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 It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
14 Oct 1996: Motlanthe, Kgalema
POM. Let me begin first with a broad question and it's a quote from Dr van Zyl Slabbert and he says, "The reason the government appears to be paralysed is not because nothing is happening but because too much is happening at the same time. A range of goals is being pursued with competing, sometimes contradictory results, and the government has neither the experience or the potential will to establish priorities." Do you think that's a fair assessment of the current situation?
KM. No, I think it is partly correct but partly incorrect in the sense that the present government inherited a state and government machinery which was put in place in order to secure privilege for a minority section of the South African population to the exclusion of the majority of people and tended as a result of that to have a very bloated firstly law enforcement unit structure and also in pursuance of the misguided apartheid approach of trying to balkanise South Africa and create pseudo states it also meant that the bureaucracy that depended on state funds were also multiplied and all that mess, whether you're looking at the education departments or you're looking at transport systems or you're looking at law enforcement units in terms of the police and so on, had to be replicated in all the self-governing and so-called independent homelands and in South Africa, the central government itself. Now the present government has inherited that bloated public sector as it were and one of its major problems, I'm using this as an example of what appears to be contradictory in what they are trying to do, one of its major problems is that given the high figures of unemployed, now how does the present government tackle the issue of right-sizing the public sector for instance, or the bureaucracies that they've inherited because the correct thing to do would have been to cut back on jobs but how would they do that given this present climate? And that appears to be contradictory, that appears to suggest that they don't have the will whereas in my view they have to deal with this very sensitively. On the one hand they need to get the economy on the upswing and ensure that new jobs are created so that when they right-size the government bureaucracies they shouldn't then be seen to be increasing the army of unemployed. I think they are proceeding very cautiously and maybe Van Zyl Slabbert is a bit harsh in suggesting that they simply lack the will to prioritise.
POM. The classical Keynesian remedy for unemployment would be the government as the employer of last resort and what the government would be doing would be engaging in capital works programmes and the like to employ people yet that's not possible at the present time given the size of the budget deficit and the commitment of the government to reduce that deficit. What kind of a quandary does government find itself in in trying to achieve different objectives, that is on the one hand to alleviate unemployment, as you said, on the other hand trying to right-size the size of the public sector which might imply laying off people but how can you lay off people in a time of very high unemployment? Third, in trying to cut the budget deficit itself in order to stimulate more funds for investment, how does it snake its way through what appear to be sometimes contradictory objectives?
KM. Firstly the problems that the government inherited were not only confined or restricted to a bloated bureaucracy but also a number of things happened just on the eve of elections. Around 1992/93 all of a sudden there were promotions in the public sector where corporals were made generals and with new agreements reached in terms of their retirement benefits which retirement benefits agreement that was reached with the old government would provide for an automatic annual increase in terms of government's contribution. And it is things like those that contribute a lot towards the present government debt because the public sector absorbs a lot of government revenue. The government is therefore hard pressed just to maintain those kinds of retirement benefits. In my view, because those were political promotions really by the previous regime, one of the things that the present government should do is to do an audit and actually check whether those promotions were valid or not and whether those agreements were valid or not, or were simply meant to be a debt trap for the new government, and undo that because those were political decisions and therefore the solution in correcting them lies in another political decision. I think this government should actually be doing that.
. One of the problems is precisely because the public sector, to give you an example, the Department of Inland Revenue does not have people with the right kinds of qualifications. There is no single Chartered Accountant who can work for them because the salaries there are very low. Now as a result of that the present government relies on consultants. It pays a fortune towards consultants. Now it isn't even in a position to collect the right kind of revenue. They don't have the capacity and skills to look at how these major corporations and important people are able to evade taxes and they could only do that if that department was staffed with properly skilled people and I think the government is losing quite a lot of money firstly because of the political promotions that happened just on the eve of the elections on the one hand, on the other hand also where it's got to spend more money in spite of having this bloated bureaucracy. That bloated bureaucracy is incapable of doing the kinds of things that this government needs to do and therefore it has to pay consultants. In some cases those consultants are really people who themselves were bureaucrats in the old government departments and were promoted and then they took the golden handshakes and then they offered their services again as consultants.
POM. It's double-dipping.
