The Current international situation:Implications for the left project

5th Central Committee discussion paper POPULAR VERSION

This discussion paper focuses on the current international situation, i ts implications for the leftinternationally, and the labour movement in South Africa.

1. The International Situation post the Global Economic Crisis

We summarise here key economic and political dimensions characterising the post-crisis environment.Much of th is analysis is draw n from progressive commentators, on recent ev ents, w hich are stillunfolding. We are liv ing in a period of rapid change, where dev elopments w hich usually take decades,are happening in the space of months. The situation described below is dynamic and fluid, and needs tobe continuously updated.

1.1 Overview of the crisis

The global financial crisis which erupted in 2008, was a systemic crisis, w hich quickly dev eloped into anall-round economic crisis, with i ts centre of gravity in the adv anced capi talist countries, but withdev astating impacts for countries of the South. Despite debate about the roots of the crisis, most agreethat its impact, and large shifts in the international political economy, mean that the w orld post the globalrecession, will be very di fferent than pre-2008. Its e ffects are still being fel t, both economically, and interms of social and political upheavals, in places as far apart as Nor th Africa, China, Europe, the US,and Latin America. Indeed, w e are now facing a second round of the recession, known as the ‘doubledip’.

The first phase of the crisis suggested that the world was entering in to a post neo- liberal era, whichwould see huge Keynesian ty pe demand stimulus interv entions (particularly through gov ernmentspending), extensiv e state inv olvement in ow nership, through nationalisation, and much tighterregulation of capi tal, particularly in the financial sector. States in the Nor th, and the G20 countries,seemed to recognise the need for a new approach. This phase was shor t lived, as resources werediv erted into bailing out the banks (not the victims of excess by the banks), rather than socialinv estment as the basis for a sustainable recov ery. Gov ernments and international institu tions failed totake on the cri tically w eakened financial sector, whose abuses gav e rise to the financial meltdow n. Thisallow ed the financial sector, to reassert their dominance, and re-establish the hegemony of theireconomic agenda.

The second phase, which is still unfolding, saw the reassertion of neo-liberal policy interventions, tosecure the financial sector, in the face of massiv e debts run up by governments in the first phase, partlyas a result of bailing out the financial sector. This neo-liberal resurgence is ironically concentrated in theNorth. The traditional structural adjustment packages of slashing the state, fiscal cutback, tight monetarypolicy, deregulation etc, is being imposed in Europe and the United States, leading to unprecedentedresistance in those countries, most recently seen in the ‘Occupy Wall Street’ movement.

Now the centre of economic grav ity has shifted to the South, particularly China. The North has becomeincreasingly dependent on the developing world to stabilise i ts economy. While social devastationhas been w idespread, countries of the South, particularly in Asia and Latin America, are better placed tobounce back, than countries in the developed world. At the lev el of global governance, countries of theSouth are asser ting the need for a new economic and poli tical archi tecture. It w ill be ex tremely difficultto return to the status quo. 1 | P a g e

Economic orthodoxy has been shattered, ev en amongst the proponents of capitalism. Global financialarchitec ture, and economic governance, is being fundamentally challenged. Sustainability of theeconomic grow th model, is being questioned, in relation to:

• The env ironmental limi ts of uncontrolled, destructiv e grow th • The viability of a one-sided export led grow th model, which depends on grow ing demand from

the dev eloped world, now in crisis• The impact of grow ing inequality and pov erty in creating systemic crises

The terms on w hich this in ternational economic crisis will be resolved, is now being determined. Will itlay the basis for a movement of peoples, in the South and North, and a new ty pe of economicarrangement, and in ternational architecture, aimed at resolv ing the crisis in fav our of the mass ofordinary people? Or will unaccountable gov ernments and financial institu tions, continue to succeed inimposing arrangements w hich are primarily aimed at protec ting the mighty financial sector, the largecorporations, and the billionaires?

1.2 The Politics of the Crisis

These new global realities suggest that forces for progress hav e potentially greater lev erage to adv ancetheir agenda, than has been the case for many decades. At the same time, the deep crisis facingpow erful elites and states, w hich command huge resources, and a massiv e repressiv e and militarymachine, raises concerns about a range of reac tionary phenomena - neo-fascism; a resurgentimperialism; militarism; religious fundamentalism; and a concer ted project to stamp out worker andhuman rights. Nor will the grow ing economic pow er of the South automatically be used for progressiv eends.

The world is therefore confronted w ith the prospec t of a scenario of unprecedented progress and hopevs. deepening human misery and conflict. There is plenty of ev idence to suggest the possibleemergence of ei ther – or both- of these competing scenarios, including:

• The dev elopment of progressiv e, le ft gov ernments and peoples mov ements in Latin America,the democratic revolutions in North Africa and the Middle East, and the resurgence of popularresistance in the countries of the North;• The rising economic role of the South, its organisation into regional and in ternational blocs,and its assertion of a new global agenda, with all its contradic tions;• The grow th of the green agenda as an integral part of the emerging in ternational mov ement foreconomic and social transformation.At the same time we are witnessing• The increasingly aggressiv e posture being taken in dev eloped capitalist countries, includingagains t their own people;• The adoption of economic austerity measures which threaten to plunge the w orld into aneconomic depression;• The rise of right wing gov ernments and ultra-right parties in the Nor th• The intensification of dangerous military adv entures being undertaken in the pursuit ofeconomic and geopoli tical interests.

The realignment of forces emerging in the post crisis landscape therefore sets the stage for massiv econtes tation ov er a new in ternational economic and political architecture. While the rising power of theSouth, and popular mov ements, is a cause for optimism, this contains signi ficant contradictions. Also,ev en if major Nor thern states are rela tiv ely speaking on the wane, their power, par ticularly the USA(w hich remains the major economic and military force in the world), should not be underestimated.

2 | P a g e

Nevertheless, the shift in economic pow er to the South, and the resurgence of left and democraticforces in key regions, particularly Latin America1 and North Africa, is cause for optimism; as is theemergence of significant progressiv e movements in Europe and the USA, challenging theirgov ernments economic policies, and international military adv entures.The rise of ‘Southern’ economic pow ers, particularly China , now the w orld’s second largest economy, isbeginning to change the rules of the game. Greater co-ordination by these countries is taking place invarious fora, including BRICS. And progressive regional alternativ es by Southern economies,particularly in Latin America, hav e begun to ‘delink’ themselv es from the economic hegemony of theadv anced capitalist countries.

The uprisings in Nor th Africa and Middle East, the ‘Arab Spring’, are a major dev elopment, on Europe’sdoors tep, with profound geo-poli tical implications, including around oil, the Israel-Palestine question,and the role of the US and i ts allies in the region. It challenges the stranglehold of US backed dictators,and has broader rami fications for democracy in Africa. While partly spontaneous, and often led by theyouth, these revolts e.g. in Egypt, have also had strong participation by organised workers, andemerging left formations. Since this wav e of revolts is still unfolding, and a counter-offensive has beenlaunched by the dictators and their backers, it is too early to predict the trajectory they will take. But theregion, and the current geo-political status quo, will certainly never be the same.

The massive Nato offensive in Liby a; the brutal suppression of the uprising in Bahrain, by the USbacked Saudi inv asion; suppor t for the ty rant in Yemen, and so on, all show that imperialist pow ersrelate to these uprisings based, not on concern for the viola tion of human rights, but on their concreteinterests, particularly in rela tion to securing control ov er oil, and geo-poli tical calculations about regionalpow er relations. It also show s how genuine popular resistance to ty rants can be hijacked, or frustrated,to serv e these ends. Nev ertheless, the ongoing uprisings show that the democratic genie is out of thebottle. Despite these uprisings, Africa remains fragmented as a regional bloc, and politically stunted, interms of the dev elopment of progressiv e formations. It will be important to see i f the African left canharness dev elopments in North Africa. The main organised progressiv e force on the continent is theAfrican trade union movement, which needs to work with emerging social mov ements, to dev elop astrategic agenda for the continent. But the African labour mov ement itself is fragmented, and without acoherent alternativ e v ision and v oice.

Dev elopments in North Africa and Latin America constitu te a tectonic political shift2. This, combined withthe tectonic economic shift in the balance of pow er to the South, is a major opportunity for progressiv eforces. How ever, there w ill be contestation in the South, betw een countries, and by anti-worker forces,to shape the new agenda. Left forces need to dev elop a coherent stra tegy to take forw ard a progressiv eSouth-South platform.

