Deals Protect Bosses’ Profits Not Jobs

Struggle for Workers Nationalisation Needed

Originally published in Izwi la Basebenzi (September 2015).

by Shaun Arendse

Capitalism is again demonstrating its complete inability to overcome mass unemployment and poverty. Private sector big business is at the forefront of worsening the already terrible situation facing the working class. Both the steel and mining bosses have announced job losses which taken together could total in the hundreds of thousands. Working class families and even entire communities face devastation. The threat of 52,000 job losses in the gold mining sector over the next ten years is being used by the bosses to refuse wage rises that could lift the mineworkers and their families out of grinding poverty.

The working class must urgently respond with determined and militant struggle to turn back these attacks and defend our jobs and living conditions. Lodged in the situation is the potential for steel workers and mineworkers to unite and organise co-ordinated sector-wide strikes in defence of jobs. The tactic of occupation must also be firmly on the table to prevent plant and shaft closures.

With the 2016 local elections fast approaching, the ANC know they will pay a heavy price if they are seen to stand by and do nothing in the face of worsening unemployment and poverty. But despite some posturing against the steel and mining bosses, the ANC government is ultimately committed to finding a ‘solution’ that protects both the profits and the property of the bosses.

This is underlined when remembering that via the Industrial Development Corporation (IDC), the government owns a controlling stake in SCAW metals, which has issued notice of up to 1,000 retrenchments. They also own a major share in steel maker ArcelorMittal SA (AMSA) which is threatening to close their Vereeniging plant. Yet the government behaves like any other capitalist investor.

Union Leaders Mistaken

Unfortunately, the trade unions leaders are assisting the ANC government in propping up the very bosses who have run these industries into the ground. The deals signed in August in both steel and mining are based upon collaboration with the bosses to find a ‘solution’ within the existing capitalist framework of private ownership and production for profit. This is the very same framework which on a world scale has caused the ‘problems’ in these industries in the first place (see box below).

Global Capitalist Crisis Creates Chaos in SA

The already stagnant South African economy is being hit by developments in the world’s two largest economies – the United States and China. South African exports to China increased from $1.2 billion to $48.4 between 2001 and 2013. China is now SA’s largest trading partner. But now growth in the Chinese economy has slowed to its lowest level in 25 years. A consequence of the slowdown is the lowering of commodity (raw material) prices worldwide.

In SA this is having a major impact on the mining industry which produces commodities such as platinum, iron ore and chrome. China no longer wants to buy as much. To out-compete their rivals for dwindling numbers of orders, commodity producers slash their prices. Anticipating a prolonged period of reduced demand, the bosses are planning to close mines and retrench workers to protect their profits by reducing the output of commodities they can no longer sell.

To try and bolster their slowing economy, the Chinese dictatorship has implemented an unprecedented devaluation of the Chinese currency against the US dollar. This is turn has impacted the value of the Rand which has reached its lowest ever exchange rate against the dollar, losing 17% in the past twelve months. The pricing of most commodities in dollars has not offset increased pressure on SA’s already existing trade deficit as the value of exports due to depressed commodity prices plummets.

The depreciation (loss of value) of the Rand has been further accelerated by capitalist investors moving money out of SA. This is happening because of increased fears about the ‘risk’ of investing money in SA given the poor economic situation and in anticipation of the US government increasing interest rates. Capitalist investors calculate that their investments will be both safer and more profitable elsewhere. Unsurprisingly, the SA economy is stagnating. It shrank 1.3% between April and June wiping out the feeble 1.3% growth between January and March.

A similar story of capitalist chaos lies behind the problems in the steel industry. China produces 1.1 billion tons of steel per year – 30% more than total global demand! However, a further 60+ countries have steel industries meaning massive global ‘over-production’. Because the Chinese steel industry is subsidised by the Chinese government there is less pressure on them to make profits.

A slowing Chinese economy means less demand for steel within China and therefore even more Chinese steel available for export at very low prices. It is estimated that Chinese steel is 12% cheaper than South African even after shipping. SA businesses, competing with each other for profits, of course prefer to use the cheapest steel available to keep their costs down. Unable to maintain their profits in competition with low Chinese prices, the SA steel bosses would rather shut-up shop.

This chaos is a result of the unplanned profit-driven nature of capitalism. Workers and their families are treated as disposable to protect the profits for the bosses. This is the madness of capitalism. The steel industry is in crisis because there is too much steel in the world. This despite the enormous social need for housing, hospitals and schools where this steel could be used! But under capitalism production is for profit not social need. The current economic crisis is truly a crisis of the capitalist profit system.

The bosses’ newspaper Business Day has devoted editorials to each of the deals “lauding” (praising) them, such is their delight with the union leaders. This in itself should cause workers’ alarm bells to ring! Neither deal includes a moratorium on retrenchments or closures. Indeed, the boss of SCAW metals has said job cuts are “now unavoidable” regardless and expects 10,000 jobs to go. AMSA too has continued with retrenchments.

The steel deal imposes a 10% tariff on certain types of imported steel. In return for this protection the steel bosses have agreed to investment and the safeguarding of jobs in those lines of production to which the tariff applies. This in no way contradicts the ANC’s devotion to neo-liberal economic policies. They have carefully remained within the boundaries of the steel import tariffs allowed by the imperialist controlled World Trade Organisation (WTO). The agreement makes provision for the ‘exploration’ of other tariffs and anti-dumping measures. From the bosses’ perspective, these deals are intended to buy time to prevent workers from taking action in order to restore their profits through retrenchments and closures.

