'Inflation' is a weapon of the bosses to attack workers
The petrol price has sky-rocketed; food prices have already risen by 15 % this year and are expected to increase by a total of 30% by the end of the year. With workers spending at least half of their wages on food, this means that the 12% wage demand of the public sector workers must be regarded as an absolute minimum. In fact it is already too low. The reality is that workers wages are going to drop this year; there will be greater starvation.
The bosses try to justify their increases in prices by at least 3 reasons: a) the cost of labour is too high; b) there is too much lending, and c) there is imported inflation. We expose the attack on the working class by the bosses’ arguments:
The cost of labour
Historically, workers demands have always come after rises in prices. This means that workers’ increases have never kept pace with increased prices but always lagged behind. The capitalists (bosses) have always benefited from inflation. The cost of labour is thus not a factor driving price increases.
Too much lending
Most of the working class do not have bank accounts; the few workers who have accounts would not be granted loans. Most of the loans are granted to the middle class, the capitalists and to some of the better-off workers. When the interest rate goes up as a result of ‘too much lending’ the small and large capitalists pass the burden onto workers by retrenchments (to pay off their loans they cut down on the number of workers). The few workers who do have loans are forced to sell their houses or have their goods repossessed.
When there are price increases for imported goods like oil and machinery, then workers are forced to pay more. While 60% of oil is produced locally, everyone is forced to pay international prices, which are well above the local cost of production. This results in massive profits for the oil companies. The same principle applies to wheat, maize and other foodstuff, where the price is linked to the international dollar price but the local cost of production is much lower. When international prices fall below the local cost of production, the working class still has to pay high prices as the capitalists push up local prices to subsidise their exports. Either way, the capitalists gain and prices are manipulated to suit their interest and have nothing to do with ‘supply and demand’. Added to this is the demand by the Cosatu leadership for the devaluation of the Rand; in other words, to make imports more expensive and in effect to subject the entire working class to a wage cut relative to international prices.
The IMF is behind the wage cuts in South Africa
The International Monetary Fund (IMF) and the World Bank are the leading representatives of the giant banks and monopolies in the imperialist centres.
The world capitalist economy is in long term crisis; it is not expanding but in decline. The imperialists always try to shift the effects of their crisis away from themselves, onto the working class in general.
With the blessing of the IMF, the SA government has set the range for inflation as 3-6 %. What this means is that irrespective of the inflation that workers suffer, the wage increases are kept to the range of 3-6%. Inflation targeting therefore means that workers wages are cut or kept low so that profits of the capitalists are increased or at least maintained. The Budget Review (2007) unashamedly brags about ‘moderate wage increases’ and ‘high corporate profits’ over the past few years. In 2006 the IMF was arguing that the SA government should aim for inflation of the middle of the range, that is, of 4.5%. In the current wage negotiations in the public sector, they have offered a 5.3% increase as a final offer. In other words, the SA government is implementing the IMF proposal of keeping wage increases down within the 3-6% range. So loyal are they to the international capitalists that the SA government is prepared to face a strike of over a million workers just to help maintain the profits of the imperialists. Union members need to ensure that their leadership do not compromise below the 12% that is the current position; a low wage increase will set a precedent for the entire working class.
So confident of the capitalist role of the SA government are the IMF that they predict that wage increases will fall from 7.2% to 6.5% from 2005 to 2011.
That the IMF can talk about ‘growing support’ for inflation targeting means that there is increasing support among trade union leaders for official ‘inflation-related’ increases and multi-year agreements. This means that workers should keep an eye on the trade union leadership, and change them if necessary, should they become agents of inflation-related deals and/or multi-year agreements.
Now is the time build a revolutionary working class party!
Forward to a Jobs for all at a living wage!
Down with the IMF-inflation-linked wage cuts!
Forward to solidarity actions/strikes in support of the public sector battle!