i98 Broadway * New York, N.Y. 10038 0 (212) 962-1210 Tilden J. LeMelle, Chairman i98 Broadway * New York, N.Y. 10038 0 (212) 962-1210 Tilden J. LeMelle, Chairman Jennifer Davis, Executive Director STO: Key Contacts FROM: Labor Desk DATE: October 10, 1991 COSATU SETS NOVEMBER 4-5 FOR' NATIONAL STRIKE OVER TAXES, ECONOMY: WARNS ON NEW LOANS SoutW African labor has begun to flex its muscles in the increasingly bitter struggle between the democratic movement and the apartheid government over the economy -- calling a two-day national strike to protest new taXes and the de Klerk regime's failure to negotiate in good faith over et onomic restructuring and labor relations. The imm'nediate cause of the strike is the introduction of a regressive new national tax system, Value Added Tax. VAT has emerged as an explosive new political issue at a time when the country is already grappling with widespread political violence and economic decline. Residents of the impoverished townships will be hit hard by VAT levies on basic foodstuffs and the previously untaxed informal sector. Negotiations between a coalition of organizations led by COSATU and the finance ministry over implementation of VA" have deadlocked in the face of government inflexibility. The government also reneged 06 a commitment to COSATU to strengthen and restructure the advisory National Manpower Commission, an important labor rt- lations forum, to include the unions. The regime then refused to implement a key NMC agreement between COSArU and employers to extend labor rights to domestics and farm workers. These events strongly -suggest goveIrnment stretegy is to lure COSATU onto toothless committees while it acts unilaterally to lock in continuing white control of the economy. In respunse, COSATU and the smller National Council of Trade Unions (NACTU) have called a *two-da, national strike onNo er44_ to demand the creation of a national economic negotiating forum. The body wobuld involve all majoreconolnic actors, and its decisions would be binding on industry, labor and g oernment. The unions also'endorsed 'a warning 'by ANC Secretary General and former mineworkers' head Cy I! Ramaphosa that a future democratic g6vernment could repudiate sanctions-busting bank loans. The threat sent .shock waves through the South African and Western banking circles and is yet another rerm iider that the 'dermicratic movement is fully 'committed to economic sanctions. SUPPORT THE STRIKE! -Send solidarity faxes to COSAT U General Secretary Jay Naidoo. (0i 1-27-11) 834-3008 Picket 'South Africn ConsujlatesiIn yjour area on'the days'of the gtrike. C6ntact the "Llbor Lksk frrm6d, iinf6rmatibn about the strike and the steuggife for economic deiocracy in SouthAfrica. Established4 by'The A ki'aCommittee 6n Afrcaj 066' 6 ontributioni ar Ie iax- deduci~1ble

Y MAIL, September 27 to October 3 1991 5 DEAL brokered by an outside taexpert could have defused the explosive Value-Added Tax crisis two weeks ago but was torpedoed by the h hb ed and inflezlb t Finance Ministe-r Ba- end do Plessis. Investigations into Do Plessis' hardtiing of the unfolding VAT saga shed I a harsh tight on the minister's personal failings atid reveal a consistent pa.tern of nolitical miscalculation ar.d flt11 Cfi.e11tt. "hI ally normal cot~otry, he would have been fired by now," commented a business leadr iwolved in last- a ditch inwes to head off an all-)tt i,4r ovcuilax at npt over Lhe ins. Sourcc said that foltowing Dr Ph_ssis' Septembewr 3 ineedag with t Co'ordinati-g Commihtee on Vat (CCV;e tax lawyer Profes5sor H enry Vorster brokered a nmeeting involving Vat. watch cwinnan itou;sc Tager and a represenitative of the Finance Depart ment. wch hammermd out a compromise dea1 broadly acceptable iz bot% h e the cotilittce aoid the dcpa).tn . Co'1act1,t for confirmation, Vorster 0 t decticnt t:3 C(A.nt. lr The dc! ackiiowledged that the hplemcnt;ntion of VAT could no: be dielay rd, but pvi,,sed the zero-ratng ef a btm-oflvi bt'sket if basic loodstuffs and nriregi c midiciioes for 4 six- Rar~nd du Plessis' 1othiti p'-io"r. lo aflow for the negola. 'schooiyara-bully' approa tion i(d attrodiction o0 poverly-rel'rf programmes. Jbis is s-bstantianiy the pulitical miscalculations sc comptomise De ;Clerk is expected to o anmouce today. a deal that could have def At his itext rieeting with die CCV, growing anqer at the hnpo on September 17. Du Plessis refused to take the gap. Insistiag that -o fu- VAT. By DREW FORR ther zero-rating was possible, he de- _.