KM. Yes. And I think that the government ought to look at the skills and needs very, very carefully and very seriously and develop an approach in terms of affirmative action because one of the crimes of the apartheid education consisted really in the fact that for the majority of people the education system denied them natural sciences. So you have people with matric qualifications all over the show, some with degrees, without mathematics, and if affirmative action was to mean that a module for mathematics was developed which could be completed in a year or two by many adults who already have matric qualifications, then in that way the number of people who could receive training as accountants and other skills like engineers and so on would increase and that would rub off as well, in terms of as an inspirational achievement of the present change, on the students because the current student body is in a situation where government, the Minister of Education is trying to offer more or less the same quality of education but it's going to take time because you are teaching staff to be properly skilled, to be able to pass on the skills to the pupils. And this is what I'm saying, that affirmative action, instead of affirmative action being restricted to promotion opportunities I think it would be even more meaningful if it were to be tackled in the area of education in the manner I have described here.
POM. Is affirmative action too top-down? That is, there has been for example in the civil service I think over 40% of all the positions of director or higher are now occupied by blacks and according to some information called McGregor's Information Services the number of blacks on the boards of directors of companies has trebled between 1994 and 1996. So on the one hand you have a developing black middle class but in a sense that's quite isolated from uplifting the masses of the people which requires an entirely different approach. Three questions. One, to uplift the masses of the people fundamental change is necessary, fundamental change to foreign investors, to the World Bank, to the IMF, to whites here who are in managerial classes or whatever, is threatening and conjures up all kinds of fears or whatever, so the government seems loath to move too quickly in that direction for fear of playing to these fears. On the other hand there is a time factor that at some point the people are going say where are these things? There's less housing, the backlogs are increasing not diminishing. On the other hand you need a climate for foreign investment and you need white skills and you have to keep those here, how do you balance those off? How much time does the government have to deliver? At the moment change appears to be incremental. Does it need to go at a faster pace, a more dynamic pace, a more transformational pace?
KM. For the majority of the disadvantaged communities, people who were involved in the struggle over the years were very patient in the struggle against apartheid and my own view and assessment is that there is no impatience on their part even now. What seems to be irking them is the absence of a clear programme of how these things are going to be, a targeted programme how these things are going to be addressed and also because of the absence of such a clear programme they have been relegated to a position of passivity where government must deliver to them whereas they come from a background where they themselves prosecuted the struggle against apartheid and they were mobilised around a very clear programme of how apartheid was to be defeated, whether you're looking at the international front in terms of isolating the apartheid regime or you're looking at the internal where (there were) legal organisations, or you're looking at the underground, or you're looking at the armed struggle front, where the masses were themselves involved.
. Now the entire South African economy was structured to cater for a minority. All the amenities and facilities that exist, the jobs at managerial and senior level were meant to cater for a small minority basically and would never - you cannot simply address the needs of the masses of people by pretending that you could simply open up and say, well all the opportunities are there for everybody. That wouldn't work because the reality is that the cake is just not big enough for everybody else and therefore the challenge is really to mobilise all the social forces towards the effort of increasing the cake and by so doing with a clear targeted programme where people would know that if we need better houses, because most of the housing problems now in the country are not so much a problem of people being homeless than people being jobless. The majority of people who live in informal settlements here are job seekers coming from really poverty stricken areas where job opportunities are less and fewer and they converge in an area like the PWV. This Gauteng province, for instance, is an area where people come to because they think that their chances of finding employment are better. So you then end up, because there is simply no provision because under the previous government the housing needs for whites were satisfied and they never really continued building rented houses, so we're in a situation where there aren't any rented houses available for ordinary people and whatever housing that is available is bonded housing. People need to have funds which could qualify them for loans from financial institutions and that's not how you're going to address the issue of housing.
. So what I'm really saying is a programme is required which could be used to mobilise communities themselves, to at least take care of the needs for labour because the quantity of things that need to be corrected in this country makes the situation here very similar to situations that one finds in war ravaged economies and that requires extraordinary effort. Reconstruction cannot just be the responsibility of government. It means it is the responsibility of ordinary people, ordinary working people. Even in the labour movement, our union is affiliated to COSATU, when we discuss some of the legislative changes that government is introducing like the employment standards for instance which calls for a 40-hour working week and so on, whereas that is absolutely a correct thing to do but in terms of the present phase of reconstruction, reconstruction means that people must work even more, harder. Even if it means that in accordance with the programme that I've said is missing where there was to be an agreement that for this decade or so we're not going to have a 40-hour working week, instead we need a 48-hour working week and the eight hours will go towards contributing towards a reconstruction fund and addressing all these immediate priorities. I think that would be a more realistic and practical approach to the problems that are confronting us.