The political situation in the developed North is fluid and unpredictable. Austerity measures (spendingcuts) hav e been accompanied by reduction of real wages and pensions, and attacks on unions. Theseattacks are not only in the ‘bankrupt PIGS countries’ Por tugal, Ireland, Greece, and Spain, but in most ofEurope and the USA. This is leading to unprecedented political resistance, including general strikes andstreet occupations, in countries facing austerity packages (eg Greece and Spain), and in unex pectedareas, like Wisconsin, USA, in response to attacks on trade union rights. People in the North arerelating to the ‘Arab Spring’, and questioning the legitimacy of their economic and political systems. The“Occupy Wall Street” movement, first in the USA, then Europe, demands accountability by the 1% whoprosper, while the crisis dev astates the liv es of the remaining 99%.

1 Eight of the ten major Latin American countries (excluding Central America) now have left or centreleft governments.

2 Tectonic: huge shi fts, like movement in the earth’s surface leading to the movement of continents

3 | P a g e

The ruling centre-le ft social democratic parties (SDPs) are in deep crisis: responsible for imposingaus terity measures in the ‘bankrupt PIGS states’, they hav e committed poli tical suicide. In mos tEuropean countries, the SDPs had long been remov ed from government, because they fa iled to offer analternativ e to neo-liberalism. Ev en before the latest crisis in Europe, centre right par ties had takenpow er in the ‘historic hear tland of European social democracy’ (Germany, Bri tain, France, Italy, Sw eden,Holland). Progressiv e forces and trade unions are beginning to distance themselves from SDPs, andsome left parties (such as Die Linkse in Germany ) are becoming stronger. How ever, European politics isincreasingly fragmented. The w orking class is not only being draw n left, but to the centre-right and ultra-right, as neo-fascists capi talise on peoples material insecurities, fears, and prejudices.

While there are signs of hope, there is also the danger of an increasingly reactionary economic andmilitary agenda by developed country governments, as their ruling classes grow more desperate. It isthus vital to ensure co-ordination betw een left forces in the North and South, isolate these dangers, andbols ter a more progressiv e agenda in the North.

The international trade union movement has a key role to play. It is the only well organised movementwhich has a presence in all these regions, and shares an agenda, at least on some major social issues.It should dev elop a joint platform to address policy differences betw een labour in the North and South.The material basis for such a platform has now improv ed, as labour in the developed North becomesmore politicised, and austerity policies undermine the project of div iding a ‘labour aristocracy ’ in theNorth, from workers in the South.

1.3 The social impact of the crisis

The ITUC General Secretary has summarised the global effects of the economic crisis3:• world unemployment stands today at 210 million - the highest recorded lev el ofunemploy ment in history;• 64 million more people hav e been pushed into ex treme pov er ty;• the ILO es timates there are 34 million more people unemployed as a resul t o f the crisis;• 23 million more people would be w ithout a job, if not for the stimulus packages adopted toconfront the crisis – programmes w hich are now being phased out rapidly;• the “decent w ork deficit” can only worsen in the coming years. A record number of youngpeople are entering the labour force – 45 million new job seekers each year, many increasinglydesperate for oppor tunity; • es timates of 210 million unemploy ed people underes timates its true depth. Millions of peopleseek work in the in formal economy as they give up hope of secure, formal jobs.

2. Responses to the Financial Crisis

2.1 The Bail-outs

When the financial crisis hi t, gov ernments had two options: • bail-out people w hose homes and other assets were being repossessed by banks, and

interv ene to ensure credit was available, including by taking ov er the financial sector; or• bail-out the banks.

They chose the latter: “What happened in the US was that 8 men gave us a 3 page document which …said ‘giv e us $700 billion or else’. This w as like a financial coup, agains t the government and thepopulation of the US…”4 Stiglitz states that if the US had used the R700 billion to create a new bank,

3 Sharan Burrow, Ituc GS Address to DGB 2 nd congress on capitalism , Berlin 7 October 2010

4 | P a g e

the resources “could hav e been used to generate all the lending capacity required, including loans forsmall businesses and to maintain enterprises. The profits from the new bank w ould have paid back theGov ernment. Ins tead, it was decided to spend the money in ways that protect some ex isting vestedinterests…the US Gov ernment has prov ided mos t of the capital for several o f the major banks, but itdoes not hav e control o f decision making in these banks.”5

2.2 Stimulus Packages or cutbacks?

Much of the economic stimulus package in the North went to the exercise of rescuing the financialsector. While it pumped some stimulus into the economy, there was a huge cost. It has left governmentswith massiv e debts, which have laid the basis for the ‘aus terity backlash’, which inevitably follow ed th isshort period of stimulus.

The opposi te approach w as followed in China, which introduced a $600 billion stimulus package, togenerate domestic demand. The package included social assistance and retirement income transfers.The stimulus w as largely focused on infrastructure dev elopment to foster construction and relatedindus tries, and generate employment. Measures were included to provide employ ment for laid-offmigrant workers (20 million internal migrants lost their jobs, as a resul t o f the crisis) and univ ersitygraduates. The stimulus was also used for rural in frastructure, env ironmental protec tion, and capitalinjec tions in 10 industries, to further technological innov ation. The stimulus package w as accompaniedby a rapid increase in bank lending, and reduction of interes t ra tes.

In contras t, how ever, by 2010, the advanced capitalist countries had begun cutting back on theirstimulus packages, and w ere mov ing into austerity mode.

2.3 International mul tilateral interventions

In the wake of the crisis, international multi lateral bodies seemed to be changing direction. Institutionssuch as the IMF, World Bank, UNCTAD, and the ILO appeared to agree that ex isting economicorthodox ies needed to take responsibility for the economic and social disaster that was unfo lding, andthat economic policies needed overhauling. The adv anced capitalis t countries also appeared to acceptthat, hav ing created the economic crisis, they could not unilaterally determine how the world was goingto ex it from the crisis. Bodies like the G20, which include leading dev eloping nations, began to displacethe his toric role of the G8 dev eloped nations club. This was an adv ance. How ev er, the question is whatthe G20 achiev ed. They agreed on the need for tough ac tion on tax havens, hedge fund transparencyand top salaries in financial corporations, but came up with nothing concrete.

Alli ances in the SouthAn analy st argues that the South-South agenda is making an impact a t v arious lev els: alliances in theWTO hav e put demands for changes to the antidev elopmental multilateral trade regime dominatedhitherto by the developed countries. Political alliances in the South are also expressed through theG77+China cooperation in global climate change negotia tions. Proposals hav e been made on globalclimate change mitigation through the subs tantial reduc tion of greenhouse gas emissions by theindus trialised countries; w ith demands for financial and technical commitments by the richest countries,to assist dev eloping countries in their adaptation to the effects of climate change. There are alsoprac tical cooperation ini tiatives within rapidly expanding South-South trade, joint production andinfrastructural inv estment, technological and scientific, health and educational cooperation. “Whichcountries benefit the most from such relations will depend fundamentally on the …conditions for suchSouth-South cooperation. The cooperation between Cuba, Venezuela, Bolivia, Ecuador and other

4 David Harvey Is this really the end of neo-liberalism? Counterpunch 13 March 2009

5 Joseph Stiglit z The global crisis, social protection and jobs, Int ernational Labour Review Vol 148,2009

5 | P a g e

countries in Latin America …are illustrative of the different modes of South-South relations that arepossible.”6

2.4 The attack on labour in Europe and USA- the race to the bottom

Some commentators argue that the crisis is being used by the powerful, to engineer a process of‘creativ e des truc tion’, to re-establish conditions of profitability for the ow ners of capital, by imposingeconomic res truc turing on the working class. The liv ing standards of the populace in dev elopedcapitalis t economies is being attacked on a number of fronts:

• Massive cutbacks in public sector services and jobs• Attacks on social protection, unemploy ment benefits, pensions etc• Attacks on collectiv e bargaining and other union rights• Attacks on income and w ages

A left commentator calls this a race to the bottom: “rulers in the US, EU, and other debt-burdenedcountries know exactly what they are doing: …to take adv antage of the crushing recession in order toex trac t “enough” concessions from the working people until welfare states are dismantled and labourcosts in the more dev eloped capitalist countr ies are made competitive w ith those of the less-dev elopedcountries. This ex plains why despi te new signs of fur ther global economic contraction, the reigninggov ernments in these countries… are continuing their brutal spending cuts on heal th, education, wages,pensions, and the like. This is not to say that these gov ernments do not w ant to hav e economic grow thor job-creation—they do—but want them on their ow n terms, that is, through Neoliberal policies thatwould create jobs that would pay wages on a par with those of w orkers in less-dev eloped countries…” 7

