Cosatu Section 77 notice: June 2001

Reasons for the Protest Action

1. The state has embarked upon a programme to privatise state assets, enterprises, services and undertakings. Closely associated with this is the restructuring of state enterprises, undertakings and services earned out by the state in ways that give the private sector considerable control, and the state's opening up of industries or sectors in order to provide for competition. COSATU is obviously not opposed to restructuring in itself, but the state's restructuring process forms part and parcel of the broader privatisation programme, which it certainly opposes.

The nature of privatisation

2. For COSATU privatisation refers to the transfer from public control or ownership to private control or ownership.

3. Three important issues arise from this definition:

3.1. Firstly, the subject matter of the transfer could be anything that is publicly owned or controlled. It may include assets, services or undertakings, functions, businesses, shares or industries.

3.2. Secondly, the transfer may include a partial transfer of ownership or control from public to private hands.

3.3. The transfer of control may be direct or indirect. For example, government may outsource management functions, thereby maintaining legal ownership but in effect handing over day-to-day control to private interests.

4. Privatisation therefore includes:-

4.1. The selling or renting of publicly controlled or owned assets.

4.2. The selling of shares in a company held by the state to a private person, including the introduction of a 'strategic partner."

4.3. The 'contracting out' or outsourcing of services or undertakings provided by the state.

4.4. Allowing private persons to operate in industries, sectors, undertakings or services in which the state or a state owned or controlled enterprise is at present the sole operator. The nature of the private operation may be in competition with state owned or controlled enterprises, in joint ventures with the state enterprises, or in strategic alliances or partnerships with state enterprises. The state has adopted this strategy with respect to telecommunications, and has mooted it for electricity generation and rail transport.

4.5. The insistence that government services be self-financing, for example through fees. For instance, this appears in education in:

4.5.1. Allowing governing bodies of public schools to raise fees and employ educators and other employees. This has led to the effective privatisation of substantial parts of public education. As a result, children from poor backgrounds receive substantially inferior education compared with their middle and upper class counterparts.

4.5.2. The requirement that tertiary educational institutions rely almost exclusively on fees, making it increasingly difficult for working-class students to get degrees.

4.6. In order to facilitate privatisation, the state has embarked upon numerous strategies, including commercialisation and corporatisation. Commercialisation refers to a state controlled or owned entity, service or undertaking operating for profit or on a cost recovery basis. Corporatisation refers to both the commercialisation and registration of the state controlled or owned entity in terms of the Companies Act. Particular concerns relate to the corporatisation of Eskom as well as municipal services in Johannesburg.

4.7. While commercialisation and corporatisation may not themselves involve a transfer from public control or ownership to private control or ownership, they are frequently the initial steps that are taken in order to privatise. They therefore form part and parcel of the broader privatisation process.

4.8. The state's privatisation programme includes all the above in various areas of public control and ownership, including national, provincial and local government as well as state enterprises, which include Transnet, Denel, Telkom, Eskom, SAPOS and various provincial enterprises.

The impact of privatisation

5. The state's privatisation programme is and will continue to detrimentally affect the socio-economic interests of the poor, which includes workers and the working class in general, for the following reasons:

5.1. It will lead to decreased and inferior quality services for the poor, since they cannot afford to pay for the services provided by or through private interests.

5.2. It will lead to higher prices for the provision of basic services, which will adversely affect the poor.

5.3. It will limit the extension of basic social and municipal services to the poor,

5.4. Generally, it will limit cross-subsidisation to benefit the poor and poor regions.

5.5. It will adversely affect the state's capacity to -

5.5.1. provide basic services to the poor;

5.5.2. provide for infrastructural development;

5.5.3. intervene to restructure the economy to ensure growth and employment creation, and

5.5.4. play a developmental role in general.

5.6. It will lead to significant job losses and will not provide for job creation.

5.7. It will foster the casualisation of labour, with more and more workers being hired on limited fixed-term contracts of employment.

5.8. It removes workers from the bargaining units established over many years in the public sector, generally leading to a reduction in incomes, benefits and job security.

