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Trade Unions in South Africa have and continue to play a major role in the economy with respect to ‘governing’ the majority of the workforce in the largest sectors of the country, promoting employee’s rights with an overall aim of an increase in the economic welfare of their respective members in the long run. Economists and social commentators have ever portrayed divided opinions on the nature and approach of these Trade Unions and argue that, possibly, a society void of them would yield better economic growth and allow the country to prosper better. The facts and demographics demonstrating this do prove these detractors right, however, they ignore the historical facts of the past which saw mass exploitation and abuse of labour and labour forces in order to ‘prosper’ and a system void of Trade Unions is very likely a thing of the distant past in a country with so much historical animosity between its citizens and many lingering prejudices still today. 

This essay will critically discuss how trade unions have addressed the national budget speech of 2014 and its proposed fiscal policies and proposed spending for the current financial period with their own proposals and comments in what these unions believe would help in taking the country forward. It will reveal the advantages, disadvantages and the practicality behind some of these proposals as officially stated by some of the respective unions. The essay will mention the reaction of government and their proposed fiscal policies; also the comments made by two of the major trade unions in the country. It will also discuss the proposed policies and changes that are proposed to be made with regards to: Youth Wage Subsidy, Infrastructure Development and Incidence Tax.

Trade Union proposals

In response to the Annual Budget Speech by the Minister of Finance, each of the trade unions have, as expected, reacted with their own respective statements which contain comments regarding the overall reception of the statement by the union and proposals for changes in the budget’s allocation and fiscal policy.

The Congress on South African Trade Unions (COSATU) highlighted areas in which they thought needed more attention and this was centred around the country’s current tax system and the union had several proposals in which they feel would help serve the country and benefit their members equally (as is the aim of a trade union). The list of proposed changes or steps that should be taken to help the economy is as follows:

• Introduction of a more progressive tax system, a tax category of the `super rich`;

• Introduction of a solidarity tax, whose aim is to cap the growth of earnings of the top 10% and to accelerate the earnings of the bottom 10%;

• Introduction of tax on both domestically produced and imported luxury items, but a higher tax on luxury items which are imported;

• Imposition of a land tax to aid the process of land redistribution;

• Introduction of export taxes on strategic minerals, metals and other resources to support downstream industries and to promote value-addition;

• Introduction of investment tax credits to encourage local procurement of machinery and equipment;

• Introduce a tax on financial transactions, including capital gains tax above a certain minimum threshold, to limit short-term capital flows and to encourage productive investment, and speed bumps on short-term capital flows to discourage hot money

• Introduction of tax on firms that are stubborn in closing the wage gap;

• Taxation of firms that pay below the statutory minimum wage, and the distribution of such tax proceed back to the workers concerned.

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