The struggle in EuropeThe ex tent of this contestation has been seen recently in Europe. There has been growing mobilisationin a number of countries, w ith workers leading some of the largest demonstrations since World War II.An analy st argues there are four structural factors underly ing this upsurge: Firstly, rising unemployment.Secondly, grow ing social and income inequality, re flected in declining labour income as a percentage ofGDP since the late 1970’s, (from 68% of GDP in 1975 to 57% in 2005). Thirdly, public expenditure onsocial protec tion has declined. Fourthly, a decline in labour and social rights. This situation for Europe’sworking class “was in stark contrast to the ex uberant profits for employers. From 1999 to 2006, profitsincreased 33.2% in the EU. Labor costs, how ev er, increased only 18.2%…”

Defeat of gov erning SDP’s throughout Europe resulted in “the E.U. countries today (being) gov erned byright-wing parties that have only w orsened the situation by strengthening their anti-labour policies withbudget cuts in w elfare states and nasty austerity policies… A response to these policies has beenstrikes and demonstrations throughout the E.U..” One of the last social democratic governments, inSpain, has introduced labour market reforms aimed at making employers’ firing of workers easier, afreeze of public pensions, a 5% cut in civ il serv ants’ salaries, and a proposal to delay the age ofretirement from 65 to 67 y ears.8

USA Wisconsin- the assault on col lecti ve bargainingIn February this year Gov ernor Walker, a right wing Republican, announced a union-bashing Bill aimedat ending collectiv e bargaining in the state of Wisconsin, as a prelude to a United States wide

6 Dot Keet, ‘the crisis’ and the crises of capitalism, March 2010

7 Putting the Brakes on Neoliberal Economics , Ismael Hossein-Zadeh , Counterpunch August 30,2010

8 Whats happening in Europe? Vincent Navarro, November 2 2010, Counterpunch

6 | P a g e

Republican offensiv e agains t the unions. According to one analyst a coordinated plan w as initia tedacross the USA to ‘knee-cap the unions, erase collectiv e bargaining, undo women’s rights andenv ironmental regulations’. After February, Republicans in Ohio, Iowa, Idaho, Alaska, Tennessee andIndiana introduced union-bashing measures nearly identical to Walker’s Bill. More than 20 statelegislatures suddenly rolled out bills radically attacking collec tiv e bargaining rights for public workers. 9

The attack in Wisconsin triggered a major battle, demons trations repor tedly grow ing to 180 000 strong.The strategy backfired, mobilising w orkers into a lev el of militancy not seen for a long time: “pro-labordemonstrations the likes of w hich hav e not been seen in the U.S. since the 1930s… igniting a populis tprotest that is spreading far beyond Wisconsin… emboldened by the far-off Arab Spring. We arewitnessing … an energized y outh movement, the mobilizing pow er of the social media, a labourrev ival…. An unprecedented coalition has emerged that might just channel populist anger and defianceinto an inv igorated national movement sufficient to quell the Republican corporate surge.”10 Will this besustained, and transformed in to an organisational programme on a larger scale? The emergence of theOccupy Wall Street movement suggests that this may indeed be happening.

3. Global Alternatives to neo-liberalism

Progressiv e states, international bodies, and global unions are beginning to advance alternativ es to aneo-liberal response. These include promoting global economic stimulus, and adv ancing redistribution,fair labour standards and social protection; reforming international financial architecture; promotinginternational w age bargaining; developing forms of regional economic organisation delinking countriesin the South from current patterns of domination; and interv entions to promote a green economy. While these proposals can best be described as ‘radical reforms’, taken together they could supporttransition to a different type of international order, movement aw ay from the current dangerous threats ofeconomic implosion (as w ell as military aggression), on an ev en larger scale, and promote economicdemocratisation. This could tilt the in ternational balance of forces decisively aw ay from the currentpatterns of domination, and lay the basis for progressive new in ternational economic and politicalarrangements. This would consti tute a quali tative break from the current international order.

Global J obs Pact

In 2009, The ILO’s Labour Conference adopted a Global Jobs Pact. There are significant similarities tothe Framework for South Africa’s response to the Global Economic Crisis, adopted in February 2009.The ILO Global Jobs Pact proposes fair ly far-reaching interv entions to respond to the crisis, with aheavy emphasis on macro-economic stimulus, decent work, redistribution, social dialogue and socialprotection.

The ITUC supports the idea of a Global Jobs Pac t, arguing that a new model w hich ensuresemploy ment is central to macro-economic policy, must include the follow ing elements:

• First, we need a coordinated fiscal stimulus, jobs centred grow th w ith a plan for jobs, andac tiv e labour market in terv ention to keep and create employment;

• Secondly, we need Labour Market Justice;• Third, we need Quality Public Services, and the es tablishment of a universal social protection

floor;• Fourth, we need balanced w orld development. Gov ernments must stand by the commitments

they hav e given – particularly the UN Millennium Development Goals;

9 Others argue that there are also a seri es of, more subtle, attacks in Democrat controlled states.

10 Which Way Wisconsin? Anne McClintock May 13 2011 Counterpunch

7 | P a g e

• Fifth – we need far-reaching investments to begin to change the energy intensity of alleconomic processes, to begin to mov e the world towards the low carbon economy. This mustbe a “just transi tion” that respects w orkers’ interes ts and promotes decent work;

• Six th, implementation of the unfulfilled commitments to regulate the financial sector so that thefinancial economy is re turned to i ts role of providing resources to service the productiv eeconomy. And, to block speculators, and generate resources needed for the publicinv estments, progressive tax ation, and an effectiv e financial transac tions tax ;

• Sev enth, we need reforms to global gov ernance to address gaps in the multilateral system thatcontributed to the crisis. We need a w orld governance structure that can prevent future crisesand would be sustainable for the 21st century.11

W age led Econom ic R ec ov ery

The notion of a wage led economic recovery acknow ledges that: grow ing inequality, and pov erty is anunderly ing cause of the crisis; serious redistr ibution is needed to redress this imbalance; and attacks onwages worsen the crisis by reducing economic demand. Therefore measures are needed to protect andimprov e workers real wages.The ILO Global Jobs Pact proposes the fol lowing options ‘ to avoid deflationary w age spirals’:– social dialogue;– collec tiv e bargaining;– statutory or negotia ted minimum wages.

“Across-the-board w age moderation carries the high risk of a competitiv e race to the bottom, withhugely negativ e impacts on demand and ov erall price lev els...The measures endorsed by the GlobalJobs Pact – a minimum wage, stronger collective bargaining institutions, comprehensive social securityprov isions and labour clauses in public procurement, public investment and public employment – areimportant policy tools for rev ersing the wage slide.”12

Acceptance that improving w ages is a key response to the crisis, is significant. But this will only beachiev ed if w orkers mobilise into strong unions, wage struggles for a liv ing wage, and achieveprotection against conditions w hich lead to precarious work, and undermine collective bargaining.Alliances with progressiv e gov ernments and international ins titutions, committed to promoting decentwork, will also assist unions’ ability to do th is.

Internationa l collecti ve bargaining

If there is an international battle taking place with forces committed to restoring the reign of neo-liberalism by attacking workers and their organisations; there needs to be alternativ e strategies andcentres of pow er to counterbalance and outmanoeuv re them. One such important intervention would beto dev elop institutions which build the pow er of worker solidarity, to begin to reduce the power ofcorporations to div ide and undermine workers. A key element of this w ould be to find ways to dev elopinternational insti tutions of collectiv e bargaining. A commentator argues that this would require bothinternational collectiv e agreements, as well as transformation of unions into international structures.13

New financial architecture

11 Sharan Burrow, Ituc GS Address to DGB 2 nd congress on capitalism, Berlin 7 October 2010

12 Don’t waste the crisis, Executive summary, ILO 2011

13 Putting the Brakes on Neoliberal Economics , Ismael Hossein-Zadeh , Counter punch August30,2010

8 | P a g e

The imposition of a new IMF MD by the North, illustrates the need for drastic restructuring of theinternational financial institu tions, par ticularly the IMF and World Bank. Despite being nominally UNins titutions, these institu tions remain the preserv e of the adv anced capitalist countries. In essence, USand European pow ers have used them to assert their hegemony ov er the world economy. Recently,minor modifications hav e been made to accommodate the role of China. Shifts in the centre ofeconomic grav ity to the South hav e placed the restructuring of these insti tutions high on theinternational agenda. While some argue that these ins titutions cannot be reformed, others assert we willneed trans formed institu tions to manage the change in the international financial architecture which isrequired.Transforming the financial sector is a central challenge, since it probably cons titutes the major obstacleto a new international dev elopment path. A ETUC publication identi fies five priori ty areas for policyac tion, and makes some impor tant proposals, including :

1. The financial sector needs to be democratised and diversified. There should be a wider range ofprov iders in the sector than priv ate banking, including cooperativ e banking, public financial serv ices andother communi ty -based providers. Private banking should be restructured to protect retail andcommercial banking from volatile and risky inv estment banking. Excessive risk-taking and irresponsibleremuneration should be curbed.

