their money? They are South Africans, if they committed to this country let that money be invested in this country to create jobs, then you can tell other foreigners come and invest. But the strategy that they will take their money out and say other people will bring their money in, it's not going to happen and the world economy today, particularly from the developed world, it's no longer based on labour intensive, it's based on capital intensive, so less and less jobs are going to be created in this country.
POM. Then you've got a monumental problem because the labour force is growing, the population is growing and the capacity to create jobs is diminishing.
MS. It's diminishing, it's just not there. This is the challenge that is facing the government. We are waiting for the government's paper on their strategy of development. First Deputy President Thabo Mbeki, we expect him to deliver the paper and see what he's got there. But at the moment the future looks very bleak, particularly for young people.
POM. Now going back to exchange controls, just because of the points you've made that if the controls were abolished rather than it being an incentive for capital to come in, what it would amount to is an opportunity for conglomerates to get their money out, which they would do if only to diversify, particularly if you have a situation of where the rand is under speculation, the labour union movement would oppose the abolition of exchange controls at this point?
MS. At this point we will say no because those conglomerates have an obligation in this country. If you take, for example, Life Officers' Association, which is pension funds basically of workers of this country, why should those pension funds be taken to create jobs somewhere when they should be creating jobs in our country here? We are saying, no, until such time that we know what's going to happen with a lot of that money. Is it going to be invested in this country? Once we've got guarantees that the money will be invested in this country then we can look at that but before anything is put in place we don't think it's correct to just get rid of exchange control.
POM. Well the other issue, and I haven't seen it addressed fully, and I've only read what's been published on the labour movement's paper on the economy, but there was to me not an awful lot of attention, maybe there was more that just wasn't reported, on breaking up the monopolies. One of the points we discussed at length years ago was that five companies, five conglomerates control up to 80% of the capitalisation of the Johannesburg Stock Exchange and they still do. Nothing has changed.
MS. Nothing has changed.
POM. Are there no laws? There appear to be no laws in the making that would substantially change that?
MS. I don't think there's the intention on the part of the government to do that. This government is not different from any other African government. I think actually business has got more influence on the government than the unions. There is no intention to do so and I don't think they will ever do that, so the situation is going to remain like this for a long time to come. What they are doing now in breaking up the monopolies, there is this concept of black empowerment which is nothing else but individual empowerment of black people selectively. Anglo-American is selling JCI, Johnnic, they are selling that to black people in the process of black empowerment but they are asking for 9½ billion rand. Now where are you going to find black people with 9½ billion rand to buy Johnnic? Obviously you are not going to find them, black people being able to buy Johnnic. So the black empowerment process that has been going on is just to have individual faces, so between now and 1999 you will see one or two, three, four, maybe, I don't know how many black millionaires you are going to find but that will not mean that the lot of ordinary, the majority of black people, has been improved.
POM. Would the same thing apply to privatisation, that what it would allow would be a small number of black people to become rich pretty quickly but it's not going to do anything to improve the lot of the masses?
MS. It will not improve the quality of life of the masses out there and also those black people who will be there, those will be maybe put at director level of those companies but without executive powers. They will just come there to vote and get paid for being present or attending a meeting, that's all. But the conglomerates, mostly foreigners, stand a better chance of even buying these assets so by and large South Africa will be owned by foreigners. We are going to have the same situation like in California in America where Japanese are owning golf courses, whatever. We are going to have the same situation here. If it's not the local conglomerates, it's foreigners who will buy all these assets, so South Africa by and large will be owned by foreigners.
POM. Now when you talk about the apartheid wage gap and how that must be eliminated, could you expand a little on the thinking behind that and what it's implications are?
MS. There are many ways of doing it. One of them is to train people.
POM. What do you mean by it, first? Do you mean the difference between what a white person is paid for a job and what a black person is paid for a comparable job?
MS. If they are doing the same job they must be paid equal pay, equal value immediately.
POM. And that's not the way. What's the gap like, for example, at the moment between, say, if I was a factory worker with ten years experience, a white factory worker with ten years experience and a black factory worker doing the same job with ten years experience? What would be the difference?
MS. The difference is still quite wide. Maybe I will get you a press cutting here where the research says whites earn up to R5000 in this country and you still have black people earning about R280 a month. So the gap is still there. Like I say, it doesn't look like there is the intention even to close this gap except that they want to hand-pick one or two black people and say in terms of affirmative action these are the people we have put forward here and something is happening. Whereas the lot of people is not improved at all.