POM. What is NUM's assessment of the government's macro-economic programme? Many people I've talked to have indicated that with its reliance on the private sector, as the agent of primary investment, it's emphasis on cutting the budget deficit, that again it is oriented towards pleasing an international community more than focusing on the particular needs of, I won't say focusing on the needs, more than saying we have to do it ourselves, trying all the time to please potential foreign investors is a waste of time, we've got to face the reality that only a limited amount of foreign investment is going to come in and they are trying to set policy goals to make it more attractive to foreign investments. It's not a good way to go about things. We should start saying, how do we generate funds from within? How do we start doing things ourselves? Where does NUM stand on just the thrust of the programme, it's emphasis and the fact that the government has said it's non-negotiable, this is it, no more consultation, no more anything, in fact that it was more or less presented to the various stake-holders rather being the result of consultation between various stake-holders?
KM. Our own view is that it is a wrong approach, it is wrong in the sense that it is more of an economist's solution to a problem that needs all of society to be taken on board. As I said, the problems that are facing this government are immense and complex and instead of government pretending that it alone has the resources and will and wisdom to deal with them, government should be accounting publicly that this is what we inherited, these are the problems and all of us together must put our shoulders to the wheel to address these problems. I am saying it is a wrong approach also in the sense that it comes up with percentages, for instance, that you need to reduce the debt, keep it within this limit and try and work towards an economic growth, annual economic growth of this percentage. Now I pose the question, what is magical about those percentages in the programme? What is magical about them? There's nothing magical about them except that that's what the IMF and World Bank prescribes and my own view is that these should have been informed because those percentages are not informed which seems to be straitjacketing the government's ability to address them. The macro-economic strategy must be informed by a clear analysis and understanding of the problems of South African society first and foremost. Therefore, what are those problems? Part of the problem is that the government is compelled to maintain institutions that may not be necessary, institutions that were put in place in defence of apartheid.
POM. For example?
KM. For example they have a number of departments in the police which are not necessary to the present day South Africa. They have things like Mossgas which the previous government had to pump billions into because of isolation and they needed to develop their own capacity for fuel in this country. It's therefore a white elephant where nobody is benefiting from it and lots of money is going into that. In other words what I'm saying is that all the assumptions which underpinned the previous government's thinking have got to be questioned. That's how I think the macroeconomic strategy ought to be developed. It must be informed by these realities where what are the expectations of, what are the skills, for instance, available to the country, what are the resources available to the country. There's huge and huge moneys in provident funds and the previous government, when there was need to develop infrastructure for the white communities and so on, they had prescribed funds and now that's all gone and I am saying even in that regard the present government ought to consider very seriously because those are local resources, that's money available here.
POM. Now what you say seems so obvious, that when your government comes in that the first thing it would do would be to examine all the assumptions underlying public expenditure, public priorities and to reprioritise and eliminate and rationalise and so the rest and it is doing restructuring and all of that, yet why hasn't, after all the analyses, all the plans, all the white papers, all the trees that have been knocked down and generating all these papers, why hasn't this happened?
KM. I think it's also a function of the manner in which the old problem was resolved through a process of negotiations and with more emphasis on reconciliation. It also meant that whereas change was absolutely necessary, it also meant that very little change was to be effected if reconciliation was to be achieved, if the white fears were to be allayed. And that's one of the problems because many, many people are beginning to say isn't this reconciliatory approach a bit too expensive because it simply postpones the problem because no change that is meaningful change can be without pain and therefore where change is going to happen, if it is to be managed, then the timing for it is now because unless it is managed we are going to slide down into situations of riots like you have in Zaire because we've got all these local government structures, they have got no revenue and once those local government structures collapse then the system collapses. And for the affluent communities they will then wall themselves in to create the Brazilian type of enclosed communities with their own little infrastructure of local government behind closed doors with security, the rest of the suffering masses are closed outside and they would afford that.
. I think it would be so easy for this country to slide into that kind of mess unless there is an overall understanding that the timing for change and a clear programme, as I said once there is a clear targeted programme I think people would be patient because they would know that they are working towards a particular goal and that could be achieved. But if change keeps on being postponed, I mean we had an anomaly in the education system where the previous government was spending seven times more on the education of a white child than on the education of a black child. Now the question is, how do you equalise that, how do you bring equity into that? The present government has tried to spread that and because the disparities are so huge instead of the new resources going towards uplifting the standard of the black child's education they actually go towards upgrading the physical structures of the schools and the salaries of the black teaching personnel and therefore it doesn't even dent the huge problem that exists. Then you still have private schools which still enjoy government subsidy and the entry fees are so high that no ordinary people could benefit from that. The point I'm making is that the privileged sector of South African society must understand that change is going to be painful and that there is going to be an influx into what previously was privileged enclaves and the sooner that gets done the better because unless that happens we will end up with change that's going to be revolutionary change.