___livered a lengthy iecture to the com- ndttee tean aad t%- talks degereateo hit flak in the cabinet f,'om colleagues into political Amida3nging. deeply concerned that his Inflexible "His mame was t1t of the school- style has undermined the governyard buliy," said one man pretent st ment'z stated comnititnrt to netodathe talks. "My impression is that he's don ad that the VAT row coewd inflict at Isecure man who's not on top of maitor damage :n the constitutionral his job. Instead os" weighing VAT cm procets and labour peace. There Is its merits. he podilcised the ssue." strong speculation that hie politicrZ caAdded the A C's Tito Mbowent. reer may be oi the lite. who also attended: "He was complete- At the second "VAr sumindt" this ly nmposoble." week, attended by 43 political, union, Numerous sources confirm that welfare and civic organisations, ANC progress was only made at this secretary-general Cyril Ram ahosa week's talks between the CCV and De warned that a continued hard line on Klerk once Du Plessis had left the VAT would undermine the governmeeting for another appointment. met's negotiating bona fides and juo"Once Barend was gone, we began to parlise constitutional talks. sae the president's human side," was Sources within the South African one comment. Chamber of Business confirmed that It is understood that Du Plessis has there are calls within business circles i N 1 *Government members agreed 01-,na the reduction in VAT 4o 10 perclt rod fuel hike had been a mistake, and that it would have been better to leve things as they were. *Government claims that VAT , would raise the comt of Uiing of lowerIncome groups by only 1.5 percent 4l were essentially baued on International Monetary Fund sthtistics, without beIng adjusted for local conditions. The CCV estimated that the figure was nearer ive percen t. * *No statistics weae available to back government claim.r that the postponement of VAT woull have "catastroph4 ic consequences". *That although it had always been government policy to couple VAT with poverty-relief progranmes, three weeks before the lianh of the a, ,io S ." * programmes for the ixtor had been planned or set in pi ce. "Government members admitted this was an oversight," a source said. A Health Department representative too the w rking |jr igroup that it lacked the *nfrastructur: -1 to distribute relief funds mid that a svtten could not be se up by Sept ;tuber 30. In addition, it appe rs Jut as latc as August, Du Plessis had no sernsc f S the looming crisis over VAT and that the issue was left tr, lo*%tr-level offiSources said that f)Illr,wing the resoch antd .iuion on the tax a- the Congress oi [C" South African Trad, I Wions' national :uppered congress, alarmed bu;,ness leader. tasked Manpower Minister Eli .ouw used.rnatherdl to suggest to Du PlessiE that he iniiate sition of diulogue with the laxinur movement. Mmtiers of ActiUp an .ids orsntaon, ott against yAT on Blusiness sources tiis week slammed EST mied1coois" Phow:JUSIN-IltK tihe almost total laWk of government educational and infonmation pr3--mmes to familiarise odinary wefor Du Plessis to step down. It is said tean involved In we talks. pc and the business community o" the that IC' top burinessinen attending a Government fatilures on VAT were mechanics of VAT- 1i, contrast with dinner last *eek of the South African also thrown into harsh relief in the bi- prc.cdce everywhere else in the sorld Fiscal Associatioz, at which the mbd- lateral "working group", repre.enting Although the Value-Added Tax Act ste ,was a guest speaker on V.^', govenmnent and CCV exptas,a-,reed was silent or ambivalent on a host of pointedly omitted to applaud his ad- to by Du Plessi5 at the Szptember 3 quesdonm, no governent interpletive dress. talks Is task was to weigh the likely manual had yet been published. If De Kic.rk announces further effects of postponing VAT, ainong "Thousands of bualness people ae changes to the tax today -- and he Is other issues. queueing up for rulings fiom Wnand expected to do e in the wake of b:-s Deliberaiom in the group revealed: Revenue - some have been waitwg talks this week with the CCV- it will *The decision to cut the VAT rate since June;" a source said. be the fourth time in as many weeks from 12 to 10 percent and raise the "It's quite clear that the government that the system has been adjusted un- petrol price by 13c a litre was made wanted to get this thing in place before der pressure. without the necessary statistics or the start of constitutional negotiations. "Given that the tax is due to take ef- econometric model. "It was a com- They realised that this was a highly refect on Monday, this suggests that the plete thumbsuck. We were flabber- gressive tax which would hit the poor, government has not done its home- gasted that such an enormous decision' and that once there were black faces in work." said the National Industrial was based on such anecdotal evi- goveniment, it was a dead letter." Chamber's Ian Hetherington, a mem- dence," said a working group member of the co-ordinating committee her. *S.. PAGE 13 ] L 3 I

