COSATU demands: End PPPs, Ban ‘labour brokers’ (gangmasters) and expand state ownership


COSATU’s 1st Deputy President, Tyotyo James addressed South Africa’s Public Sector Summit on March 12 2010.

He said: ‘COSATU is pleased to have been invited to this important gathering, whose primary task is to discuss what we consider to be the heartbeat of our country’s democracy.

‘The Reconstruction and Development Programme (RDP) document said “The apartheid regime has been unrepresentative, undemocratic and highly oppressive . . . The legal and institutional framework we are inheriting is fragmented and inappropriate for reconstruction and development.

‘“It lacks capacity to deliver services, it is inefficient and out of touch with the needs of ordinary people. It lacks coordination and clear planning.”

‘For us as COSATU at the centre of this Public Service Summit is the question of the Transformation of the state.

‘The RDP, in setting out a vision for the transformation of the state argues that “democratisation requires modernising the structures and functioning of government in pursuit of the objectives of efficient, effective, responsive, transparent and accountable government. We must develop the capacity of government for strategic intervention in social and economic development.

‘“We must increase the capacity of the public sector to deliver improved and extended public services to all the people of South Africa.”

‘Perhaps before we proceed with the input it will be important to do a brief reflection on the background regarding the transformation of the state.

‘The reality is that when the call for the transformation of the state was made, that took place in an environment where the tide had turned against state intervention in the economy.

‘Market fundamentalism had gained confidence bolstered by the collapse of the Soviet bloc, pressure to roll back the welfare state and the crisis confronting many developing nation states.

‘The result was the notion of a mean and lean state or a slim state, which basically meant that the state’s role in the economy had to be rolled back. In order to trim down the state, a set of policy measures were prescribed including privatisation, shrinking the size of the public service and so on.

‘This meant that the debate about the transformation of the state in South Africa was polarised into two camps.

‘On one side were those who favoured a lean and mean state suggesting that the South African State should play a minimalist, purely enabling role, and that the size of the state must shrink.

‘The notion of a minimalist state was supported and promoted by the powerful alliance of transnational capital and international finance institutions such as World Bank and IMF.

‘Their shared outlook was that the free market knows best and the private sector does best, that the state’s main task in economic and social development is to minimise impediments and maximise inducements to private capital accumulation.

‘Privatisation, commercialisation and deregulation became the watchwords of those who were promoting this vision of the public sector reform in South Africa.

‘On the other side, was a second approach which favoured a more nuanced strategy, focused on addressing the inefficiencies of the apartheid state and building the state’s capacity to implement a programme of social transformation.

‘The implication of this approach was that the size of the state cannot be predetermined, but should be informed by the magnitude of the programme that the state has to implement. The RDP strategy, far from promoting a minimalist state, envisaged a developmental state which plays a significant role in the economy and society in general.

‘The RDP said that the ‘public sector must play a major enabling role, since it cannot be expected that the market will make such structural transformation on its own.

‘The RDP’s approach rests on the philosophy that advances a complementary role for an active state and a regulated market. This is in sharp contrast to the view that these are mutually exclusive spheres, as argued by those who favour a limited state role.

‘Often this view is couched in terms that equate efficiency with the market and inefficiency with the state. This regression to the 19th century views on the role of the state tended to be one marked by hostility to the state in so far as it goes beyond certain minimal functions. According to this outdated view the state should be just large enough to maintain public order, protect property rights and enforce contracts.

‘In our view as COSATU, the state should play a dynamic developmental role as a key economic agent. It is the biggest employer, consumer and investor. Through its fiscal and monetary policies, and the composition of its budget, it exerts a tremendous economic influence.

‘Its parastatals [state corporations] such as ESKOM, Transnet, TELKOM and the Post Office are massive engines in the economy. Through its education, trade and industrial policies it shapes the country’s industrial development. We hope that State owned enterprises have been invited to this Summit!

‘An active, interventionist state is necessary if we want to achieve our goal of economic development.

In other words we need to overcome poverty and redistributive power, wealth, income and economic opportunity from a small minority to the majority of citizens. A developmental state will marshal resources towards the building of an efficient, dynamic economy.

‘Experience elsewhere demonstrates the economic value of particular types of state intervention. Japan, Korea and Taiwan intervened strongly and systematically in markets with industrial, trade and financial sector policies to advance economic expansion, productivity and growth and exports performance. Even Singapore, Malaysia and Thailand and China today use active industrial policy measures by the state to influence the pattern and rate of economic activities. The reconstruction of post war Europe would not have been successful without an active state.

‘Markets have been inadequate in responding to the social needs of human beings – in setting decent wages and fair standards, in protecting the poor and the marginalised, in correcting imbalances of wealth and inequality. Unfettered free markets have led to the development of major inequalities and poverty in society and defeated the purpose of economic policy.