POM. This begs the question that you had a government takeover that is dominated by the ANC, by the tri-partite alliance, two elements of which were the SACP and COSATU, both committed to improving the lot of the working people, of creating jobs, of the redistribution of wealth on a serious scale and yet after two years of the government of national unity these two elements that are part of the alliance appear not only not to have delivered but to have surrendered, so to speak, to the dictates of big business and international conglomerates?
MS. First and foremost I think in that alliance the SACP is a junior partner, so is COSATU. They are both junior partners. I think with the untimely departure of people like Joe Slovo, Harry Gwala, people who could have had influence on the ANC part of the alliance, I can't see anyone, I think the Communist Party particularly has lost influence in the ANC. I don't see anything they are doing. I think they have lost influence. I don't think Mandela looks to the Communist Party for any advice, I don't think so. Also his Ministers, and also when we spoke to the former Minister of Telecommunications, Dr Pallo Jordan, a known Marxist, we were shocked because he was talking market, he was market orientated. So I think business has done it's job. In America they talk about lobbying politicians, in South Africa business doesn't talk about lobbying it talks about 'dining' them, so I think they have successfully 'dined' them. They have lost complete influence.
POM. Has this brought about a greater cohesiveness within the labour movement itself? Are COSATU and NACTU now speaking with one voice, are you behind one programme or are there still political differences that separate you?
MS. There are because COSATU being part of the alliance, COSATU cannot move a full mile against the ANC government. Somewhere down the line COSATU will have to stop and re-evaluate whatever they want to do. So we have a different approach on these issues. So as long as COSATU is part of the alliance I can't see them moving the full mile to fight this government. They can make noise like, for example, when you had a problem with big business over the Labour Relations Act, there were lots of marches organised. But who addressed those marches? One of the marches, the first march in Johannesburg was addressed by Mandela. Now the very fact that you put workers in the streets to fight against the government, at the end of the day you say Mandela must come and address them. What impact does it have? Bringing Mandela there it goes obviously with the loyalty of workers who will not be with Sam Shilowa or with Gomomo but the loyalty of workers will be with Mandela. So that is the weakness, they are not able, and that is why the government will just keep them there, they can make noise, that's fine let them say whatever they say but we continue to do what we want to do and COSATU will fall in line later.
POM. But you lose Mandela, I mean is Mandela the ace card that the government can produce, but in a post-Mandela era?
MS. Maybe things might change then but for now until 1999 this is an era of Mandelaism. It's the same thing like we had in Ghana when Nkrumah was around, it was Nkrumah-ism. It's the same thing that we had in Tanzania when Nyerere was around.
POM. Do you think this is unhealthy for democracy when one individual is elevated to such a position of eminence or pre-eminence above everybody else that first of all it mutes criticism and, secondly, it inhibits the development of democratic processes?
MS. It does but usually the strong characters like Mandela are very popular in their first term. If they move to the second term their popularity starts waning. Now Mandela is still in his first term. If you take Mugabe, for example, he has been taking so many terms now he is so unpopular in Zimbabwe. Now Mandela, this is his first term. Up to 1999 I think he will still be at the helm but unfortunately he says he's not coming back, but I think he has realised that after the second term things will not be as rosy as the first term.
POM. So he's kind of getting out when he's on top?
MS. Yes he wants to get out when he's on top, which is smart, which is good because later on he can come back as an elder statesman and everybody will still listen to him as an elder statesman rather than to wait like Kaunda until you are voted out of office, to start fighting youngsters for position, which is not healthy. I think it's good for Mandela to retire while all of us still respect him.
POM. Now you were once perceived as a PAC-aligned union movement, not directly but more sympathetic to the PAC. Do you think the PAC for all intents and purposes has collapsed or that it still has a vital role to play or that it simply lacks the resources, the leadership, the organisation, the policies, division to make itself any kind of a viable alternative opposition or voice to the government in the next ten to fifteen years?
MS. I think if you read the media this past weekend about the conference of PAC you will realise the state of affairs PAC is in. They need to begin to reorganise. Where they should begin I don't know but if I was to advise them I would say start at the leadership. The leadership does not seem to have a vision. They have to reorganise and once they have organised then they have got to find an independent path from the ANC. For example, there was a press conference yesterday, I saw it on television, the PAC says they are going to participate in the Truth Commission, "We will participate", at the same time, "We are against the Truth Commission". When you make those contradictions nobody takes you seriously. You either support this process or you're out of the process and you bring in an alternative. They haven't reached that level. On the one hand you are part of the process and on the other hand you are not part of the process. Now the question is, they are against it, what are they going to do? What alternative do they have? They didn't propose an alternative so maybe in September when they have their conference new leaders will come with a different vision and then the resources will come. They are not organised as it is now. Who puts resources there?
