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Ramaphosa’s commitment to corporatist consultation sounds very democratic. But it is a mistake. For almost ten years now the World Bank, IMF, OECD and the ratings agencies have all said that South Africa needs serious structural reform. It must radically reform its education system — the weakest in all Africa. It must liberalise its labour market, which currently works only to the advantage of a tiny labour aristocracy; it must slash its public service both by personnel and wage cuts and it must clean up its SOEs, which have all been bankrupted by their venal and incompetent management. The problem is that in each case this would involve confrontations with the trade unions which are a key part of the ANC’s alliance, so the government has always backed away and instead promised to bring down the budget deficit.

However, the failure to enact structural reform has undermined all efforts at fiscal consolidation. The public service unions (the main component of Cosatu) continually insist on and get wage settlements way beyond inflation. In their last three-year deal, concluded when the economy was actually shrinking, they got 26 per cent plus an increase in benefits worth another 3 per cent. The shortage of well-qualified personnel — due to the weak education system — pushes up salaries for the elite. And the SOEs need continual large bail-outs to save them from bankruptcy. There is simply no hope of Ramaphosa getting out of this mess if every policy has to be carefully brokered between government, business and the trade unions.

Take the SOEs. The state arms-manufacturer, Denel, and the South African Broadcasting Corporation both ran out of money to pay salaries a few months ago and only desperate temporary expedients are keeping them from closing. South African Airways has been bankrupt for many years now and exists only on continual state bail-outs. But by far the most important, Eskom — the electricity company — now owes more than $35 billion, has seen its staff double in the past five years even as its output fell, pays the highest average salaries in the country and has run out of money to pay salaries.

The government’s answer was to illegally raid the civil service pension fund to keep things going and to ask the local banks to lend Eskom $1.72bn. to tide it over for a few months. All foreign banks have backed out, the local banks are “considering” and even so Eskom’s bankruptcy will be only months away. This was, under apartheid, the world’s eighth biggest utility, legendarily profitable and producing the cheapest electricity in the world. Yet the government can’t afford Eskom to go bankrupt because all its debts are government-guaranteed and because cross-default clauses mean that any SOE that goes bankrupt automatically results in a calling in of loans to all the rest.

It is obvious that any solution to the Eskom mess has to include large staff redundancies, a pay freeze, and the large-scale sale of assets — and something similar applies to all the other SOEs. There is no hope of getting such solutions agreed by Cosatu or the Communists. The same is true of the crises in education, the rigidity of the labour market, and public service pay. There is simply no road to structural reform through consensus-seeking corporatism. Yet to agree to structural reform is to admit that the whole trajectory of ANC government since 1994 has been wrong — and it also means a fight to the death with the South African Comunist Party, the unions and the ANC Left.
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Anonymous
July 1st, 2018
12:07 PM
The SACP must be over the moon. Heroic effort brings great reward. Tough on the ordinary folk. 'Twas ever thus.

Barry
May 3rd, 2018
7:05 AM
I have never read a more accurate analysis of South Africa, and indeed, Africa as a whole. If a South African leader who can implement the structural changes required is not elected within the next five years, SA will be doomed to the same future as most other African countries, especially Zimbabwe. What a pity this will be.

Michael Coulter
April 19th, 2018
9:04 PM
Most insightful. Thanks for writing this.

Janeen
April 19th, 2018
8:04 AM
In response to "Anonymous" 16 April 9.04 "Apartheid regime caused a much greater genocide. Its rule resulted in millions of black South Africans, mainly infants and children, dying of starvation because they were deprived of food" I would dearly like to know where and when these death occurred

Keith Phillips
April 19th, 2018
3:04 AM
I sadden at this having experienced the Zimbabwean collapse. I fear that the starvation that is coming to SA will eclipse anything that has happened in the past as the outflow of capital and capability in the sector collapses food production. Forget the past. Rescue the future.

Rob Bass
April 18th, 2018
5:04 AM
RW Johnson has summarised the South African situation perfectly. It's impossible for me to challenge any one of his statements. Life for all SA inhabitants, except the black elite, will become more difficult in future. Dependent upon one's age & energy level, it is either a country with unbounded opportunity or one from which those capable should emigrate sooner rather than later.

Anonymous
April 17th, 2018
4:04 PM
Very balanced but not touching on Malena and his extremists. On land expropriation : This will certainly lead to famine as it has done in the rest of Africa. When you combine that with the well meaning Australians that want to speed up visas for white South African farmers, it certainly will happen. HOWEVER, the well meaning Australians( I love them) should keep in mind that this will just antagonize the SA Government and they now “have to be right” and stick to their policies just as the Apartheid regime did when sanctions were imposed. Angry people do not make sane decisions. Angry people break and destroy without pain initially to themselves. Have you ever hurt yourself in a moment of anger?....Did you feel it? Afterwards, possibly when you saw the blood! What we need is diplomacy and communication, showing respect and gradually educating so that we can arrive at a common, sane, reality. Don’t vent your anger and antagonize. It serves no purpose. And. Also, don’t antagonize inderctly by offering help via the media. Wage a private war in private and keep the sensationalist media out of it, please! P.B.

Anonymous
April 16th, 2018
9:04 PM
While Thabo Mbeki deprived black South Africans of retroviral drugs the Apartheid regime caused a much greater genocide. Its rule resulted in millions of black South Africans, mainly infants and children, dying of starvation because they were deprived of food.

Anonymous
April 13th, 2018
3:04 PM
There is much truth in this piece but it gives white South Africans a free pass.They have white Messiah Syndrome deeply embedded—most senior positions in companies are held by whites not because they are more competent but because most whites have refused to change and embrace meritocracy. The decisions are made in secret white laager committees—so nothing has changed from Johan Anthoniszoon "Jan" van Riebeeck’s days.

Barry
April 9th, 2018
5:04 AM
This article did not cover the other aspects in all this. Julius Malema...he is the greatest danger to peace.

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