2. Regulatory gaps must be plugged. Deriv ativ es markets must fall under publicly accountablesuperv isory authorities. Hedge funds and priv ate equity houses should be subject to greateraccountability and transparency requirements. Offshore financial centres that fuel regulatory evasion,must be countered by increased in ternational co-operation, and improvement in the capacity of the taxand superv isory authori ties in developing countr ies.

3. Fair taxation is needed to strengthen financial stability and accountability. Policy needs to beinternationally coordinated to avoid tax arbitrage and ev asion. A financial transactions tax would reducethe incentiv es for speculation, and allow for the prov ision of global public goods (env ironmentalprotection and development aid).4. Financial supervision must be ‘hands-on’. Superv isory authorities should hav e pow ers to implementan orderly winding up of failed institu tions before they reach crisis point, to limit taxpay ers’ ex posure tothe risk that bail outs will be required in the future. Banks and other institu tions should be subject to‘disciplining rules’ whereby public authorities can intervene to prevent irresponsible risk taking, remov edirec tors and enforce group restructuring.5. There must be effective international supervision and global governance. Global finance needs globalregulators. Allowing policy to continue on its current trajec tory won’ t give in ternational institu tions thelegitimacy, pow er and resources to prev ent another global crisis such as 2008. More ambi tion andradicalism are needed.14

We need to look at these, and other, ideas in the South African contex t; and how to fight these battlesinternationally, including on the IMF and World Bank, given the failure of the G20 to make progress.What role can the international labour mov ement play in this regard?

Regional economic a lternati ves

Pos t the crisis, ex por t-led strategies of dev eloping countries are in question, since they can no longerex pect that industrialized countries will absorb the additional supply. This is leading to a reorientation ofprogressiv e dev elopment strategies tow ards more inv estment in regional and local development. Theshift in economic power to the South, creates the possibili ty for a more asser tiv e regional economicstrategy, which de-links states in the South from economic domination by adv anced capitalist states,and large mul tinationals. This lays the basis for greater control ov er natural resources, their

14” Exiting from the crisis: towards a model of more equitabl e and sustainable growth” Etuc 2011

9 | P a g e

beneficiation, and prices, thereby undermining a key cornerstone of colonial, and neo-colonialdomination. Latin America is the key region which has begun to show the potential power of this model.

The Latin American model is placing emphasis on the more autonomous dev elopment of the region,making it less dependent on the economies, and fluctuating demands of the North. This shift to regionaltrade does not necessarily decrease trade, but places greater emphasis on trade within the region. InAfrica a mere 10% of trade is betw een fellow countries on the continent (compared to 80% in Europe).Changing the trade balance promotes greater regional sel f-sufficiency, and is also env ironmentallyprogressiv e, reducing the carbon in tensity of economies, giv en the dramatic reduction in thetransportation o f traded goods.

The Latin American approach to regional economic integration focuses on tw o key elements- use of natural resources as economic leverage, and for mutual benefit; and - creation of a new regional financial architecture, to sever dependence on the dollar.

Latin America is using natural resources, particularly gas and oil, to bolster self-sufficiency. Led byVenezuela, it has adopted a deliberate policy of harnessing its oil resources to adv ance regionaldev elopment. One of Chávez's fi rs t acts w as to rev italise the oil producers' organisation Opec and forcethe oil price to record levels. At the same time he reduced the price of oil for the poorest countries in theregion, and used Venezuela's new w ealth to pay off debt, notably Argentina's, in effect, expelling theIMF from the continent. Further, Venezuela supplied Cuba w ith oil a t preferential rates, assisted indev eloping a Cuban oil refinery, and joint oil exploration. Cuba in turn supplied Venezuela with 40000medical officials and teachers. The oil imports allowed Cuba to double the minimum wage for 1.6 millionworkers, raise pensions for the elderly, and deliver cooking appliances to the poor.

Venezuela has been inv olved in other co-operativ e arrangements rela ting to oil in the region including:agreements on oil and exploration projects with Argentina, and Brazil; inv estment in Bolivia’s oil and gassector, and supply ing preferentially priced diesel, in ex change for foods and services. Because of highworld oil prices, Chav ez has been able to ex tend assistance programmes throughout South America, egprov iding millions in aid to Uruguay and Bolivia. Venezuela now offers more direct state funding to LatinAmerica and the Caribbean than the USA. Venezuela is developing a common front of all countrieswhich possess natural resources. Chav ez also proposes uniting S America’s oil companies in a jointventure, Petrosur. Mercosur is also being used as a vehicle to co-ordinate energy strategies.

Secondly, this regional alternativ e aims to create a new regional financial architecture : Brazil, Argentina,Paraguay, Uruguay, Boliv ia, Ecuador and Venezuela hav e initia ted a Banco del Sur ( the SouthernDevelopment Bank). The Bank rests on 3 pillars. Firstly, to be a dev elopment bank for projects in theregion going bey ond the national characteristics of an ins titution such as the Brazilian BNDES. TheBanco del Sur will not make funding dependent on implementation of neo-liberal policies required by theWorld Bank or the IMF. The 2nd pillar is designed to protect currencies against speculative attack, byusing rising commodi ty prices to build up foreign exchange reserv es. The Banco del Sur could act as alender of last resor t to those member countr ies ex periencing balance of payments difficul ties. Third, theBanco del Sur will be able to facilita te trade in regional currencies rather than US dollars. The ETUCargues ‘the potential for this alternativ e approach is enormous’.

These progressive regional economic alternativ es, aim at forging a regional development strategy. Theyare different from the traditional concept of “ regional integration”, which aims to impose a ‘one size fitsall’ approach in v arious regions, by forcing countries to adopt IMF-compliant macroeconomic targets.The Free Trade Agreements (FTA’s) which the US imposed in central America is a classic ex ample. Ourow n SADC agreements, and Nepad, went some way dow n this road; as did the Maastricht agreement inEurope.

Can Africa use its access to strategic minerals to implement an alternativ e regional strategy ? To do this,needs progressiv e gov ernments, with the political will to harness resources for the benefi t of our people,rather than ex ternal in terests, as the basis for a new ty pe of in tegration. Only then could the recentlylaunched African Free Trade Area be moved in this direction. Leaders of 26 African countries, launched

10 | P a g e

negotiations in June 2011 to establish a free trade area pulling together 3 regional economic areas: theCommon Market for East & Southern Africa, the Eas t African Community, and SADC, with a combinedGDP of US$860-billion, and population of 590-million. The 1 st phase of setting up the FTA15 comes intoeffect in 3 years. The nex t step aims to include West African countries in free trade negotiations.

4. Lessons for South Africa from the International Situation

4.1 Lesson 1: Workers need a real alternative

The European experience shows that taking workers for granted, by adopting economic policies whichare weak imi tations of policies adv ocated by the centre right, is a recipe to ultimately lose to thoseparties. European new conservatives hav e reinv ented themselves, taking ov er the centre groundoccupied by social democrats, projecting themselv es as caring and enlightened, but strong onconserv ativ e values and good governance. Similarly, the DA has tr ied to appropria te the sy mbols andlanguage of our movement, while appealing to the elec torate with a brand of ‘tough, no-nonsenseliberalism’. Socio-economic conditions resulting from inappropriate economic policies, and theow nership structure of our economy, are projected by the DA, as the result of ANC incompetence, a‘bloated state’, a too pow erful trade union mov ement etc. Without an effective developmental state, andpolicies with a powerful impact on peoples lives, people can fall for such conserv ativ e propaganda, ev enif we know it to be a nonsensical, anti-worker agenda, in reality.