CONGRESS OF SOUTH AFRICAN TRADE UNIONS Td.o:4.$1m P.0 Of4-3 PRESS STATEMENT 2/10/91 COSATU DEMANDS CENTRAL ECONOMIC NEGOTIATING FORUM AND RESTRUCTURED NATIONAL MANPOWER COMMISSION COSATU's highest decision making body, the Central Executive Committee (CEC), met from 27-29 September, inter alia to discuss recent developments on the economic and labour fronts. In relation to these issues, the CEC made a number of important decisions: 1. Withdrawal from the National Manpower Conimislon The NMC is the body whish aavises government on labour legislation. COSATU agreed to participate on an interim and conditional basis after it signed the Laboria Minute last September together with NACTU, SACCOLA and the State. In terms of the Laboda Minute the NLMC would be restructured, full rights extended to farm, domestic, public sector and Bantustan workers, and trade uniors would be consulted before any legislation affecting them was introduced. COSATU decided to participate conditionall ii, the unrestructured INMC, ii, order to advance the right:., of workers excluded from labour legislation an to infl-iencc the restructuring of the NMC. We did s' on the basis that the NMC w ould be restructured to make it fully representatiye of the mayor players, and would 9t as a negotiating forum, not merely an advisov body. This was also done on the understanding that once the term ot office cf the NIC expired in April this year, a restructured NMC would replace it. However this has not occurred. The NMC sought an extension from the Minister to extend its term of office until September to complete discussions on restructuring. While the Minister initially agreed to a restructured NIVIC being set up in October, he then reneged on this undertaking and has since then refused to specify a date for the new NMC. Then, in a letter to COSATI on September 9. the Minister backtracked even further, by saying that even the restructuring which was Wh Rai., WW-t TVL Wo-mtt- TYL I~ N nMlllNil Sg 'It'I N ow ~ 'W~aw gul k Cm ~ ftbM. " . POA3, .43S 314 F P M., PC 3,-43 P.CB.,2MI p01..7P 0P3o."r, I1e PA O B 351 PO 1119 cawilopJ I29 0c 999T0R1A =0 ow910 4461 K.. YA*, Oe8 3TJzA 4016 PAXI33121 0. MOM 6 PAX . 92 02 PA',1M517 0632 31M2819 PAXM1099)92.0.U pAX.1nj03lS7111e :AA0N20 M6)P~X'(03025 711. proposed by the NMC was too far-reach ng, and could only be discussed in national political negotiations. The NMC proposals had the support of both COSATU and SACCOLA, the major players in the labour relations field. Under these circumstances, the COSATU CEC felt that the government had made it impossible for us to continue paricipating in the unrest-uctured NMC. The decision was therefore taken to withdraw from the NMC until the government lonours their undextakinig to restructure it. At this point, COSATU will reconsider our withdrawal. 2. UIF Board In June this year, COSATU received a request from the LTIF Board to nominate a person to sit on the newly constituted board from October 1991, In the light of our experience of the NMC, the CEC felt that we should not nominate someone, but rather that the role of the UIF Board and the demand for improved benefits, should be discussed in the proposed national economics negotiation forum. If an agreement is reached in these negotiations on the nature of a restructured UIF Board. then COSATU would be prepared to participate in such a Board, 3. Campaign for the setting up of a National Negotiating Forum on the Economy ]n discussions subseqvent to the signing of the Laboria Minute, COSATU proposed to both the Mlinister of Manpower (in May 1991) and Saccola (in June 1991) that a forum be set up to negotiate agreements on broader economic issues. COSATU was concerned to establish a national negotiations forum to look at crucial issues affecting its members such as retrenchments, job creation and other issues of socio-economic development. Both Saccola and the Minister welcomed this proposal. In a meeting with Saccola and -he Ministex on J~ly 