POM. But does NACTU see itself now in terms of political alignments as being strictly neutral, that you are aligned with your membership and it's your membership that dictates your politics?
MS. We have never hidden the fact that amongst our members we've got those who are PAC, we have got areas where you've got people who are ANC, we have got members in Natal who are IFP and our constitution is very clear. If I take a position whether in ANC or in PAC I must resign from the federation. The constitution is very clear. And when we meet here, as you can see, we meet here as central committee of this organisation, we don't have to bring in PAC or ANC or whoever. At our annual conference, the last congress we had, we invited no-one from any political party because that is the workers' conference and we don't need politicians to come there. The workers must come and decide and take the decisions. We don't have to invite PAC, we don't have to invite anyone. We didn't invite anyone. We invited trade unions all over the world, we invited COSATU to come there, but we didn't invite ANC, PAC or whoever because that's not the organisation.
POM. Do you think COSATU is getting caught in a bind? You mentioned it earlier, on the one hand being part of the government and on the other hand trying to represent the interests of workers and very often the two clash and they are caught between trying to be supportive of the government and trying to be supportive of their membership and you can't be the two things at the one time, you've got to pick one or the other? And that they're not very clear as to what their direction is, whether their primary function should be to be supportive of the ANC or whether their primary function should be to be supportive of their federation and their membership?
MS. I think the leadership in COSATU has a problem and the problem is with their followers, the affiliates in COSATU. If you take, for example, unions in the public sector there is no way those unions in the public sector will compromise with the government programme of privatisation. Now at the leadership of COSATU the leaders might see reason to compromise but those people, the affiliates who are faced with members who are going to lose their jobs will not compromise. So the leadership there is having a serious problem. Whose loyalty are they going to serve? And that is a hard choice they must make.
POM. Now in most countries, that includes the United States, Britain, European countries, one of the phenomena of the last 15 years has been a decline in union membership and the figures I looked at here show that over the last year that there has been a decline of something like 15% in union membership. One, is this becoming a problem and, two, if it's happening like it's happening in the rest of the world, why is it happening and what are the implications for the labour movement here?
MS. Firstly it's happening because people are losing their jobs, the economy is not expanding, the economy is shrinking and therefore we are losing members. Secondly, the implication for that is that at the end of the day the trade union movement works with numbers. You don't have numbers, you don't have influence. Now what it will eventually mean is that for us as a labour movement we will lose influence not only with this government, even the next government that is coming. We will find it very difficult to influence that government because we don't have numbers because political parties look at the number of people who voted them into office and compare them with the numbers of people you are representing as a labour movement and usually in any other society those who are represented by unions are less than those who voted for the political parties. So the less numbers we have the less influence we will have. That's going to create a problem and it's not good for democracy because that leads to dictatorship.
POM. Has your federation discussed the problem of declining membership? Has COSATU discussed it? Have you discussed it jointly? Have you discussed what measures you can take to stabilise the situation?
MS. We haven't discussed it with COSATU. Obviously inside the federation we have talked about it. We have tried to put in measures to try to curb it but it's very difficult. In the metal industry for example we have lost a lot of members there. In the construction industry we have lost a lot of members there.
POM. You've lost them because of retrenchments?
MS. Because of retrenchment and the shut-downs. You see the problem in this country is that our economy is linked with the mines. The metal industry is serving the mines. The construction industry is serving the mines. So once you have a decline in the mines the whole economy crumbles and that is why we have started a union in agriculture. We are trying to re-place those members with the unions in agriculture because there are millions of people working in agriculture so that if we can get a substantial number of workers into the unions in agriculture just to bring the balance, but it is a problem. It's a serious problem.
POM. I want to go back to one of the questions Patricia and I have been asking and not getting a very good answer to, and that is that you have a situation now where the economy is growing at around 3%, 3.5% a year but no jobs are being created. You pick up Business Day every day and you see company after company reporting revenues are doubling, profits are tripling. What's happening to the money?
MS. The money is locked at the Stock Exchange. The profits are as a result of the financial markets and there is a lot of money that came into the country as a result of investment but that money went to the Stock Exchange.
POM. So it wasn't direct job-producing investment?
MS. It was not job-producing, so the profits are profits. If you look at those companies those are mostly listed companies because that's where they make their money. So the money is not made out of manufacturing and the little money that you will get out of the Stock Exchange, as you can see in Johannesburg or outside, is to demolish a building, put up a new office block, get a few people there. But those profits are profits as a result of money that has been made at the Stock Exchange.