The Brazilian ex perience on the other hand show s that the implementation of strong policyinterv entions, which make a profound difference to peoples liv es, means that the poor and workingpeople will see through the propaganda of the right, and recognise which par ty really has their interes tsat heart. How ever, empty le ft slogans, accompanied by conservative economic policies, only discreditsmovements.Ex perience in Africa is that liberation credentials hav e a limited life. The situation in eg Zimbabwe show sthat if liberation mov ements become arrogant, and out o f touch, their proud history won’t save themfrom the wrath of the people. Par ties which inv oke the relev ance of that history and its icons, but arguethat the mov ement has betrayed its roots, by becoming out of touch etc. potentia lly strikes a pow er fulcord with the people. The impact o f the ANC’s history, symbols etc. w ill fade over time. Increasingly,interv entions such as social grants, provision of basic services etc. w hich impact peoples liv es, willbecome a major element of the ANC’s appeal. But key gaps in addressing peoples condi tions, such asfailing to: deal with inequali ty; create decent jobs; or address y outh unemployment; are the Achilles heelof the movement, and w ill be ruthlessly exploited in the nex t elections. Also, people will only beprepared to handle all manner of difficulties, but remain loy al, if they hav e ownership of thetransformation project. This w as the lesson of the Cuban revolution.

4.2 Lesson 2: The dangers of coali tion politics

We need to confront the reasons behind the downturn in support for the ANC in 2011, and act decisivelyto av oid this sw ing becoming a serious upset in 2014. The huge support of our mov ement since 1994among our people has made us complacent. We are used to getting w ell over 50% of the vote (aroundtw o th irds). In many countries, parties often hav e to gov ern w ith less than 50% majorities, and hav e togo into coalitions with other parties. The coali tion scenario would be a disaster for our transformationagenda in South Africa, given the line-up of political forces, and the lack of le ft partners for themovement to w ork with. In Europe many social democratic parties have been forced to go intocoalitions with centre-right par ties, w hich has spelled their death knell w ith the electorate. Therefore afurther weakening of the movement’s suppor t close to, or ev en below 50% in the 2014 elections, is apossibility which must be seriously addressed, and av oided.

15 An FTA is a t rading zone whose member countri es have signed a free trade agreement, whicheliminat es tariffs, import quotas and preferences on goods and services traded between them.

11 | P a g e

4.3 Lesson 3: the North African youth revolts are not that far

It is denialism to think that something similar to the Arab uprisings could never happen here. There arecertain similarities which w e should not ignore. The demographic profile, in these societies like ours, isthat a dispropor tionate number of the population are youth below 30 - the so-called ‘y outh bulge’. A keyelement in the uprisings w as that much of the Arab youth is educated (many of them graduates),frustrated, and unemploy ed, w ith no prospects, and all their ex pectations of a decent life dashed.Further that their economy and society fails to offer them a fu ture, but increasingly concentrates hugewealth and riches in the hands of a few. These material conditions led to hopelessness, alienation, andrev olt. This was their ‘ticking time bomb’. How di fferent is i t to ours?

All the policies and programmes of the mov ement, jus t as they giv e priority to addressing the needs ofworkers, women and rural people, need to ensure a special focus on y outh, not just in rhetoric, but inconcrete terms which impact on the liv es of young people. Young people need to have hope that if theywork hard, they can get a decent education, training, work, housing etc. Failure to address these needswill breed conditions for a politics of desperation, outside the control o f the organised working class, andmake unemploy ed youth available for all manner of demagogic and dangerous agendas.

4.4 Lesson 4: Bad alliances lose union members

The plight of unions in the USA, which represent 7% of priv ate sector w orkers in the US, and the hugedecline of trade union membership in most countries of Europe, sends a clear message that workersare not union members for life. Unions face pow erful adv ersaries w ho w ill use every trick in the book toundermine them. Unions can also be thei r ow n worst enemies. If they don’ t represent the ir members’interests, politically and economically, workers will vote w ith thei r feet. The labour movement won’tbecome a force to advance members interests, unless it keeps or builds high trade union density.Critically important is the stance unions take towards employ ers, the state and poli tical parties, andensuring a conscious membership, through ongoing education and poli ticisation. Business unionism,which sees the members as clients, who are sold a serv ice, is doomed to die a slow death.

A lesson from Europe is that unions which have alliances w ith parties w hich implement neo-liberaleconomic policies, hav e paid a high price in terms of loss of membership. Survey s of our members hav eshow n that workers are losing patience with our alliance partner implementing economic policies whichare contrary to their in terests, and that they ex pec t the announced policy shifts to be implemented,failing which they will take action. Failure by the ANC to take this forw ard w on’t necessarily only bereflected by the ANC getting punished at the polls. If workers feel that w e are persisting with arelationship that is no longer in their interests, this could begin to be reflected in loss of unionmembership.

4.5 Lesson 5: Mishandling poli tics leads to splits

The decision to maintain political alliances, or pursue new ones, without the full support of themembership, can undermine the uni ty of workers, and ultimately lead to splits, and the emergence ofnew federations. This has been the experience in Brazil, where the CUT split three times, in part ov er itspolitical alliance w ith the Workers Party. It may be difficult to alway s achiev e full agreement on adecision relating to poli tical alignment. In reality, a minority of workers will usually hold a di fferent v iew(there are workers in COSATU, for ex ample, who would prefer us not to be in alliance w ith the ANC).How ev er, if there is respect for democratic processes, proper consul tation, and political engagement,workers are more likely to respect whatev er decision is democratically arriv ed at. Therefore the w ay inwhich engagement is managed on this matter is critical.

Ov er the long term, w e therefore face a double edged challenge in terms of political alliances. Firstly,av oiding a split in COSATU which could result from pursuing the wrong strategy. Secondly, ensuring weaddress the real issues, ra ther than avoiding them in the hope of maintaining unity. A ‘ false consensus’may demobilise members and hollow out the Federation politically, making it unable to act effec tiv ely asan organisational force.

12 | P a g e

International ex perience show s the importance of achiev ing a balance between building a pow erfulindependent labour mov ement, and ensuring through activ e engagement and alliances, that the le ftprojec t remains on track nationally. It is self-defeating to withdraw from the poli tical arena, as workerswill pay the price of retreating from this field of contes t.

4.6 Lesson 6: Workers need a strong civil society

The ex perience in a number of le ft projects is that the assumption of power by le ft parties or liberationmovements has led to the demobilisation of various mass mov ements and progressiv e civil society, ascadres and the ruling par ty enter into the state. Trade unions hav e an important role in building civ ilsociety, in situations where i t has been demobilised. The location of unions at the point of production,giv es them a strong, stable organising base. A mobilised, progressive civ il society mov ement, is animportant counterw eight to a potentially bureaucratised and centralised political leadership in the statewhich can easily lose touch w ith the people it seeks to represent. In Venezuela Chavez deliberately setout to build the power of civ il society organisations, to giv e expression to the power of the popularmovement. We hav e our own history in South Africa of organs of peoples and workers pow er. How cansuch organs be combined w ith a broader mov ement of civil society, to mobilise pressure from below fortransformation?

4.7 Lesson 7: New conditions need new strategies

We need to take stock of how unions in ternationally have dev eloped new organisational stra tegies, oncethey found that tradi tional, ‘conserv ativ e’ approaches to unionism were fai ling to attract large sectors oftheir constituency. We can learn from creativ e strategies to address constituencies requiring newapproaches, including youth, migrants, women etc.

Think tanks of COSATU, including the September Commission, and Organisational ReviewCommission, have called for new organisational strategies to address new challenges. COSATU’s 2015plan stated “we need to recognise the fact that the composition, socially and economically of theworking class is dynamic and shifting. Therefore our organisational strategies need to address thesechanging realities, and be specifically geared tow ards meeting the needs and addressing theconsciousness of specific lay ers and strata of workers. Some of the sectors and strata that we need toconsciously target w ith creativ e organisational approaches include: 1.Youth 2. Women 3. Migrantworkers 4. Casualised and part- time workers 5. Unorganised sectors of the working class…”1. Youth - constitute the majority o f the unemploy ed, as well as employed w orkers. Many youngworkers, particularly those under 30, haven’t ex perienced the tradi tions of trade unionism developedpre-1994. Their social and political culture is rapidly changing. Our unions could star t to seem‘conserv ativ e’ and out of touch with their aspirations. Youth are also disproportionately representedamongst the most vulnerable strata, with one es timate that 85% of 3.5 million casual workers are youthbetw een the age of 18-3516. There has been some progress in COSATU affilia tes, w ith a number ofaffilia tes now hav ing dedicated youth desks or structures. Further, some affi liates are addressing youthwho are not y et members of the union - including students, family members etc. Analy sis is needed onthe content and character o f these youth programmes. 2. Women - debate in COSATU has focused on the issue of w omen leadership in the Federation. Thisremains important. We must also check whether organising strategies adequately address the directconcerns of women w orkers, particularly in vulnerable sectors. While women membership in affiliatesroughly corresponds to the number of women workers in the w orkforce, certain sectors where womenpredominate, such as domestic, cleaning and casual labour, are underorganised. Therefore affiliatesneed organising strategies and campaigns specifically focused on organising w omen workers.3. Migrants - unions such as NUM, NUMSA and FAWU hav e ex tensive experience of organisingmigrants. But the role of migrant w orkers is changing, in the economy and in unions, as foreign migrants

