04 March 2010

Job creation before BBBEE - COSATU

Cosatu says job creation must come before empowerment

Linda Ensor, Business Day, Johannesburg, 4 March 2010

CAPE TOWN — Broad-based black economic empowerment (BBBEE) should be subordinated to the imperatives of a job-creating industrial policy, the Congress of South African Trade Unions (Cosatu) said yesterday.

To this end, the BBBEE laws should be amended to prevent “import fronting”, whereby black-owned companies won government tenders but simply imported their inputs to the detriment of local companies and jobs. Cosatu said the fact that much of the procurement for the government’s 2010 infrastructure development programme had been imported was “scandalous”.

Another proposal emerging from the labour movement’s submissions to Parliament’s trade and industry committee on the new industrial policy action plan was the National Union of Metalworkers of SA’s (Numsa’s) call for steel giant ArcelorMittal (previously state- owned Iscor) and petrochemical producer Sasol to be “re-nationalised” because of their important position in the value chain of production.

“The pricing system of ArcelorMittal undermines our industrialising agenda,” Numsa said.

Cosatu also suggested a tax on short-term capital flows to stabilise the exchange rate, higher taxes on luxury and nonessential imports and a restructuring of the tax system to promote investment in targeted sectors.

Cosatu second deputy president Zingiswa Losi and industrial policy co-ordinator Jonas Mosia said the federation was concerned about the abuse of BEE. “While in the past we saw massive outsourcing and privatisation with consequent job losses to promote narrow BEE, fronting is the new tendency emerging.”

Cosatu also called for the restructuring of development finance institutions “to ensure that they promote a developmental agenda rather than operating on the basis of risk assessment similar to private capitalist banks”. The Industrial Development Corporation Act should also be amended to ensure that its funding promoted labour- intensive sectors and decent work.

Both labour and Business Unity SA (Busa) stressed the importance of co-ordination between government departments and other stakeholders if the action plan was to succeed. The buy-in of state-owned enterprises would be critical.

While Cosatu highlighted the importance of changes in macroeconomic policies on inflation and the currency, Busa stressed that existing constraints on doing business had to be addressed if South African firms were to become competitive.