POM. Now why are there so many - if one looks around Johannesburg and goes out particularly out into the suburbs, into places like Rosebank or Sandton and you see these huge office buildings going up, these huge shopping malls going up, these tens of hotels going up, why are they being built and for whom are they being built? One thing one notices is all the white people who are in them. There are no black people in any of these malls or, I don't know about the office buildings, but certainly not in the malls in places like Sandton or Rosebank. Who has the disposable income to allow developers to say it's worth while investing another R100 million in building another shopping mall out in Rosebank?
MS. That is the money that I am saying, that's what I'm saying, the money that is at the Stock Exchange and that money at the Stock Exchange is the money that if it gets out it goes to build those things. Again, you have our pension funds that are controlled by these stockbrokers. If you take Rosebank there is a Hyatt Hotel that has been built there. It has been built by pension funds of South African workers. It's pension funds that has built that hotel because these guys as financial engineers they decide in the absence of workers where they are going to invest the money. Now that is why we are saying it will be better if the money is used to create jobs, to be invested in job creation programmes rather than these office blocks.
POM. Do you think that foreign investors who are interested in making direct foreign investment here still have doubts about whether this is a labour-friendly economy or whether it's still prone to strikes and mass mobilisations or whether there are problems on the horizon, ones that you've discussed, that should make them leery about directly investing?
MS. I don't think so. Let's take someone sitting in Paris or in London, there are unions there, very strong unions. Just towards the end of last year France experienced serious strikes, Germany will be the same. There is no European country you can talk about where there are no strong unions so the investors, what will be happening here will also be happening in their own countries and they know what to do if they want to avoid that kind of a situation. I don't think it's because of the unions because where they come from they come from highly industrialised, highly unionised, highly active unions in their countries. So it's not a problem. I don't think it's a problem. I think modern economy has everything to do with money making more than job creation, so investors are looking where they will make more money rather than create jobs. These guys don't come from the pulpit, they don't come from some church, they don't invest for philanthropism. They invest because they want to make money. If it's easier for them to make money at the Stock Exchange without any hassle they will put their money there. If the Stock Exchange starts not performing they won't bring their money to the Stock Exchange, they will take it somewhere. So the problem in modern economy is not about job creation it's about money making. Where will they make most of their money? And that's what dictates investment.
POM. So after two years of the government of national unity, when it comes to economic empowerment, the plight of the working classes, job creation, the raising of standards of living and the elimination of poverty, the breaking up of the conglomerates, introducing stronger domestic elements of competition into the economy, are you disappointed?
MS. I am not disappointed at this stage. However, I am looking at the situation in a realistic way. We are dealing with a situation of more than a century here. The Nationalist Party just came in 1948 but they inherited that system, so no government can eliminate these things in two years. I think it is a very short period of time to think that these things can happen. We need to look at the situation in medium and long term and my long term is to say look at the situation between ten and fifteen years and then we can have a proper evaluation. You can't expect these things to happen in two years. For example, Mandela gets into office; for all those things to happen they need money. Mandela does not have the money. The money is with the conglomerates. If he is going to say, "I'm going to pass laws to force you guys to do this, that and that other", then what happens? The money gets out of the country. There are so many means of getting the money out of the country. He doesn't have the money. So two years is a very short space of time to expect those things to have happened. I know they made promises. Either they made promises out of ignorance as politicians or they deliberately misled people, but two years is a very short space of time to think of anything.
POM. Are there grumblings on the ground?
MS. Of course people are grumbling. At my level I can understand, but a person who was told, "You vote for us we'll get you a job, we'll get you a house, we'll get your children to school", and two years down the line you still don't have a job, your kids are not at school, you are still living in a shack, of course you will not be patient.
POM. Do you think the government in that regard is keeping in adequate touch with the grassroots or that it's so easy if you're a minister to be flying from conference to conference and then you're in New York one day and you're talking to the IMF and you're in Paris the next day at a conference and you enter a different world where you lose time.
MS. The fact of the matter, let me just explain it, this arrangement means that those who are in government like ministers don't have constituencies because it was proportional, so there is no minister who has a direct constituency he must go and talk to. Therefore they don't have any touch and in most cases if a minister comes to address people, how many people will come? People will only come when Mandela is there so he is even overshadowing them, that if Mandela is not there few people will come. So they don't even have constituencies they can talk about because of the arrangement that was made. Now you can't even talk about losing touch, but did they ever have any touch in the first place? They didn't because people went there hanging on Mandela's jacket so they didn't go there on their own and talk to people and convince people. They went there, Mandela addresses a rally, people come. On their own they haven't. We are waiting for 1999, that's when you will begin now to see people building constituencies, going out there, making commitments, going to parliament, arguing and coming back to people. But now we don't have that system and therefore you can't hold them responsible. The only person you can hold responsible is Mandela but Mandela comes back and says, "It's not me alone, there's Nationalist Party, there's IFP, we are all in this", so that no-one can be held responsible here.
