“Trade unions in South Africa play a significant role in the economy. Trade unions have been active in responding to the fiscal policies of government. Unions argue that their proposals for the budget will increase economic growth and support job creation. Criticism of trade union views on the budget has focused on the affordability of these proposals, and on their impacts on business growth. Will trade union alternatives on the budget support economic growth and economic inclusion?”
Trade unions played an important role in South Africa’s transition from apartheid in 1994 and continue to play a very public role in the South African economy (STEENKAMP, 2005). COSATU (Congress of South African Trade Unions) is the main trade union in South Africa that has actively commented (criticized and commended) on the national budget after its release (COSATU press statements, 2014). COSATU has affiliations with other unions in South Africa (NEHAWU, NUMSA, DENOSA) (COSATU, 2009) and collectively they have the bargaining power to influence government or corporates to give into their demands. This paper will examine key points in the statement on the national budget issued by COSATU and examine critically whether these suggestions made by the union would have the desired impacts on the South African economy should government decide to follow the proposed courses of action. The first point to be discussed in the fear that the South African economy is in austerity mode after a 2% year on year increase in national GDP (Trading Economics, 2013) and this increase is below real terms allowing for population growth (COSATU press statements, 2014). The second key point to be discussed is government expenditure, particularly the composition and expansion/contraction of government expenditure over the next three years. Taxes are the main source of government revenue (Engelbrecht, 2012) and COSATU feels that there are certain areas of improvement possible to collect more revenue from the economy and also at the same time promote equity through making the tax system more progressive (Black, 2012). Employment creation is a crucial part of poverty reduction (Hull, 2009) and COSATU argues that it the role of government under the Constitution of the Republic of South Africa is to provide of providing all its citizens with the means to live a life of dignity (COSATU press statements, 2014) and that government should not absolve itself from this responsibility through the private sector. The paper will conclude by suggesting alternative methods to promote economic growth and economic inclusion.
2.1 Austerity fears pertaining to growth of real GDP in South Africa
COSATU has expressed fears that the South African economy is in austerity mode after GDP( gross domestic product) figures were released showing that the South African economy had grown by 2% year on year, beating forecasts on 1.7% growth in GDP for 2013 (Trading Economics, 2013). COSATU’s main...