by Piet Coetzer

The politics of unemployment

Financial crisis morphing into a global political crisis

George Friedman
George Friedman.jpg

The global financial crisis of 2008 has developed into a global unemployment crisis which, in turn, is fast becoming a political crisis. The impact is likely to be epic –geopolitically, economically and socially – and while the details may differ, a similar process is taking place in South Africa. 

Two different reports released in different parts of the world last week have one message in common: when unemployment becomes intense, the entire political system can shift.

In a report for Stratfor, George Friedman writes about the recent election results in Italy which, “with 11.2% unemployment, is far from the worst case of unemployment in the European Union. Nevertheless, Italy is breeding radical parties deeply opposed to the austerity policies currently in place.”

He further notes that when “unemployment emerges, consensus (that financial stability should be the primary focus) shifts and the focus shifts with it. When unemployment becomes intense, then the entire political system can shift. From my point of view, the Italian election was the first, but expected, tremor.”

An article on violent protests in South Africa, published last week by the Pretoria-based Institute of Security Studies (ISS), states that “young unemployed men confronted by bleak employment opportunities were identified as the main ‘instigators’ of the (violent) protests. The broad causes of public violence were identified as marginalisation, lack of community representation, and lack of economic and social citizenship. These factors propelled communities to acts of violence as an expression of their frustration.”

On the developments in Europe, Friedman writes that while there was relative success in solving problems in the banking sector by the elites in society, “they have done it by generating a massive social crisis. That social crisis generates a political backlash that will prevent the German strategy from being carried out.

“For southern Europe, where the social crisis is settling in for the long term, as well as for eastern Europe, it is not clear how paying off their debt benefits them. They may be frozen out of the capital markets, but the cost of remaining in it is shared so unequally that the political base in favour of austerity is dissolving.”

He reminds readers that in the buildup to World War 2, “Fascism had its roots in Europe in massive economic failures, in which the financial elites failed to recognise the political consequences of unemployment. They laughed at parties led by men who had been vagabonds selling postcards on the street and promising economic miracles, if only those responsible for the misery of the country were purged.

“Men and women, plunged from the comfortable life of the petite bourgeoisie, did not laugh, but responded eagerly to that hope. The result was governments that enclosed their economies from the world and managed their performance through directive and manipulation.”

Friedman further points out that the message of the Five Star Movement, favouring debt default as an alternative to the present financial austerity rise, is not a marginal party. “The elite may hold the movement in contempt, but it won 25% of the vote. And recall that the hero of the Europhiles, Mario Monti, barely won 10% of the vote just a year after Europe celebrated him.”

He notes that “history does not repeat itself so neatly. Fascism in the 1920s and 1930s sense is dead. But the emergence of new political parties speaking for the unemployed and the newly poor is something that is hard to imagine not occurring. Whether it is the Golden Dawn party in Greece or the Catalan independence movements, the growth of parties wanting to redefine the system that has tilted so far against the middle class, is inevitable. Italy was simply, once again, the first to try it out.”

Friedman comes to the conclusion that “the crisis of unemployment is a political crisis, and that political crisis will undermine all of the institutions Europe has worked so hard to craft. For 17 years Europe thrived, but that was during one of the most prosperous times in history. It has now encountered one of the nightmares of all countries, and an old and deep European nightmare – unemployment on a massive scale. The test of Europe is not sovereign debt; it is whether it can avoid old and bad habits rooted in unemployment.”

South African developments

For South Africa, the details and some of the underlying factors are different, such as the frustration about expectations of improvement in their economic position for the majority of the population. But the signs that the existing political order is under threat, are mounting.

One of those signs lies in the power shift taking place between the established trade unions, as represented by the Congress of South African Trade Unions (Cosatu), with its close association with present ruling elite as represented by the African National Congress and new, independent labour formations.

Most prominent among these has been the power struggle between the Association of Mineworkers and Construction Union (AMCU) and Cosatu’s largest affiliate, the National Union of Mineworkers (NUM). One of the byproducts of this power struggle has been violent disruptions in the mining sector.

More importantly, two-thirds of South Africa’s workforce are not unionised and its unemployment figures are more than double – or even triple, depending on what base for calculation is used – those of any country in Europe. To date, these masses have been mostly unorganised and their frustrations often develop into violent protests around issues such as inadequate service delivery.

Only time will tell whether the newly formed ‘political platform’ of Dr Mamphela Ramphele – Agang – will be successful in mobilising these masses. But its mere birth, and the interest it has generated, are signs of the underlying restlessness present in the South African political environment.

It may not happen as quickly as some commentators and observers think, and there may still be some unexpected twists and turns in the process, but the end of the present political power construct in the country seems to be under way.

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