11991, COSATh proposed a structure and procedure for this forum, as well as issues which COSATU wanted addressed. At this meetihg, an in- principle agreement was reached to establish a forum to negotiate such issuets. A tripartite worldng group was established to draw up terms of reference for the forum. This group prodncced a "draft statement of intention" which stipulated that the first plenary session of the forum should happen before mid-August. COSATU subsequently endorsed the draft statement of intention. Desp.e these agraemats, Saccola and the State have subsequently backtracked on the proposed forum. In a meeting with the Minister on August 27, he suggested that this forum cannot be discussed outside of the national political negotiations. This effectively put the proposed economics negotiating forum ov' ice The CEC considered this turn-about in the light of recent developments. The government's refusal to negotiate burning economic issues on the one hand, while on the other hand unilaterally imposing economic restnicturing programmes, was completly unacceptable to the CEC. The proposal that the.e negotiations must be postponed until national political negotiations take place, was viewed as a transparent delaying tactic, The VAT debacle, and other unilateral restructuring being undertaken by the government, A....l- "-.E.-.t.. tkiat. &,imusus is dxlnvia ia sadsa Ot iumpnna iqtl 0un economic programme. COSATU C(.C therefore decided to launch a campaign for a national economic negotiating forum. together with our allies. This forum would involve the major national actors in the econonmic arena, and would aim at reaching binding agrements on burning economic issues. This forum would not pre-empt the formulation of economic policy by a new democratic government, but would negotiate economic issues which needed to be addressed during the transidon period. It woald also ensure that the government no longer embarked on unilateral restructuring. In this context, the CEC rejected the request to COSAT that it cntin-ate two representatives to sit on the State Presidents Economic Advisory Council. COSATU is committed to negotiating binding agreements among the major parties on economic issues. It is therefore inappropriate for us to sit on t advisory body which is part of tite process of implementing the goverrnent's prcgrarnme of restructuring. 4. Programme of Action The Piogramme of Aceon decided on by the CEC did not only cwicrrn itself with VAT but wi'th the relatt-d issues of unilateral economic restructuring and the reneging of government comnitments as outlined above. The CF.C was of t.he view that a serious and sustained programme of action must be ombarked opcn,. It was thus decided that a two day national general strike s ould bc called in the first week of November. W?le the cxact dawes and other details are to be finaised at a trade union summit with NACTU and 15 other independent unions and staff associations on 8 tcober, the follcwing are COSATU's propesed demards for the general strike:

VAT The CEC endorsed the demands of the Co-ordinating Committee of VAT, namely: * There should zero-rating of basic foods, water, electricity, medical services and medicines. * The poverty relief programmes must be properly negotiated. * Better provision must be made for small businesses. Economic Restructuring The VAT issue has brought ito focus moves by the government and the corporate sector to unilate' Ily restructure the economy, is thus demanding that, in this transitionaryp-±.x-, thz urnla:rzal economic restructuring of the government as well as unilateral indusaial restructuring which is being undertaken in some sectors must stop. Trade uiio m ust be iivoived u, negodatirs over rei:ructurix.g. In particular SACCOLA and kN 5t:.e must iyzc to tqt estabhshatmr*. of a. aational forum to cgoutiato cionoriz, i$suca togother with other major playerg in the. ecnrtmic are'ia, Worker Rights The CEC vieweJ with concern the lack of progress in achieving legal protection and full trade union rights for farm, domestic, public sector and Bantustan workers. We Are demanding that thex iquired legislative amendments shou-ld be inade ia time to be passed d-riiig next y-ar's parIiamentary session. lnerii Governnment in the context c: the -rkLhagate icandai, COSATU Congress in July, agreed that we n-ed to consider stike action in support of our demand for an Interimn Go';ernur' :.t. t te jove ram'rL t refuses to meet this demand, it will be a central demand of the national general st:ke.