POM. A political question, were you surprised with the firing of Pallo Jordan?
MS. We were surprised. I was. I was not even in the country when I picked it up, I was surprised. I am still waiting to hear what was the reason why Pallo Jordan was dismissed. One of the reasons, it's just my personal opinion, I think he was not able to deal with the unions. He is a bureaucrat who once he has taken a decision has taken a decision. I think it's one reason, I don't say it's the reason why, but I have no regret for his removal.
POM. Pallo also doesn't have the most mellow personality.
MS. I have no regret that he has been removed. We think we needed someone there who has a feel, who understands to deal with labour movement. Pallo did not have that so if they have removed him it's better.
PAT. Just along those lines, Trevor Manuel and his move. It seems that he does not have much confidence in the business sector and at the same time a lot of things that you talk about that are problems with this economy, like of a regional trade policy, assuring foreign investors that privatisation is on the way, seem to be policies with which he had close identification. What's the trade union, the workers' confidence in Trevor Manuel as a Minister of Finance? Is he part of the problem or do you see potential for him to understand what you're dealing with?
MS. He was a part of the problem in Trade & Industry because what we talked about earlier on, on tariff reductions, he went to sign some tariff reductions particularly in the textile industry that cost us jobs. One of his problems is that he is being advised by Americans and some people from outside South Africa. I think that is weakness because he listens more to outsiders than us inside the country. The finance arrangement in this country is arranged differently. I think a Minister of Finance is controlled by the national bank, not the Reserve Bank. Rather than deal with the Minister of Finance rather deal with the Governor of the central bank because he can't do anything outside what the Governor of the central bank tells him. So he is a caretaker, any minister in terms of these arrangements. I think if you don't understand the system you look at the Minister of Finance. But I understand the system. The system works in this way that as the Governor of the central bank you can change any minister but the man who actually dictates policy is the Governor of the central bank. So that system isn't going to change, so he's going to listen to Dr Stals if he wants to keep his job.
PAT. And do you think Stals stays?
MS. Stals will stay. I think he is an effective person, he knows what he is doing and he has been doing this job for a long time and he knows and when you talk to him he tells you that, "Wherever I go all over the world I get criticised and that is part of the hazards of this job." Any national banker will tell you that. He's a firm person. What I like with him is that he's an arrogant fellow but he is very polite with it. He is an efficient person. He is quite efficient, very arrogant, but very polite but he stands his ground. We had him here, he came to talk to us, COSATU, ourselves and everybody, and he got away with it.
POM. Unlike Pallo who would be very arrogant and not very polite.
MS. Yes, Pallo would not handle it. But Stals knows how to handle his critics. He just lays his cards open and says, "This is my job, this is what the Act says and I am keeping strictly to the Act. I have a responsibility and this is my responsibility, and criticise me, damn me, but that's what I'm supposed to do."
PAT. Who then makes the decisions on exchange controls? Him or the government?
MS. He will make the recommendation.
PAT. He makes the recommendation.
MS. To the government, but that recommendation is ...
PAT. The whole question of a minimum wage was being voted at some time, the minimum wage in different sectors of the economy. Do you think that's still a viable proposition or that it's going to get lost in the host of other problems that are developing.
MS. It can't be lost. If you take, for example, in agriculture we need to have a minimum wage there because people will get paid whatever a farmer thinks and you will be shocked that in this country most exploiters of farm works are not even individual farmers, they are big conglomerates who are in agriculture in this country. Now we think they can afford, there is just no way there are not going to afford it, they can afford. We've got to set the standards, they have got to pay minimum wage because they own farms all over the country, so they have got to be made to pay because they can afford it. Of course we need to look at it sector by sector. For example, if you take the service industry, particularly the security industry, you've got to set minimum standards there. We can't allow what's happening there, long hours, people working for slave wages, we can't have that.
POM. When you talk of security industry, you're talking about the police?
MS. The private security industry. These guys who will be guarding, say, gates or buildings at night, whatever. The cleaning industry, for example, you've got people who clean the offices at night and all that. You look at the conditions and wages they are paying there. We have women working night shifts there, cleaning these offices, and you look at the conditions and you look at the wages they are earning, it's terrible. So we need to set up some standards and some minimum wages there.
POM. And do you think that will happen between now and 1999 or that's a post 1999 ...?
MS. Well we will keep on fighting now. If we get it before 1999 we will welcome it. We might not get it but it's something that we must keep on fighting until we get a sympathetic government that will listen.
POM. OK. As always, thank you very, very much.