South African President Cyril Ramaphosa has announced plans to reduce his administration’s fiscal distress, with a decision to cut thousands of telecommunications jobs.
Indirectly employed by the government through one of its many state-owned enterprises (SOEs), cutting 3,000 jobs represents the beginning of promised steps to return South Africa to economic sustainability.
Two decades ago, Telkom, South Africa’s state-owned giant, was the largest by infrastructure development and most sophisticated on the continent.
Like power-producer Eskom and many others, Telkom is a shadow of its former self and struggling to make ends meet.
The cause has been a combination of prescribed “black economic empowerment” through the deliberate preference for formerly disadvantaged people and of the ruling African National Congress’ (ANC) leftist policy of cadre deployment.
Often these two processes have overlapped but they have meant that highly skilled people have had to give way to replacements.
While a fair number of such appointments have worked out, many have not.
This has affected national, provincial and local governance — and is one of the reasons there has been mounting unhappiness in communities lacking basic services, leading to protests.
In the vital SOEs, which dominate the economy and which are effective monopolies, the governance failure and accompanying corruption have run rampant and caused collapses or near-collapses requiring state bailouts.
But there is no more money for such bailouts and South Africa cannot borrow any more without the entire sovereign debt of the country falling into ‘junk’ status.
In an address to the ANC rank and file last weekend, Ramaphosa made it plain that in providing service directly or indirectly through employment in SOEs, accountability would be the watch word.
According to international ratings like the World Bank and IMF, the government and its SOEs are around 10-15 per cent overstaffed.
However, Ramaphosa’s union allies hate the idea of retrenchment.
Combined with residual elements involved in former president Jacob Zuma’s “state capture” project of looting, the unions say they will not let Ramaphosa do what he must.
They are trying, through the Congress of South African Trade Unions, to halt any retrenchments. They also want Eskom removed from SOE minister Pravin Gordhan’s control.
However, the unions have the recent experience of South African Airways (SAA) to consider.
Strike action by ANC-aligned unions grounded planes for days — long enough to win the pay increase the unions were demanding, but also to throw the broke airline into a terminal crisis.
SAA is in business rescue at Ramaphosa’s insistence. With a deadline this weekend for it to find $139 million to remain operational, the airline may be liquidated.
If so, thousands of jobs will be lost, rather than perhaps hundreds if rescued.
The unions, having won the battle for an increase, pushed the airline to the edge and may have lost the war in terms of jobs.
SOUL OF ANC
At the core of ANC’s internal disputes about what to do to rescue the economy are divergent views.
The issue lies between the business-friendly lobby in ANC led by Ramaphosa, and those inclined to a hardline socialist agenda.
The result is a war over jobs which has become the proxy battlefield for the real struggle under way, being that for the heart and soul of the ANC — and therefore of the future of South Africa.
This week, Gwede Mantashe — once a leading unionist and currently ANC chairman and a minister — has been saying things directly contrary to Ramaphosa about getting South Africa out of the power-generation crisis.
The country is broke and faces costly ratings downgrades if it does not cut government jobs.
Consequently, Ramaphosa and his team are acting. Some 129 cases related to corruption have emerged from Eskom alone, and have gone for prosecution.
More than 1,000 internal disciplinary cases are in the process within the power producer.
The question is whether Ramaphosa can do enough against the backdrop of a weakening global economy to prevent a meltdown.
And then there is a crucial local government election a little more than a year out.
How the struggle for power and for control over ANC — and therefore over South Africa’s destiny — plays out will tell if the country becomes a failed state or emerges as a shining example of a modern developing nation, as Ramaphosa promised.