POM. It's not going to be revolutionary change, it's going to be - it will be revolutionary change because the people at some point will say enough is enough, we are patient but there's a limit.
KM. You have a situation where people for decades struggled against the regime, the old discriminatory regime, and then this change happened in the manner in which it happened and there is patience and they are willing to lend support to the present government but those people are people who know no other method of attaining change except through struggle. And I'm saying that whereas for a few this period may represent a period where they want to get on with their own lives and so on, but it wouldn't be very difficult, if there is no clear programme, for the same masses to be mobilised anew. And this time round there will be revolutionary changes. The Zairian riots would be like a Sunday picnic compared to what will happen here.
POM. This in a way brings us to the nub of the problem. Has too much attention been paid to trying to alleviate what are called the fears of whites? At the same time they are grumbling more, they are complaining more and in terms of doctors and things they are emigrating more, so in those terms despite your best efforts to say we are reconciling, we're not threatening you, we're doing this, we're doing that, they are saying, well things are going the African way, things are getting worse. So why not cut the Gordian knot, say, just as you said, we've paid enough attention to you, we've babied you, you're still not satisfied. For example, one of the questions I ask a lot of white people that I interview, businessmen, leaders, whatever, is their analysis of the economy, where things are going and they will give this litany of things that are not going well. And then I'll ask them, "Are you better off than you were two years ago?" and invariably they will say, "Personally, yes I am." It's like, well what do you want? You feel better off, you are better off and yet you're complaining all the time that things are going wrong. Where comes the point when you say to them enough is enough and we have to take drastic steps? As you say the pain has to come, let's get it over with.
KM. As I said reconciliation was itself a priority, it was important and I think in that regard we can't fault government for having adopted that approach but that needed to be accompanied by a very clear programme as to how the quality of life for ordinary people who in the past were really done in, they were really given a raw deal, how their needs are going to be addressed. That programme should have been in place right from the outset so that the government of national unity should have been in no doubt as to what it's priorities were. An attempt was made through the Reconstruction & Development Programme but I don't know whether by accident or by design that programme was reduced, whereas government said it adopts its own programme, they committed the cardinal error of establishing a special ministry for it which then meant that all the other ministries could continue as of old and simply identify one or two projects as RDP projects. Then that meant that it was little corner projects instead of being an overall programme for all of government and therefore all of the ministries. So you still had ministries having their policies and broad approaches and then having little projects as the RDP which RDP was supposed to be the main programme for all of government. Well they have since dismantled that ministry and I am saying they made that discovery a bit too late, that in fact the existence of that ministry was a disadvantage actually, a disservice to the RDP and all those who put their faith in it as a programme.
. Now whether now that the Nationalist Party has pulled out of government at this point in time, whether the ANC now as the majority party in government would prioritise the RDP still remains to be seen because the feeling is that precisely because they come from a background where the mainstream of the economy, the captains of industry are people who have had long relations with the traditionally white political parties, the ANC seems to be at pains to try and develop a relationship with captains of industry now. There is no way in which they could come up with an independent macroeconomic strategy independent of the present business sector's thinking and I think they need to speed up, among other things, the training and facilitation of, and this is ironic in the sense that it's almost like an historical obligation, that they need to facilitate the creation of black capitalists who would participate in the mainstream of the economy so that they can then inspire ordinary people. Ordinary people must then believe that it is possible for blacks to make things happen and to run even successful major business enterprises because unless that happens it then means that this change, political change, would be confined to a change of national anthem which hasn't really amounted to much change, and also a flag and the faces of people in government. That would be the only changes that would have happened because all these problems can be addressed if there is also change on the economic front. There must be economic justice.