‘The world is still trying to recover from the damage of economic crisis and all the leading market countries have been calling for state intervention. Leave markets on their own and see the havoc in the world. Today the world is confronted with the crisis of global warming and at the centre of the causes of the problem is the logic of the market which is based on over accumulation and profit maximisation regardless of the consequences.

‘So as we meet here today the conditions are totally different in that those who were advocating for an overreliance on the market have a task to first explain to us what caused the economic crisis that made the USA and Europe to call for the state intervention to bail out capital. They must explain to us why is the USA today advocating for National Health Insurance?

‘As COSATU we therefore would like to speak from a high moral pedestal and say in this meeting we will argue for a developmental state and we will stand up and say that the delivery of basic services to citizens remains the responsibility of the state. This implies that service delivery institutions should be owned and operated by the state. Here we would oppose the use of outsourcing, the use of PPPs and the establishment of government agencies as providers and operators of service delivery.

We will argue here that public service as a workplace should ensure that there are sufficient state employees which are providers of service and refrain from using labour brokers as the providers of casualised labour. Instead of using Labour Brokers they should unashamedly stop using them and join our call to have these human traffickers banned!

We want to say upfront that we are concerned about the use of PPPs as service delivery vehicles.

‘In the PPP quarterly (February 2009) it was stated that 18 PPPs have been legislated, and 55 are still being negotiated. Of the 18 legislated 7 are located in the health sector. In the Budget speech it was mentioned that Chris Hani Baragwanath Hospital in Gauteng is a flagship PPP. Internationally, it has been recognised that the establishment of PPPs, does not improve service delivery and/or access to services, but the profit motive leads to increased costs, reduction of employment and the increased casualisation of labour, which impacts negatively on service delivery capacity and undermines universal access to basic services.

‘The Alliance Summit held May 2008, called for a “moratorium on privatisation and outsourcing and the review of current outsourced public sector utilities”. As COSATU, we therefore call on this Public Service Summit to declare a moratorium on establishing new PPPs and for the reversal of the already processed PPPs.

‘We hold the same views against Government Agencies. Our argument is that while these are not private companies but they are institutions set up as autonomous structures to provide services on behalf of the government.

‘There is no current legislation which enables any executive authority to create agencies, nor to declare a public service department into an agency. Therefore, the current establishment of agencies is unlawful. Despite this, many government agencies have been established and there are attempts to establish more agencies. An example is the Gauteng Shared Services Agency (GSSA), which has been put on hold due to our interventions. Others include the SA Social Security Agency (SASSA) and the Public Railway Agency of SA (PRASA).

‘If these are allowed Service delivery will continue to be undermined because these agencies “take on a life of their own”. They are accountability to no one and as a result co-ordination in government is undermined.

‘Secondly, the employment contracts are transferred from the public service to the individual agencies, in similar ways in which outsourcing and PPPs do.

‘For this reason as COSATU, we call for the moratorium on the establishment of new agencies and that employment contracts which have been transferred from the public service to these individual institutions, should be referred back to the public service.

‘We welcome the opportunity to participate in this important Summit and we would also like to state upfront that in our deliberations in this Summit we will present an argument to persuade the Summit on the following 12 areas of focus:

‘1. Move away from regulatory state towards more state intervention in the economy and ensure public service provision and access.

‘2. Implementing a moratorium on the establishment of government agencies and the review of existing agencies which are providing public services.

‘3. Implementing a moratorium on the usage of labour brokers by the public service, and the future process of banning labour brokers and to ensure that the inspectorate of Department of Labour is effective in monitoring the usage of labour brokers.

‘4. Fill existing vacancies, review existing list and develop a new developmental state perspective on employment to address access to quality public services.

‘5. Reverse processes of transferring employment contracts out of public service to FET colleges, agencies, outsourced entities.

‘6. Ensure that the agreed comprehensive review of all conditions of employment including the remuneration policy is implemented.

‘7. Introduce new measures to deal with corruption and fraud in the public service.

‘8. Implementing a moratorium on outsourcing, PPPs and the review of existing outsourced projects and PPPs, in line with the Polokwane Resolution and as part of the priorities of government in the manifesto.

‘9. Ensure the implementation of the 10-Point Plans for education and health and the NHI.

‘10. Address specific public service difficulties – education, health, criminal justice – looking at resources, infrastructure, employment.

‘11. Need to establish a partnership with public service unions to continue discussions and monitoring of implementation of agreements.

‘12. Need to look at convening a public Sector Summit, which would include other segments like SOEs, local government, etc.

‘We wish the Summit will not be one of those which ended up being talk shops!

‘May all the objectives of this Summit be realised!’