16 See Naledi paper Towards a Cosatu Living Wage Conference May 2011

13 | P a g e

are phased out o f certain sectors, such as mining , and undocumented migrants are increasingly usedin certain sectors, making organising more difficult. Strategies used by our affiliates to address thesechallenges needs attention, including a focus on the construction and farming sectors, retail, hospitality,domestics, and other service sectors. Also, we must consider what further role w e can play in combatingxenophobia, in the workplace and communities, and combating employer abuse relating toundocumented migrants. And w hether we can use creativ e strategies, used by workers from countriessuch as Philippines, to promote organisation amongs t migrants.4.Casualised and part-time workers - deliberate casualisation of w orkers to combat unions, is notunique to South Africa. We should analy se how unions hav e addressed this challenge internationally.COSATU affiliates strategy is to change the status of casual w orkers to permanent e.g. NUMSAcompels employers to employ permanently after 3 months; or to secure rights of part time workers incollectiv e agreements (e.g. SACCAWU, NUM). This strategy cannot succeed without a massiv eorganising driv e. With labour broking, affiliates are combining a strategy of recrui ting these workers (e.g.SACCAWU, DENOSA), while try ing to ban use of labour brokers, through campaigns, and throughcollectiv e agreements w hich either ban or regulate them (e.g. SACTWU, NUMSA). Legal interv ention isrequired to ban this practice. On the other hand, we must relate to those employ ed in better paid ‘decentpart time work’. There is international ex perience eg in Holland, where unions deal with this on qui te alarge scale.

5. Unorganised workers - Union density internationally has been in decline. The low level o f unionorganisation is linked to grow th in low pay: “…in countries with a union density of less than 15 per cent,the incidence of low pay is, on average, close to 25 per cent. This low -pay incidence is reduced by 3percentage points for the countries with a medium lev el of union density (betw een 15 and 50 per cent)and is almost halved to 12.3 per cent in countries with high cov erage (higher than 50 per cent).”17 InSouth Africa, w e have managed to mainta in our lev el of union density at over 30%, despite massiv eretrenchments, but organisation is very low in certain sectors. Below 5% of workers are organised inAgriculture and domestic w ork; 13.3% in construction, and 16.2% in wholesale and retai l18. These 4sectors employ close to 4 million workers, over a thi rd of the formal workforce. Special strategies areneeded to organise these vulnerable workers. The state must play a key role in addressing theirsituation, certainly in relation to farm and domes tic workers. The importance of statutory minimumwages, is acknow ledged internationally, in combating super-ex ploitation and rising lev els of inequali ty.This ex perience needs to be analysed. Equally, raising our lev els of organisation, and defendingcollectiv e bargaining, is key to combating these abuses.

Analysis shows that most ini tiatives to address these challenges hav e been taken at the lev el ofindiv idual affi liates. More work needs to be done to develop targeted Federation wide strategies on eachof the identified issues, e.g. a youth organising strategy. Prev ious organising strategies to address theposition of vulnerable workers have not by themselv es been effectiv e. A multi-pronged strategy shouldbe considered. This strategy, in addition to organising these w orkers, should incorporate an approach tonational minimum wages, the role of state regulation in these sectors, approaches to incorporatevulnerable workers in collectiv e bargaining, and union - led strategies to ex tend social protection.

Other new challenges confronting unions include the need for pro-active strategies to engage with thegreen economy; and developing an approach to new ty pes of regional economic development. Thegreen economy agenda opens opportunities, to build economies w ith new technologies whichgenerate jobs and improv e peoples’ quality o f li fe, while protecting the env ironment. The challenge is fora ‘just transition’ to these new technologies and economic restructuring, so that the South, w orkers andpoor countries don’ t disproportionately bear the burden. Labour needs to promote appropriate policies,and play a leading role in the green mov ement. COSATU should massively increase i ts ability to engagein th is area, and draw on the ex perience of its allies internationally. We need to dev elop a national policy

17 ILO Global Wage Report 2010/2011

18 Naledi paper Towards a Cosatu Living Wage Conference May 2011, Figure 40

14 | P a g e

framew ork, and ensure that all a ffilia tes dev elop green sectoral strategies. Industrial strategy specialistsseconded to affiliates by EDD should be tasked with developing such strategies, together with theFederation. The UN Conference on Climate Change, COP 17, in Durban this year, is an oppor tunity toadv ance these goals.

New types of regional economic development: the dev elopment of new forms of regional economiccooperation, contains the seeds of a radical economic alternativ e. Combined w ith the economic pow ershift to the South, this raises possibilities for new forms of economic organisation and alignment. Whilethe left-oriented political hegemony in Latin America, doesn’t ex ist in other regions, the labourmovement could play an impor tant role in Africa, in encouraging progressive states, to develop a newapproach to regional economic development. We therefore, together with our regional allies, shoulddev elop coherent proposals in this regard. We also need stronger regional bargaining strategies, aswell as forums, for Africa, to driv e this development agenda. What possibili ties are there to influence theAfrican Free Trade Area discussed above? We need agreement on a more regionally focused grow thpath, a broad based industrialisation strategy for the region, strategies for food security etc. Increasedtrade within the region, and greater self-sufficiency in food production, also creates potential synergieswith a green growth agenda.

4.8 Lesson 8: International labour is a key vehicle

What is the role of the international labour mov ement in engaging with these new global realities, andcan it become a serious actor in shaping a new trajec tory ? Organised labour is probably the main non-state movement in ternationally w hich has the degree of organisation, ex perience, capacity andcohesion to drive a global al ternative to neo-liberalism, together w ith its allies in civil society. We referhere to genuine, democratically controlled, and independent w orker organisations. How ev er the labourmovement is not homogenous. There are issues on which the labour movement di ffers, particularlybetw een North and South (but there are progressiv e and conserv ativ e unions in both regions). But thereare more issues on which w e agree. The assaul t on labour in the North is likely to radicalise the labourmovement, and close these gaps further. If the labour mov ement is able to agree on a programme, i t w illconstitute a formidable force. This is an opportuni ty, and serious challenge for the international labour mov ement. ITUC, the largestand best organised international federation, tends to be ov erly cautious, and reluctant to confront someissues head on. The organisational cul ture is too top-dow n, and processes don’t promote properdiscussion of the issues. ITUC also tends to be dominated by unions from the North. Nev ertheless, ithas a new leadership, open to engagement on our policy perspectives. Just as the South is assertingitself on the global stage, so too should unions from the South become more assertiv e in theinternational labour movement. The WFTU, on the other hand, shares many of our perspectiv esideologically, but is weak at the organisational level. COSATU is affilia ted to ITUC, undoubtedly thecentre of grav ity, and few of our affiliates have joined WFTU. This may allow us to build bridges betw eenthe tw o formations; or at least generate discussion on cri tical international issues. COSATU and ourallies could motiv ate the creation of a joint forum for the international labour mov ement to address thechallenges confronting w orkers in the post-crisis period.At the lev el of the global South, labour needs to decide which formations and insti tutions to prioritise.Progressiv e union centres in the South which hav e built a rela tionship (e.g. Brazil, South Africa, SouthKorea, Ghana, Nigeria, India etc) should dev elop an international agenda for engagement. When w eengage with the G20, BRICS, the multi lateral financial institutions, WTO, COP etc, it needs to be basedon a coherent agenda, ra ther than a union presence attached to national governments, which fragmentsinto different interests. Clear proposals for each of these fora, should be placed collectiv ely by aprogressiv e caucus of international labour, initially from the South, and ul timately from a tru ly globalbase. Ex isting netw orks in the international federations, as w ell as progressive netw orks such asSIGTUR, can assist in mobilising this movement. We also need to deepen relationships w ithprogressiv e civil society organisations, including through the World Social Forum, and develop join tplatforms with organisations outside the labour mov ement. A progressiv e South South initiativ e oforganised workers could also interact with progressiv e states, on regional dev elopment strategies suchas those being taken forw ard in Latin America.

15 | P a g e

5. Labour and politics: Scenarios from the international experience

NB: These scenarios are not intended as proposals or advanced as options, but aim to assistdiscussion, to clarify possible scenarios which could unfold, based on possible developments of existingtrends, as well as actual scenarios which have unfolded in the international arena, which may assist usin developing strategies based on current and future challenges.

