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Inside Labour: For the poor, policy offers little relief

Oct 30 2016 10:30
Terry Bell

With the usual flurry of comment and analysis, another mini budget has come and gone. But for the majority of workers, whether employed or unemployed, such policy machinations are of little interest because they are too busy trying to survive in an increasingly harsh environment.

A tightening of fiscal policy, a tweak to the tax rates, an adjustment to elements of state spending or a revision to one or other revenue stream may gain the approval of rating agencies, international lenders and business. And such moves could lessen the prospect of the country’s credit rating being downgraded to “junk”.

However, for the majority of South Africans, junk status already applies: they live it. In fact, where credit is available to the working poor, it is usually at rates that would make the most hardened seller of junk bonds blanch. Even under existing small loan regulations, those who qualify and know how to access such funds face rates that start at 60% a year before admin fees and other legal “add-ons”.

But many of the people in work are also part of the more than 10 million South Africans who have “impaired credit records”. They cannot access any additional funding other than through the mashonisas – the loan sharks – whose methods of collection and rates of interest can generally be described as brutal.

Even workers already earning at the level deemed by Cosatu to be a suitable minimum wage – R4 500 a month – and who are not in debt, face a dire time ahead.

Inflation for the poor – always much higher than the official cost of living index – has risen steadily and looks likely to rise still further.

In the year to the end of September, for example, that staple of poor households, mealie meal, rose in price by more than 32% – a 25kg bag now costs R170.80 more than it did a year ago.

According to the food monitor maintained by the Pietermaritzburg Agency for Community Social Action, five “priority foods” bought by poorer households rose in price by an average of 25% over that 12-month period.

However, three of these items, mealie meal, cooking oil and rice, were at least zero rated for VAT, the regressive taxation that the labour movement has long complained about.

But cake flour and sugar, which are also regarded by many poor households as a priority, also incur 14% VAT.

And when wage increases are in the single digits while the cost of living is consistently in double digits, it is understandable that there is a great deal of anger and bitterness among low-paid workers and the unemployed.

It also gives rise – in a grossly unequal society – to unionised workers demanding a fairer share of the wealth they generate.

Against this background, it seems essential that radical, transformative policies be put in place if the majority of South Africans are to have any hope of being freed from junk status. However, there appears to be little political will to break from the orthodox, sticking-plaster remedies of the past.

So, the struggle for survival will probably intensify. Hardly a recipe for economic or social stability.

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rating agencies  |  mtbps  |  tax  |  economy  |  labour  |  junk status  |  debt  |  trade unions

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