. Now whites will continue to be arrogant, they will continue to threaten that they will quit and do this and that as long as they control the purse strings of the economy. You need to dilute that, you need a different mix in the manner in which the economic cake is owned and controlled because once you have blacks in there then you will get whites who are in business who will regard themselves as true South Africans and whose loyalty would be South Africa first and foremost. For now whites who have no connection whatsoever with any part of the world, whose connections with other parts of the world are even less than those of some blacks, also feel still threatened, that we will quit, we will go away elsewhere and so on, whites with ordinary skills I mean, that in other countries would really not count for much. Here because there is this skewed skills profile here they are overvalued basically. Most of them add no value whatsoever. We deal with the mining industry and we see from time to time people holding very senior posts who have absolutely no clue and add no value whatsoever but because of the past history they are overvalued and that is why my view is that if the government can have an affirmative action programme in the area of natural sciences, mathematics, in no time we would have a bigger body of accountants, we would have a bigger body of engineers and that could actually mean that the present skills that are in short supply now and therefore artificially in great demand and as a result were priced out of this world, would be available for far less than what they get now. And to me the government, the ANC as a majority party now, needs to really go back to the drawing board and revisit the RDP and really transform it into a very clear targeted programme.
POM. So you don't see GEAR as a targeted programme that addresses the needs or the priorities that you're talking about?
KM. No, no, it isn't, it's not.
POM. What is it driven by?
KM. In my view GEAR was really aimed primarily at sending the message to foreign investors that South Africa was an attractive investment outlet for them. That's why I said it's development should have been preceded by very clear assessment and questioning of all the assumptions that lay behind the kind of state machinery that this government has inherited, and also the needs and the massive problems, whether you are looking at housing, education, transport, electrification, all those things, that needed to be addressed. If it was informed by that then it would have been easier to also mobilise ordinary people and local resources but it's not informed by any of those considerations, it didn't seem to be informed by any political assessment or analysis of the situation. It's more a product of economists I think, behind closed doors.
POM. Churning out economic models. Put the figures in, get a model out.
KM. Nobody can explain to us what is magical about the percentages that are targeted except that that's what the IMF and World Bank seem to recommend and also foreign investors seem to accept those figures as acceptable and correct. But whether those are really meaningful, because also the question of government expenditure, whether the government should really lay much stress on fiscal discipline in all situations and whether the percentage of the deficit cannot be increased as a way of creating a basis for growth in the future and why it must, because the government seems to be approaching it from a point of view that says we can fix these things first kick instead of being a process. That doesn't make sense to me.
POM. You touched on a couple of important things there and one is there has been a book come out in the United States by a famous black sociologist named Julius Wilson, I think he's at the University of Chicago. His book is called 'When Work Disappears: the Work of the New Urban Poor'. I have a copy of it with me, I'll send it on to you for a read because it's devastating in its analysis of what's happened in the United States with regard to poverty and race and part of what it says is that you had affirmative action, it has worked but it's worked kind of top down, and as it's worked and blacks have become empowered and part of the middle class they have moved out of poor areas and in fact made ghettos worse because whereas before they were the people with energy and enterprise, they used their energy and enterprise to get out, so what you've got left are the dregs, a permanent underclass and that you have this complete disparity between a black middle class that has become part of the elite. They are well off, they send their children to the right schools and they have become dissociated completely from people in the inner cities, they never go to the inner cities, they don't know what's going on there. Is there a danger of the same kind of thing happening here where you would have the empowerment of a new elite who live in the right places?
. I must tell you, for example, just anecdotally I had never been to Sandton City in my life and I said I just want to go out there and have a look at it, so a couple of weeks ago I went out there and in the course of walking through the mall in a space of half an hour I bumped into three government ministers. I said, "Hm, is this how a Saturday afternoon is spent?" Is there not that danger, and that government programmes for the permanently poor don't work, that there's no country in the world that you can point to where welfare programmes or the like have significantly moved large numbers of people out of poverty into either jobs or being able to take care of themselves?
KM. That danger always exists but as I said it's ironic that in this country where we need, I think, the creation of precisely not just the middle class but a class that would also be seen to be partaking the mainstream of the economy as owners and as controllers as well, it's almost an historical obligation because the obverse thereof would be for the status quo to remain as is and there is that kind of obligation. As you correctly point out as people move out, people who have ambition, people who aspire to a better quality of life, as they move out of the townships to the suburbs that has already happened. All the people who have been elected into government now don't reside in the townships, they all reside in the suburbs, they drive posh cars, they have cellular phones and so on because there are better amenities there and so on. That danger is always there. The point is also that in South Africa because we had a policy in the past where residential areas were zoned along racial lines, part of the tasks of this new phase is to integrate communities. How that integration is going to happen cannot really be defined in very fixed terms.