5.1 Scenario 1: A Working Alliance (Pap and Vleis)

This scenario would be first prize, if we nav igate it successfully. Internationally, how ev er, there are fewcases where this has been achieved. CUT, the Brazilian Federation, has achieved this with a degree ofsuccess, together with the Workers Par ty (PT) in Brazil, but this has come at the expense of a numberof splits in its ranks. Ini tial deep strains as a result of neo-liberal policies in President Lula’s first term,hav e giv en way to an improved relationship, as Lula’s policies took a more progressiv e direction (withpressure from CUT and the Landless Peoples Movement - MST). Conv ersely, the progressiv e Europeantrade unions hav e become increasingly alienated from the social democratic par ties, which hav egradually adopted neo-liberal economic policies. The area in Europe where unions have traditionallyhad the strongest relationship w ith social democratic gov ernments, namely Scandinavia, is now indisarray, with only Norw ay retaining a social democratic government.

Ev en left unions, which have relationships with left gov ernments, such as the UNT in Venezuela (whichbroke aw ay from the conserv ativ e anti-Chav ez CTV), and the Bolivian COB, have had complex andsometimes contradictory relationships with their gov ernments. While this is inherent for ex ample, in thebargaining rela tionship between public sector workers and gov ernments, there are also broader politicalques tions of tactics and strategy, which strains rela tionships. Broadly, the challenge is to retain thebalance betw een driving transformation, and a genuinely revolutionary agenda; with the need to retainthe integrity and independence of the labour mov ement, to defend the legi timate interests of workers,and to retain the uni ty and cohesion needed for workers to wield serious power.

South Africa, in many respects has to pioneer our own path. We are one of the few cases in the world,where the labour mov ement has combined a close alliance with the ruling party, w ith a strong degree ofindependence, and internal cohesion. This has assisted us to nav igate this rela tionship. Howev er,material realities workers face, as well as problematic policy trajectories taken by gov ernment, has putserious strains on this rela tionship. While there has been some progress, in certain areas of the state,there continue to be tw o major obstacles to achiev ing the scenario w e desire:

• Implementation of neo-liberal macroeconomic policies in key aspects of gov ernment, driven bya Treasury and Reserve Bank aligned to the interes ts of finance capital, continue to frustrateprogress in implementing the dev elopmenta l agenda agreed at Polokw ane . This, despi te theintroduction of the NGP and IPAP;

• A leadership in government, state institu tions, and the ruling party, with impor tant ex ceptions,either compromised by business in terests, ideologically aligned to business, or isolated fromthe working class agenda. Plus a grow ing problem of abusing access to state resources foraccumulation, resul ting in nepotism, patronage and corruption.

This tox ic combination has led to resistance in sections of the ANC and state, to implement its elec toralmandate. But grow ing contestation in society, has also opened doors. Space exists to contest thesepolicy directions, with significant pro-working class elements beginning to establish themselv es ingov ernment. Despi te Alliance problems, some progress was made at the 2011 Alliance Summit, andtogether with the constructive outcomes of the 2010 ANC NGC, this opens space for engagement, toaddress the identified challenges.

Achiev ement of our preferred scenario depends on whether the labour mov ement has a strategy towalk through these doors, decisively shift policy, and agree on a prac tical programme for transformation.Secondly, whether we are able to address the crisis in leadership, which retards implementation of the16 | P a g e

agreed programme. The Brazil example suggests, that with the correc t political leadership, thisturnaround can indeed be achieved.

In his 1st term (2002-2006), President Lula was tainted both by the adoption of neo-liberal economicpolicies, and a serious problem of corruption. Wi th his allies in the par ty, state, and the broadermovement, he acted decisiv ely to turn this around in his 2 nd term, moving to address these problems, ingov ernment and the par ty. Leadership was changed, and important policy shifts were engineered,regaining the support of worker and peasant organisations. This led to a huge increase in mass support.By the end of his 2 nd term (2010), surv eys put his support at 80%, making him the most popular leaderin the world. A le ft cri tic of Lula’s gov ernment outlines how this was done, including: “He recomposedhis top team, decimated by the scandals. Heterodox economists …aligned with the PT w ere appointedto head the Ministry of Finance, the Secretariat of Strategic Affa irs and the National Bank for Economicand Social Dev elopment (BNDES), the largest dev elopment bank in the w orld… they hav e been able toimplement ac tiv ist and distributiv e fiscal and financial policies, and to moderate the Central Bank’sorthodoxy.…The adminis tration pushed up the minimum wage gradually and consistently, andembarked on a reasonably ambitious ‘programme of grow th acceleration’ focusing on inv estments ininfrastructure, transpor t and energy …”

“The gov ernment’s social programmes were also ex panded, especially ‘bolsa família’ (an incomesupport programme for poor households). The buoyant economy created 14 million new formal sectorjobs... the social benefi ts paid in the poorest regions suppor ted local production, rather than fuellingpurchases of impor ted durable goods. The strengthening of the domestic market, the ex pansion ofproduc tion and careful banking regulation helped to shelter the Brazilian economy from the rav ages ofthe global crisis: GDP is poised to grow by 7.5% in 2010. The minimum wage rose by 67 per centbetw een 2003 and 2010 … the Gini coefficient fell from 0.57 in 1995 to 0.52 in 2008, and salaries rosefrom 58% of GDP in 2004 to 62% in 2009… Lula’s gov ernment has also play ed an impor tant role in thepolitical stabilisation of Latin America and, in particular, supporting the left-wing administrations …Noneof these outcomes is rev olutionary, but they are real enough. For these reasons …Lula’s popularityamong the poor, and in the poorest regions, is ov erwhelming. ..”19

This is important, because i t show s that a turnaround can be achiev ed, from an apparently desperatesituation. It must contain important lessons for SA. We need to analy se how the progressiv e movementachiev ed th is under President Lula’s leadership, and whether, ev en if we can’ t replicate that experience,we can learn from it.

5.2 Scenario 2: A failed Alliance (Skorokoro)

What happens in the medium term if the current stalemate in gov ernment, and the ANC, persists or,ev en worse, the scales are tipped back towards a strong neo-liberal agenda, with austerity measures,deregulation etc? If under these circums tances, COSATU decides to persev ere with i ts alliance, w hatwill be the situation by the time of the 2014 elec tions?The international experience suggests that while loy alty may persist among the general populace to apopular party for a w hile, ev en after it has betray ed its mandate, workers are likely to be less forgiv ing toa labour movement, which fails to adv ance their interests effectiv ely. In such a scenario, workers tend tovote with their feet: either joining or setting up a new Federation (as in Brazil, Argentina, Egy pt etc), orleav ing the union (USA, UK etc.)

South Africa is unlikely to be the ex ception, since workers hav e a high degree of politicalconsciousness. Surv eys of COSATU members show repeatedly that they ex pect the Alliance to deliveron the agreed agenda, and that they won’t giv e a blank cheque to the ruling party, or to COSATU. Themost recent w orkers surv ey suggests the 2009 elec tions were regarded as a last chance forgov ernment to change course, and implement pro - worker policies.

19 http://www.lab.org.uk/index.php/news/57-focus/688-brazil-

17 | P a g e

Ex pectations were particularly high, following the Polokwane revolt, shifts in policy direction, and theelec tion of President Zuma. The mood on the ground, and dev elopments around the 2011 localgov ernment elections, including revolts around manipulation of the candidate selection process, suggestthat a ‘business as usual’ scenario will be a disaster both for the ANC and COSATU. The likelihood inthis scenario, is that the ANC’s 2012 Conference, as well as COSATU’s Congress, will be explosiv eMark 2 versions of Polokwane. Therefore COSATU needs to hav e a clear plan for 2012, a strategy to tiltthe balance of forces, and an approach to av oid the unfolding of a skorokoro scenario. And cri tically, toneutralise the right w ing demagogues attempting to hijack the mov ement for their narrow accumulationagenda.

The skorokoro scenario could w ell lead to three negativ e outcomes:o A split in the Federation, or setting up of a competing Federationo The resignation of w orkers and/ or the inability to recruit new memberso The implosion of the Alliance

The danger of splits breaking up the labour movement, is illustrated by 3 splits w hich took place in theBrazilian CUT: tw o major spli ts from CUT took place in Lula’s first term in 2004 (w ith 30-40% of theleadership leav ing CUT) and 2005, follow ed by a further split in 2007. A sobering lesson is that thesesplits took place before the turnaround of Lula’s second term, which came too la te to preserv e the unityof the Federation. This is a w arning to us: whatev er strategy we adopt needs to keep our mov ementunited. His tory shows it is very di fficult to rev erse these splits once they hav e happened. Howev er, it isalso true that the Brazilian unions have always been relativ ely fragmented, with organised factions andtendencies, w hich we hav e managed to av oid. But we shouldn’ t underestimate the stress which therelationship betw een union, party and state, can place on the uni ty of workers, particularly if progress isnot being made in resolving the contradictions.