5.9. Regulatory agencies have proven unable to establish specific and effective obligations to serve the poor by extending services at affordable prices. They have few or no sanctions to impose on companies that fail to comply with obligations, ambiguous targets for the extension of affordable services if any exist at all, and at best ineffective mechanisms to monitor compliance.

Demands

6. COSATU demands that -

6.1. Government halt all privatisation initiatives pending the establishment of a clear policy and legislation to guide restructuring, used here in the sense of changes in the management or control of any of its assets, enterprises, services, undertakings, industries or sectors.

6.2. The policy must be binding on all state owned or controlled entities, including state enterprises and all levels of government.

6.3. The parties to NEDLAC must negotiate the contents of the policy, which must subsequently be tabled as legislation.

6.4. The policy must give effect to the following principles:-

6.4.1. The State must retain the capacity and assets to play a strong developmental role in order to meet its constitutional obligations in respect of second generation rights.

6.4.2. The State must remain the provider and manager of basic services. The government's restructuring programme must therefore exclude privatisation of government owned or controlled institutions that provide basic services and meet basic needs. Basic services are water, sewage, rubbish disposal, electricity, welfare, and basic housing, health, transport, education, telecommunications and cultural services such as stadiums, parks and libraries.

6.4.3. The State must also remain the provider and manager of national infrastructure networks, including water, rail, roads, electricity and telecommunications.

6.4.4. No restructuring of state systems or institutions may take place until the relevant sector has established a policy on service norms and how they will be achieved, especially for poor communities. The policy must ensure that

• historically disadvantaged communities receive adequate services, and 
• services suffice to maintain an efficient economy.

6.4.5. No restructuring may take place if it negatively impacts upon the poor, whether by constraining provision and extension of basic services to them or by aggravating job losses. 6.4.6. The state may not privatise where that would effectively end cross-subsidisation of services for the poor.

6.4.7. Restructuring may not lead to a reduction in the conditions of employment of employees or affect recognition agreements or existing bargaining arrangements, including the constitution of the bargaining unit.

6.5. The process of restructuring must be transparent and must include -

6.5.1. If the State contemplates restructuring, it must prepare a cost-benefit and impact analysis. The analysis must include the following -

• The direct and indirect costs and benefits associated with restructuring, including the expected direct and indirect effects on service delivery (especially for poor communities), the health and safety of communities, the environment, employment and incomes, and the overall distribution of incomes and assets.
• The impact on the capacity of the State, in terms of skills, expertise, administrative systems and assets needed to provide the service.
• Reasons why alternative restructuring proposals were rejected.

6.5.2. The state must consult with the affected communities and bargain with trade unions in the affected entity, service or industry.

6.5.3. The matter must be discussed by NEDLAC. The parties to NEDLAC must have access to all the relevant information relating to the proposed restructuring.

6.6. In the case of a proposal to privatise in any form:

6.6.1. The state must advertise the proposal in the relevant media.

6.6.2. If the proposal applies to a provincial or national entity, the Legislature must make the decision whether or not to privatise; in the case of a proposal by a local government, the Council must make the decision.

6.6.3. Before the Legislature or Council makes its decision, it must hold public hearings and consider the submissions of interested parties and it must be provided with -

• All relevant information, including the cost-benefit and impact analyses;
• A report on the consultation process with affected communities and bargaining process with trade unions;
• The recommendations of the parties to NEDLAC; and
• Reasons for disregarding recommendations or views expressed in the process. 

Nature of the Protest Action

The protest action will include marches, protest rallies, demonstrations and stay-aways.

The initial stay-away will be for 2 days. However, there will be special circumstances for shift workers whose shifts commence before 00h00 or end after 24h00. All shift workers will stay-away for two complete shifts. They will be absent from work on the shift that has the greatest number of hours on the days of the protest action.

The precise date or dates of these actions will be determined following consideration of the reasons of the protest action at NEDLAC. 

The protest is directed at:

The Government of South Africa,
Union Buildings,
Pretoria