. In some cases, like we've seen, the first movements of those who are forward and moving out of the townships and moving into the more affluent communities. I think with time we've also seen a few whites who have no skills, who find themselves with less paying jobs because the rates in these affluent areas, in the former white areas are also increasing as a way of protection, that people who go there should really be of a particular bracket in terms of earnings and resources. So some whites find themselves unable to keep up with those standards and they are moving in the opposite direction because they find that life is much cheaper as they move in the direction of the townships. We have a few cases of whites who have actually gone into the informal sectors, no rates, don't pay rent and so on and for a certain period. No doubt they don't want to go there permanently I guess, they see it as a period of respite and at some point when they've recovered they can then move on to better areas.
. So the point I'm making is that there are going to be lots of realignments and I think it's early days. Townships will remain vibrant for a very, very long time, will remain with enterprising people for a very long time to come in this country because the other suburbs, just to get in there, firstly you need to qualify for a loan of no less than R180,000 up front, not the real up-market, just where you have a three-bedroomed house and so on. As you move up there are places where just the plot costs no less than R300,000 without any buildings on it. What that means is that very few people can afford to go into those areas, very, very few people are going to, I mean from the black communities here. So for that reason for a long time to come the townships would still be rich in terms of enterprising ideas and so on.
POM. So you don't have a long term fear of the barrier not being black and white but of haves and have-nots, that you will have a number of blacks who will have made it in the professional class and in fact you will have the employed and the unemployed?
KM. For now the employed and unemployed are all trapped in the townships and that's why I said the informal settlements that we find sprouting around the periphery of these towns consist of job seekers basically more than the homeless. These are people with homes elsewhere, either in rural areas or somewhere else but who have had to leave their families in search of employment opportunities. I must accept that the divide is definitely going to be a class divide, it's going to be a divide between the haves and the have-nots, it's going to be a divide between the employed and the unemployed. In this country among blacks because of the extended family relations and also we haven't actually reached the American levels of a working person being his brother's keeper, here it's not unusual for a single breadwinner to be feeding or sharing whatever little bread that is available with an extended family and also sharing the roof with an extended family. In fact nobody would sleep in the park if that person has relatives. A person who sleeps in the park among black communities does so out of choice or because he has no relatives. If a relative comes about and is totally destitute nine out of ten cases that person, even a distant relative, would be given a place to sleep here. So that's like a cultural thing.
POM. Very different from the west. Just a few more questions, and thank you for your time. One is, in this situation is the role of unions changing? Some people would say that the employed who belong to unions are part of the elite, I think COSATU has 1.6 million members and there are like 40 million economically active people in the country and that it's kind of an interest group insofar as it's looking after its members first and their concerns first, again before the larger picture of the teeming unemployed masses. Is there a new role for unions emerging? Must the unions redefine themselves in this era? Must they redefine their relationship to government? Must they redefine the nature of the tripartite alliance? Must they too do a number of things in this area that they haven't yet faced up to doing?
KM. Well the unions, in fact I would argue all formations and individuals have to reassess their own positions, have to re-evaluate in terms of transformation because in a period of transition transformation affects basically all living organisms. Any organism that resists transformation runs the risk of becoming a dinosaur and therefore an endangered species. Now I've alluded to the historical obligations of having to facilitate the emergence of black industrialists, black entrepreneurs and so on. Now what is my reading of the role of such a class once it matures? I think they would be even more vicious in terms of dealing with working people and what should we do as unions now if that is the correct understanding? My own view is that unions have got to partake as well in investments which would make them financially stable for a foreseeable time to come because if we don't we are going to be easy meat, unions would be the first to be attacked. As you've correctly indicated that already there is an attempt to characterise them as representing an elite because people don't take into account the fact that the working members of trade unions feed extended families in the absence of a viable social system in this country. There isn't any social security for the majority of the unemployed and they survive purely on the earnings of working brothers and sisters. My view is that therefore as unions we need to, like I said, government has to question all the assumptions underlying the previous government's creation of a state bureaucracy.