The NUMSA leadership was undoubtedly under enormous pressure from their members. But despite Jim’s recognition that he was not “convincing angels” it was still a tactical mistake to approach negotiations in this way. It is not only Business Day that will draw wrong conclusions but NUMSA members and the working class as well. The danger is that illusions have been fostered that it is possible to find a ‘solution’ in collaboration with the bosses, or even a capitalist government such as the ANC. This can disarm the working class when the irreconcilable interests of the workers and the bosses inevitably clash. The task for workers’ leaders is to point to the real cause of job losses in the competition for profits under capitalism that has created a global race to the bottom and put forward a programme of struggle based on working class independence.

The mining deal looks just as shoddy. Union leaders have agreed that the problems of the bosses are the problems of the workers. Unions will co-operate in improving productivity, changing ‘inflexible’  labour practices and consent to the selling of so-called distressed assets. All of these measures imply job cuts and the rebalancing of power in the mining sector even further in favour of the bosses. Indeed, the provision in both deals for retrenchment and retraining funds to be established sends the dangerous signal that the union leaders accept that job cuts are inevitable and see their role as simply limiting the scale.

Fight for Nationalisation

The union leaders’ hesitation to organise a determined struggle reflects their lack of a clear alternative to capitalism. Some leaders have clearly accepted the idea, repeated endlessly in the media as ‘common sense’, that strikes and struggle will only accelerate and increase job losses. Nationalisation is portrayed as the equivalent of detonating a nuclear bomb under the economy.

But the demand for nationalisation of the steel and the mining industries under democratic workers control is crucial to arm the working class for the struggle to defend jobs. Fighting for democratic worker control distinguishes our demand from both the corrupt and bureaucratically run parastatals (like PRASA and SAA) and answers the sham partial-nationalisation of the ANC government who use their ownership stakes in industry to further the interests of the capitalist class.

The failure of the union leaders to demand nationalisation assists the bosses in portraying job losses as the result of an unstoppable natural disaster rather than the result of the bosses’ own greed. We have criticised NUMSA in the past for failing to raise the demand for nationalisation, for example during the five week metal industry wage strike in 2014. Likewise, we have criticised the leadership of mining union AMCU for  abandoning the call for the nationalisation of the mines which was a central demand of the mineworkers following the strikes after the Marikana massacre.

Without the demand for nationalisation, support for tariffs amounts to asking the working class and middle class to subsidise the profits of the capitalists. This of course is exactly what the parasitic bosses want. Despite ANC ministers’ assurances that the new steel tariff will not lead to increased steel prices this is a real threat. In the case of steel used in government infrastructure projects this subsidy would come via tax revenue being diverted to the steel bosses to support higher prices. In the case of steel used by the private sector this subsidy would come via passing on the increased cost through higher prices for goods and services.

AMSA already has a record of manipulating prices to support its profits. It is unlikely that the ANC government will break with its neo-liberal orthodoxy and impose price controls. Without such measures the bosses will find a way to raise prices. Indeed, smelling an opportunity, AMSA is demanding far more sweeping tariffs than those so far agreed to.

The working class needs a programme of action based on socialist ideas to respond to the failures of the capitalist system. We do not want to struggle merely to prop up a diseased system when its wholesale replacement is needed. There is more than enough use for all the steel, iron ore and platinum produced in SA in the development of infrastructure, housing, schools, hospitals etc. It is the bosses themselves who are proving that profits will always come before social need upon the basis of their ownership of industry. Society cannot move forward and fix the problems of unemployment, poverty and inequality on this basis. This can only happen if the working class fights for the nationalisation of industry under democratic worker and community control.

Perspectives for Struggle

The deals in both steel and mining will not halt the job losses. They will both break down as the interests of the workers increasingly conflict with the interests of the bosses. The speed at which this will happen is uncertain. A deepening of the world crisis of capitalism (see box opposite) could push the bosses to accelerate their attacks forcing the workers to take to the road of struggle sooner.  However, if ‘things hold’ for a period, especially under the current union policy of collaboration, the managed decimation of jobs in both industries could be the result. By the time the working class realises what is taking place these jobs will be lost forever.

Whilst Business Day echoes the satisfaction of the bosses and the ANC government with the “maturity” of the unions this does not herald a new era of ‘industrial peace’. The crisis of capitalism makes that impossible. Workers will embark upon struggle with or without the involvement of the present union leaderships. If the union leaders do not prepare the workers for struggle, they could find themselves discarded just as easily as NUM was in the platinum belt.

Workers must lose no time in organising. Joint committees of steel workers, mineworkers and communities should be formed to co-ordinate protest action. Demonstrations, pickets and lobbies should be organised immediately to begin marshalling the strength of the working class and placing the question of struggle clearly on the agenda. Strike action and occupations in response to any retrenchments or plant and shaft closures must also be planned. Finally, workers must take up the question of a new socialist trade union federation and workers party as part of the campaign against job cuts (see editorial on page 2). Unless we organise the working class to take power and run society in the interests of the majority unemployment and poverty will remain the future for millions.

Izwi says:

  • Struggle against all job losses! Struggle for a living wage for all workers!
  • Form joint committees of steel workers, mineworkers and communities to prepare for struggle
  • As a step toward a socialist planned economy, nationalise the steel industry, the mines and other so-called ‘uncompetitive’ industry under workers control and management; open the books of big business
  • Create jobs based on living wage and security of employment; share out the work – for an immediate reduction in the working week without loss of pay.
  • Massive investment in social services such as education, health, social welfare, sport, art and recreation.
  • Introduce a state monopoly of foreign trade and capital controls under the democratic control of the working class linked to a policy of international solidarity – workers of the world unite!
  • Campaign for the abolition of the IMF, World Bank and World Trade Organisation – for a worldwide democratic plan of production