Cash hoarding by companies is a threat – COSATU


The contemptuous cash hoarding by South African companies poses a threat to labour peace and social stability.

The recent revelations by the DTI funded research ,conducted by the University Of Johannesburg’s Centre For Competition Regulation and Economic Development,  that cash reserves in the JSE’s largest 50 companies had increased from R242bn to R1.4-trillion between 2005 and 2016 are disquieting to say the least. This contemptuous cash hoarding is happening at a time when the economy is stagnating and is also hemorrhaging thousands of jobs every day.

It is not clear why SA companies are reinvesting their profits in an economy that has served the so well and expand their operations and hire more people. This clearly shows that the governments ‘trickle down economic policies such as GEAR/NDP have failed the majority as they have guaranteed profits for a few individuals and poverty for the rest of us. Trickle down economy seek to promote the making of high profits by private companies with a view that the shareholders in these companies will re-invest their profits.  However, private shareholders have now become a threat to industrial stability, labour peace in the workplace because they are choosing to retrench employees in order to increase and maximise their profits.

Currently, over half of the workforce earns less R3700 per month and one third of population is reliant on social grants.  The reasons for this dependency are precisely because the profits made by private companies have not trickled down to the majority through high wages and decent jobs. Despite overwhelming evidence of failed free market policies the government led by the Treasury has refused to regulate private capital and to change the economic policies.
The unemployment rate is currently 38% and for blacks 40%. The failed trickle down economic have failed to protect more than 90% of population of which 80% is black from the greedy private shareholders and monopolies and oligopolies.

COSATU believes that many of these companies are not investing because they want the right to dictate economic policies such as the radical socio-economic transformation. They are also using this investment strike to exert political pressure to the ANC and their errant president, who has created more instability and uncertainty with his decisions.  An increase in retrenchments two years before the elections is likely to give the DA more campaign ammunition to raise false hopes that after 2019 there will be more jobs.

COSATU urges government to respond by taking strong measures to intervene in the economy and crowd out the private in the major sectors in the economy. Unfortunately, the recent 14 point plan by the Treasury seeks to further remove the government from the economy and to increase the power of the private sector to exploit the workers and the poor. That is why there is need for a new economic and jobs summit.

We call on  government to restrict the profits of private companies by price ceilings, increased taxation on company net profits and higher dividend taxes, and to use this money not for individual aggrandisement or corruption but to use the money to create factories and decent jobs.  We need new economic policies that put the needs of the majority at the centre of all policies; not only the needs of foreign investors who are only interested in profits.  

Government should stop propping up capitalism because its recent attempt to respond to economic crisis bolsters the ideological existence of capitalism whilst at the same shifting the burden of the economic crisis on to the working class.

The inane argument about the high cost of labour is nothing but an attempt to liquidate unions. Inequality, unemployment and poverty have not been invented and are not being reproduced by workers and trade unions. Inequality, unemployment and poverty are the necessary conditions and products for the existence of the capitalist system of exploitation and are used by the capitalist class to lower wages and cut back on workers’ hard-won gains.
We reject the call for workers to moderate their wage demands and the efforts by the National Treasury to reduce the protections and hard-won gains of the workers. The fortunes of the rich and the super-rich have soared in this country, while social inequality has reached unprecedented levels as a result of the vast appropriation of wealth from the bottom to the top. Far from resolving the contradictions that have manifested themselves, South African capitalism has exacerbated the problem of poverty and inequality.

More and more people in this country find themselves trapped in sprawling slums and haunted by the spectre of avoidable diseases and death.

Whilst we appreciate the range of interventions undertaken in terms of the NGP and IPAP by the ANC government; not enough is being done to address the crises of mass unemployment, poverty and increasing inequality. Our call that was made in 2013, supported by the SACP, for the “redrafting and fundamental overhaul of the core economic chapter of the NDP continues to be ignored.

Government also does not seem to have a plan to address the ongoing retrenchments that are motivated by a manufactured crisis of profits and greed. These CEO’s are paid handsomely for disposing off of the workers. It is lucrative business to retrench workers in South Africa.
Anglo American CEO Mark Cutifani retrenched 85 000 thousand workers out of his global workforce and was he was rewarded with a salary of R44, 53 million.

Steinhoff CEO Mark Jooste oversaw the retrenchments of 4 110 workers and was rewarded with a package of R62, 86 million ; while SAB Miler CEO Alan Clark saw the retrenchment of over 1000 workers and was paid R47, 6 million.

While it is indisputable that South African President Jacob Zuma himself has become a liability and symbol of a lack of confidence but we believe that he is being used by some of these companies as a scapegoat. In their quest to find a devil for their anti-transformation crusade , they have unfortunately found a willing participant.