. Equally true is the fact that we also have to question the assumptions that made us belong to a tripartite alliance. We need to question our attitude and relationship to government now. We need to ask ourselves where does power reside? Does the power reside in the National Executive Committee of the ANC or in parliament and work out how we are going to influence those processes to the best interests of our members in the broader population and we can only do that if we ask ourselves those difficult questions. We need to ask ourselves the question about our attitude towards capital, development of capital, because you can't have development unless there is capital. Now we need to ask ourselves the question, what should be our attitude towards capital now? So these are very pertinent questions that we need to put to ourselves and therefore whatever answers that we come up with will then inform our approaches to how we reposition ourselves. One of the things that is very clear to me is that we need, as this process of privatisation, process of unbundling, where the companies that were hitherto owned by monopolies, as black groups come together to take over those companies, we need to as organised labour to be also staking our claim in that regard because whereas individual black business groups will become richer and richer and richer and there is no way in which they are going to have any social responsibility where that would be more than that of the existing white business companies but we by our very nature, because we're a collective, there's no way in which we can divide whatever we make amongst ourselves, where it's owned by the union as a body corporate and the beneficiaries would be members. When we invest and the returns come into a trust the trust will fund education, bursaries for members and their dependants, we will fund other social programmes, social upliftment programmes. So I think there is merit in the unions now taking stakes and in some cases even control.
. We have established as a union an investment company and the way we've gone about doing it is that from the union's reserves we established a trust, an investment trust, and that trust established an investment company and that investment company which is 100% owned by the trust once it's involved in a number of ventures and once the returns start flowing in the sole beneficiary is the trust and the trust must then fund upliftment programmes. Our first area of focus is really offering bursaries to members and their dependants. We have separated the investment company from the union. It operates like any other investment company and it gets no favour from the union.
POM. Just in terms of priority, do you think that the normal range of priorities, like unemployment or housing or housing and unemployment, do you think that perhaps education should be, looking to the long term, the most important priority? That unless you develop that the earning capacity of a labour force is really dependent upon the level of investment in that labour force and that the human capital is the most important form of capital?
KM. I think that's the most important investment that this society can ever make. There is no doubt about that, there's no question about that. That's why I even said that to me the most important element in affirmative action ought to be in the area of education, spreading and unlocking, because I think it would unleash immense social resources and that's what we need to achieve, what needs to be achieved otherwise we can never be able to correct these anomalies unless we have people resources with the right kinds of skills. Firstly we need as a matter of priority to upgrade the skills of the teaching fraternity and adults in general.
POM. Teachers who have poor results.
KM. Yes because otherwise ...
POM. I mean not poor, I mean poor quality teachers but give poor quality education. A couple of last questions. One, would you think that the level of race relations that's between the races is improving or that they are still at about the same level of polarisation? For example, in KwaZulu/Natal in the local elections this time it was noticeable that people voted very much, whoever they had crossed in the election of 1994, they had returned to very much racial voting patterns. Whites voted for the NP and the DP, a larger number of Indians for the Minority Front and Africans for African parties. In the Cape there is a racial element to the way in which people vote. Here in the cities, I remember when I came here first in the late 1980s or whatever or early 1990s, I would go into the townships all the time and see a good sprinkling of white people there. Now you go in you see nobody. It's like in a way that that degree of segregation has increased rather than diminished.
KM. Well I wouldn't say it has increased but the point is that you see the alignment is going to take a class form and to the extent that the people who would be accepted by whites as peers and friends have moved out of the township, they have moved into the suburbs. So whites would argue that, well, my friends are all next door and so on, where in fact if you are fortunate enough to come across a white person who supported apartheid you would count them on one hand. The majority of them today will tell you that they have always had black friends, they have never supported apartheid and so on, except the lunatics to the right, but the majority of them who regard themselves as enlightened will tell you that they have never ever supported apartheid so I always find it very, very interesting that there is such a tiny minority of whites that actually supported apartheid and practised apartheid here. But the point is that the voting would appear to take a racial form for as long as and it will be so for as long as there isn't a visible ownership and control by blacks in the mainstream of the economy. This colour notion that white means ownership, white means employer will remain and even in terms of class consciousness where the class consciousness among the working people will remain very low for as long as this relationship remains as is. But once you have blacks who own and control and exploit no less than their white counterparts there is going to be a realignment along class lines because we find that it's a necessary condition, if you like, because whereas in the past we operated side by side with unions that are white and in the mining industry, and in the past they wouldn't even talk to us, in the past they wouldn't even sit next to us, I mean in the same forum as we would do, we find today that there's lots of meeting points because you see what is happening is that whereas in the past the companies and management could afford their privileges to the exclusion of the bulk of the black workers, today that is untenable because it would be against the constitution of the country.
