Macro-economic policy

Amilca phatlane

Macro-economic policy making during Covid-19 trend is a head-on attack on the “working poor”

In light of the current novel Corona Virus (Covid-19) pandemic, the proponents and captains of neoliberalism are still explicitly determined to ensure that our economy falls to pieces, while acting in pretence to encourage the development of integrated policy strategies towards the containment of the virus and minimising its potential long lasting, negative impact on economic growth.

The decision on the subsequent levels of locking down the country, from Level 5 to the current level (3) – although necessary, has contributed negatively to the already declining and contracting economy. Already in the beginning of 2020 – before the outbreak of Covid-19, in South Africa “GDP figures showed a contraction, following the 1.4% contraction in the fourth quarter of 2019, which also followed a contraction of 0.8% in the third quarter of last year”. This is according to Statistics South Africa’s Quarterly Labour Force Survey 2020.

While the above helps frame well the argument that the economy had already been experiencing a drastic decline, it is important to show that the developments leading to the current level of lockdown, and the reopening of the economy in full – as well as the implemented adjustment measures of operations in economic production for safety, there is evidence that the economy has been hard hit by the new way of doing things (e.g. working for less hours or working virtually or remotely – which is often referred to as the new normal, impact on productivity and therefore, economic growth). The National Treasury, through the Minister of Finance, during the budget adjustment speech clarified that “due to the COVID-19 pandemic, the South African economy is now expected to contract by 7.2 per cent in 2020 and inflation will likely register 3 per cent in 2020”.

From a leftist standpoint, the nationwide increase in job cuts/retrenchments in both the private and public sector is a result of the macro-economic policy frameworks implemented by the government, and this ill-considered pattern of policymaking continues to affect the working class negatively. As far as unemployment statistics are concerned, the value of labour power has been reduced by an organised capitalist class, whose interests are nothing else but capital accumulation and profit maximisation. The ever-changing working-class structure changes in response to an antagonistic subjugation and exploitation by the system of capitalist production on organised workers.  Under the headship of the incumbent Minister of Finance in the National Treasury, Tito Mboweni, the path, pattern and pace of implementing macro-economic policies, which is in favour of the dominantly western neoliberal agenda has now become more extended – through what he refers to as a coordinated fiscal andmonetary policy response – thus worsening the socio-economic challenges that South Africa finds itself in. Despite being in a crisis – such as the situation brought by this pandemic, this trajectory of the macro-economic outlook – although similar to, and continues the trend of the “1996 class project” of a wave of neoliberal policymaking – has now deepened and threatened the survival of the “working poor”. This does not suggest that those who came before Mboweni implemented effective policies – but merely points to the fact that at this rate, the injudicious implementation of retrenchments and reduction of public servants’ pay is a deplorable ignorance of the existing circumstances of the majority of the underpaid, exploited and overworked workers.

This oblivious act of not taking into account the already precarious position that is a reality for the majority of the working class must be noted as an attack on their own continued survival. To this end, the Congress of South African Trade Unions, has, in its recent response to the 2020/21 Budget Speech, noted with disappointment the failure by government to heed to its calls for a combined tax of the wealthy – as business continues to be on an adamant investment strike, sitting on billions of Rands, which could be used for job creation and thus, reduce unemployment.  Seeing that as a country we have now reached a socio-economic cul de sac, I completely agree with the CHI Director, Dr Sithembiso Bhengu in his piece published in Umsebenzi Online 2020 that “policy makers should consider a guaranteed minimum income not as a polemic but a necessary measure to cushion scores of working-class households affected by the crisis”. The discontent felt across the country regarding job losses (translating into loss of household income) is a clear indication that many among the population are now seeing the economic impact caused by Covid-19.

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