:OtManflemurg I0Bx ~6 -Mamsntfotw 2107 Fax: 01 -- q lex -42*2S Nalior=aI CongreSS PFRE"U6 STATEMENT - RESPONSE TO NEWSPAPER SEPORT$So ABOUT HOQNOURING INTERNATIONAL LOANS 'The report inl the Star ot 2nd October to the efrect that i said the ANo wouid mnot be keeri" to ihonour interneticnal Icans granted to the current gvernerif does not sccurately reflect my statement: ephacitee the ngTt, anid moral duty, of ary future democratlly efectel gcverrimsrit to re-evaitJate any io2ai8 tfat the apzrtheid regime oetcz itaLo arwn Ue coenxuona under which th-pi have been Obtained. The new d errocram caly efected government cannot. -just be a rubber stm -!or the actfons ana un~dertmk~rgs of an~ a.pe-tteld government, w'h ,h ccu-1d havte &rted to CnerOUS -0,Odlt1Cr! -neking it C!Mfcult for a iie~v givernmnept to ac'ee~b~'e.We Mtj need to carefully evzfuate, the cnditions for each loan. Faced with this situetion, we are opposed to the granting of arny AIM.ther ,nternational loans to South Africa at least until an Int.er,*m GcverrmenT is fornned. I6tatermemt by Cyzii Rsma~hCsa Secretary G-eneral of the African National Congress Msued by the Zepai-ement of Informator and Publicity F 0 BOX 61884, Marshalltow~n, 217 2 Cctober 1991

CONGRESS OF SC UTH AFRICAN TRADE UNIONS PRESS RELEASE 4/10/91 COSATU POSITION ON LOANS TO APARTHEID GOVERNMENT COSATU is in full support of the ANC National Working Conmmittee's decision on the repayment of loans made by the South African Government. Our considered view is that a future democratic government has the right to re- evaluate the repayment of loans given to the South African Government. especially those made in this transitional period. The present Government has no right to burden the South African people by unilaterally borrowing money, at this stage, to feed the apartheid bureaucracy, or to finance unilateral economic restructuring which is to the detriment of the majority. We call on international banks, including the IMIF and World Bank, to intor iirn ntaotiarionS with Ihe r;gV §;ntatives of the people and not just COSATU also calls on the international trade union movement, solidarity movements and our other allies to step up pressure on international financial institutions to stop all loans which do not have the support of the South African people as a whole. Issued by: Jay Naidoo COSATU General Secretary WNa~m wmn TfL~ Nq,.i,,TYL jHWQ~~ NW4.C"003%hW*MU1 JI~M I.A wwon~C~., ZM"16 k "Ivan ZR.-7 P.O. BM35 714p .Us P~&4 PAR..2MI PA INK 9 PO.a. 3V4 hi.rPSic P.O.4f ft 3100 1s)?akit VOMNNIL4 5ZD?=i C,, .9 . V*Nnm XaIMMUY PWAKt,4AIL ~IN,JR (5.4 M..s 1 bM.3WGI PAX: V34.272 WiX (014,5I 2241 D= ?A F1)5JJAX! (05311 ".1§10 CN~9.I PA. CU3-411 CAM70WHm, FAX:(Oifl 23411% 0 (O2D461_WAN, 0 J041)4A-17A QO9I.&A.6- 1. MANU.MMEi3/ 'I 4,s1728 RIC:44/i .SO¢8