. So what the employers do, they look at these two problems and this you also find in educational institutions and so on, they look at these two problems and say, look can we sustain, maintain these levels of privilege for these white workers and then extend the same conditions to these huge numbers of black workers? And they say no, this would distort our cost structure, therefore what do we do? But because the gap between what was the conditions for black workers and the white workers is so huge they have difficulties in finding a middle point even. So what do they do? They depress the conditions of the white workers now, they whittle away whatever privileges that were there and then determine a ceiling far lower for the majority of black workers and movement towards that ceiling for these black workers represents a tremendous improvement from what they had in the past. Now that offers a class meeting point between the white workers and the black workers because the white workers now find all of a sudden that their privileges can actually and are actually being whittled away and they find that there is meeting point and a common cause between them and their black colleagues. So the point I am making is that that would only become clearer and much more bonded once this process of black capitalists coming into being really manifests itself. In a very ironic way ordinary black folk need those kinds of success stories as an inspiration, something they can point to and say, well we can make it as well.
POM. It's a conundrum or dichotomy. You're saying on the one hand we must build up black capital and once we've built it up we must know they're going to be as ruthless towards us as white capital has been and then we've got to fight them every bloody inch of the way.
POM. The very last question and it's one that puzzles me. It's with regard to the gold mining industry. A figure, and maybe my figure is wrong, but it was given to me and my mind boggled, it said that 70% of the gold of South Africa is exported to Italy and then that it comes back into the country in the form of finished products. My question is a very simple one, why isn't there a value added industry to gold in this country? Why isn't there an industry manufacturing all kinds of gold, necklaces and bracelets and products? Why are they being imported? Why are you exporting the stuff to Italy and then re-importing it and selling it in places like Rosebank and Sandton?
KM. It's not only gold it's diamonds as well. We export rock and then we buy finished products. There is no beneficiation of these minerals in South Africa.
KM. Firstly because these were in the early days exploited by people who regarded themselves and called themselves Europeans and they called the native people non-Europeans and therefore I think in the early days people still entertained dreams that they were here to make a fortune and they would go back to Europe at some point and so on, but then ultimately settled. There's a better word, a climate with more opportunities, but also that they could produce gold with cheap labour in abundance. Abundance and abundance of cheap labour here and there was really no need for them to beneficiate. They could export the rocks and there was a time when gold fetched US$800 per ounce.
POM. But could I as an individual go and buy gold and take it home and make necklaces and bracelets and set up in a flea market or something and sell my little gold trinkets or whatever, or is that forbidden by law?
KM. It's forbidden by law. It's the Reserve Bank that sells the gold. It's forbidden by law.
POM. So you can export gold but the only legal buyer of gold in the country is the Reserve Bank?
KM. The Reserve Bank. The industry sells to the Reserve Bank, or sells through the Reserve Bank. It sells to foreign markets through the Reserve Bank.
POM. But it can't sell to a domestic market?
KM. No. If you were to buy gold here you've got to buy it in the form of a finished product, Kruger coin or something like that, and you are free to melt it and do whatever you want to do with it, but that's how you can buy it.
POM. Are there restrictions in the way of your union, for example, saying listen you've got to open up, you've got to create a value added market here for mining?
KM. We have been making that demand for a long time, that there is a need for beneficiation in this country. That way we would be able to create not only value added processes but create downstream industries with employment opportunities there and yet that hasn't found any favour or favourable reception anywhere because now the in thing is that we need to be internationally competitive, we must go into the international market and do this and that. And that's what informs the government macroeconomic strategy as well. There is no clear programme towards creating value added processes inside South Africa itself. Not even with diamonds. Diamonds get produced here and they are sent to the central selling organisation in London and they are the people who sell. Through our investment company we have a small diamond cutting and polishing operation and when you apply for a sighting, license to sight, to be able to go and have sight of the diamonds when you buy, they sell to you. I mean it's De Beers that is in control there. We discovered that unless there is a change in the mineral policy of the country there's not much you can do really. You have to live and let live. You have to join the boys' club and be a fellow traveller in that regard as I understand it.
POM. But that's my ambition to see a value added industry in gold products in this country.
KM. Well the Italians make more money out of South African gold than we do.
POM. I know it's crazy.
KM. That's a fact of life, that's true. But I think it has a lot to do with the fact that in the early days there was high quality ore, I mean real rich ore and the mining was reckless. That's why even now these mounds here are being recycled because they still contain some gold that is profitable to process and people don't simply care. If half the revenue that flew out of the sales of gold was used to develop a manufacturing sector in this country and to generally develop the infrastructure this country would be a well-developed country. I think it would be very close to being a first world country but all that revenue went into really useless projects here.
POM. You'd better call Cyril. Thanks ever so much.