The second danger - disillusionment of workers, and abandonment of unions - has been seen in theUSA, now dow n to a union density of 7% in the priv ate sector; and the collapse of the relationshipbetw een workers and labour par ties in Europe, which has seen w orkers v ote in centre- right parties, aswell as increasing alienation from unions. This relates to the danger of the Alliance imploding, and ofworkers abandoning the traditional alliances betw een unions and political par ties, because of theirfailure to adv ance a pro-worker agenda.

5.3 Scenario 3: Political Withdrawal (Into the Wilderness)

Another scenario w hich may arise from a ‘business as usual’ situation, is disillusionment by workers withpolitics, based on their concrete ex perience that major inv estment in political alliances, is not producingmeaningful benefits; and the belie f that political work is being done at the expense of shopfloor, breadand butter issues. This perception could develop in South Africa, where organisational review s haveidentified a decline in serv icing of members, in some respects, and a declining quali ty of organisationand education. This could lead to a call for the ‘non-alignment’ o f unions w ith political parties, and a‘back to basics’ movement.

This type of perception fed in to a major split in the US Federation, the AFL-CIO in 2005, when the‘Change to Win Coali tion’ pulled about a third of the AFL-CIO’s members in to a new federation, whichobjec ted to the money the AFL was putting in to the Democratic Party, and called for more resources tobe put into organising, particularly in organising the large numbers of unorganised workers. As withmost splits in unions, this has been to the detr iment of workers, and talks have been held in an attemptto reunite the tw o federations.

No serious union Federation in the world can completely withdraw itself from poli tics. The main debateis about whether the Federation should be aligned or ‘non-aligned’ to a political party. The position ofnon-alignment tends to be linked to a lobby ing posture, w here unions engage as interest groups. This isthe approach FEDUSA has taken in South Africa, or the Ghana Trade Union Congress, whichentrenches non-alignment in its constitu tion.

18 | P a g e

A variation of this scenario could be where the Federation maintains a loose alliance with the rulingParty, co-operating on ad hoc issues, but focusing more on workplace issues. While a retreat frompolitical engagement implies a move away from social mov ement unionism, it is possible that aFederation could maintain its social movement character, by mobilising alliances with other socialmovements, outside of an alliance with a political party. This is the approach of the Argentinean WorkersCentre, which developed a close rela tionship with the unemployed, and v arious social mov ements, inresponse to the alignment of the major federation (CGT) with the ruling par ty (conserv ativ e incharacter).

5.4 Scenario 4: New Left Project

When a union federation’s relationship w ith its poli tical ally becomes unw orkable, because of lack ofagreement on policy and programmes, and union membership becomes frustrated and alienated, somemovements internationally hav e decided to either launch their own poli tical project; or change the natureof their relationship w ith their ally.

Different possibilities, which hav e emerged internationally, include the labour movement:• launching a new poli tical party, usually with other mov ements;• dev eloping an alliance w ith an existing party other than its tradi tional ally; or• dev eloping a different type of relationship w ith its traditional ally, which may also inv olv edev eloping relationships with other parties.

The crisis of social democracy in Europe has led to a major shakeup in union-par ty relations over thelas t 20 years, with many labour mov ements changing their relationship to traditional allies, and viceversa. Since the 1990’s, many social democratic parties have engaged in attacks on labour. This has inturn led to the ousting of most SDP’s from pow er, the launch, or rev iv al, o f le ft parties, and a process ofpolitical realignment of unions. Nev ertheless, Union- SDP relationships remain deeply embedded giventheir long history, in the las t century, and many unions continue to hav e relationships w ith the SDP’s, atthe same time as forging relationships with left parties, or play ing a key role in their formation.

In Germany, the coalition betw een the SDP and centre-right parties, came into conflict with the unionsov er a range of issues. This led to a deteriorating relationship between the DGB and SDP in Germany,as well as loss of union membership. After the 2005 elections, unions and le ft activ is ts played a key rolein building a significant left par ty called the Linkse- or Left. Despi te being very y oung, the Left Partyperformed well in the elections, and received about 12% of the v ote, and is reportedly playing animportant role in mobilising the le ft in the German SDP, who want to shi ft the SDP into the direction of acoalition with the Left Par ty.

The left parties are also challenging the SDP’s in v arious Scandinav ian countries (the home of socialdemocracy), the Czech Republic, Netherlands, Portugal, Latv ia, Greece, Ireland, Iceland and Cyprus. Inmany of these countries, realignment is taking place in the rela tionship between the unions and theSDP’s. Nev ertheless, the European left remain rela tiv ely small minorities, challenged not only by centre-right coalitions, but also by the rise of ultra-right parties. All these parties have significant support fromworkers, and union members. While there is grow ing left political asser tiv eness, the downside is thatunions are no longer serious play ers in determining the direc tion of ruling parties. Thus, unions inEurope hav e to play an oppositional role, until the left is sufficiently strong to take pow er.

The ex perience of African trade unions launching political parties has been a mixed one: In Nigeria theNLC unsuccessfully tried to build a Nigerian Labour Party, which fa iled to make an impact on thepolitical scene. In Zimbabwe, the ZCTU playing a key role in successfully building a mass oppositionparty, the MDC, which is now in gov ernment, and has the majority in Parliament. But questions arisearound the policies and programme of the MDC, and why the ZCTU has not stamped a working classimprint in this regard. Similarly with the Zambian ex perience: the unions played a major role in formingthe Movement for Multipar ty Democracy in 1990. The leader of the MMD, Frederick Chiluba was drawnfrom the Labour movement, but hav ing won the Presidential elections, proved to be no friend ofworkers. In both Zimbabwe and Zambia, the unions, hav ing successfully formed powerfu l political19 | P a g e

parties, stepped back, and allow ed them to take their ow n direction. This is a lose-lose scenario forworkers, who plough resources and political energy into a projec t, then find that the vehicle they createdcan’t mov e them forw ard.

In Egy pt, the independent federation which emerged to replace the state contro lled unions, has takenthe initiativ e to launch a le ft pro-worker party to contest the elections later this y ear. The par ty, called theDemocratic Workers Party was launched on May Day this year, and agreed to enter in to a "socialistfront" w ith four other Egy ptian left groups. In South Africa, the only Alliance partner which considered going it alone w as the SACP, w hich debated,but rejec ted, a proposal to campaign independently for elections. The SACP Congress in July 2007resolv ed on tw o possible electoral “modalities” for the Party in the 2009 elections. Firstly, the option of:“Independent [SACP] electoral lists on the voter’s roll w ith the possible objective of constituting acoalition Alliance agreement post elections” . Alternativ ely, the Party could pursue “An electoral pact withour Alliance partners” . The Party decided on the latter option for the 2009 elections.

If COSATU members decided that the organisation should mobilise behind a left par ty to representworkers, it is not clear w hether the SACP would be prepared to play that role. A SACP report inFebruary 2007 included a surv ey of electoral ex periences of Communist Par ties internationally : “. .. thegeneral conclusion of this broad surv ey was that elec toral politics w ithin capi talist dominated societies isan ex tremely difficult terrain for principled communist parties. Generally, left electoral successes in thesecases inv olve one or another v ariant of broad left fronts, alliances and coali tions in which CPs are onecomponent. The electoral terrain also often provokes serious strains (sometimes splits) w ithin CPs –betw een cadres within legislatures and those more ac tiv e on the mass terrain.”

In deciding to suppor t a left par ty, factors w hich would need to be considered, include:• the impact on the uni ty and cohesion of COSATU, as well as the SACP• whether workers w ould support such an initia tiv e, and whether it had serious prospects of

becoming a majori ty party in gov ernment, over time• whether th is would consti tute termination of the relationship with the ANC, or w hether a loose

co-operation agreement could be reached, with the view to possible coali tions• if the SACP was not prepared to play this role, but workers insisted on a workers party

representing them, w hat would be the alternative?

This scenario would only be feasible if the leadership and membership believ ed that it had ex haus ted allother options to advance the working class agenda. Ev en then, the majority w ould be unlikely toconv ince ev eryone that there was no alternativ e, so some potential for spli ts is a real possibility. Thethreat of th is has to be w eighed against the cost of doing nothing, and increasingly being compromisedby a relationship which is not seen to be adv ancing workers interests, and the long term impact thatwould hav e on the mov ement.

20 | P a g e