JOB CREATION AND DEFENCE PROCUREMENT

Summary

The SACC applauds the Portfolio Committee on Trade and Industry for launching an investigation into the accuracy of the job creation forecasts associated with the arms procurement deal. We raise a number of questions about offsets as a job creation strategy and urge the formation of a broadly-representative body to monitor and evaluate the industrial participation programmes on a continuing basis.

1.0 Introduction

1.1 The South African Council of Churches (SACC) is the facilitating body for a fellowship of 24 Christian churches, together with one observer-member and associated para-church organisations. Founded in 1968, the SACC includes among its members Protestant, Catholic and some African Independent and Pentecostal churches, representing the majority of Christians in South Africa. SACC members are committed to expressing jointly, through proclamation and programmes, the united witness of the church in South Africa, especially in matters of national debate.

1.2 Over the past two years, the SACC has repeatedly expressed grave reservations about many aspects of the current defence procurement package, including the accuracy of the job creation forecasts. We have questioned both the need for the sophisticated new weapons and, more especially, the prioritisation of rearmament over other more urgent human security needs.

1.3 Our doubts about the veracity of the job creation figures are not based on a thorough economic analysis of the offset agreements. Even if we were equipped to undertake such an analysis, we would first need to know exactly how the government calculated its estimate of 65 000 new jobs and see a breakdown of where these jobs are expected to be located. However, we understand that in other parts of the world, such defence offset agreements have often produced far fewer benefits than initially hoped. Consequently, we feel compelled to continue to raise questions about the deal. We applaud the Portfolio Committee on Trade and Industry for holding hearings on the arms deal's capacity to generate jobs. We hope that the hearings will help to address some of the questions we raise below.

2.0 Are the job creation claims made for the industrial participation component of the arms procurement deal reliable?

2.1 If the investment and countertrade deals on which the job creation estimates are based are economically sound to begin with, why has it been necessary to link them with the arms deal? Why are the companies involved not queueing up to invest or to trade anyway? If the trade and investment plans are not economically compelling, are they likely to materialise--or to be sustainable if they do?

2.2 Will the government publish details of the jobs they expect to create through the deal so that independent analysts will be able to assess the accuracy of the claims?

3.0 Does the arms procurement package represent a cost-effective job creation strategy?

3.1 The government has limited resources at its disposal to address the very great needs of its people. Without doubt, the single greatest threat to the security and well-being of all South Africans is poverty, not invasion. Job creation must be a priority in any credible anti-poverty strategy. Creating jobs must take precedence over having the best-equipped military on the continent. If job creation is a priority, is spending a vast amount--currently estimated at R43 billion--on sophisticated weapons the most practical way of achieving that objective?

3.2 Half of the offset agreements are meant to be defence-related, but defence industries are typically capital-intensive, creating relatively few jobs for the money invested. Even if the predicted 65 000 jobs materialise, we will in effect have spent at least R660 000 to create each job. In South Africa, as in other parts of the world, the arms manufacturing industry operates at a loss, requiring state subsidies to stay afloat. This could considerably enlarge the price the public pays to create and maintain each defence industry job.

4.0 What sort of jobs will we be creating?

4.1 In both the Defence Industrial Participation programme and the civilian National Industrial Participation programme, the emphasis is on high-tech manufacturing. Will we be enabling poorer, less skilled and less educated people to find work? Or will we simply exacerbate the shortage of skilled professionals, inviting a widening rift between rich and poor?

5.0 Is it morally defensible to use employment needs as a justification to expand arms production?

5.1 At a public forum organised by the SACC and the Christian Council of Sweden as a part of the November 1999 Sweden-South Africa Civil Society Encounter, the Rt. Rev. David Beetge, Anglican Bishop of the Highveld, acknowledged the profound need for jobs, especially in rural areas. But he warned that this should not imply a policy of "jobs at any cost". Recalling a friend whose son had been killed on the battlefield, he said: "I cannot say to her: 'Don't cry for your son because the bullet that killed him provided a job for someone in another country.'" Are any jobs we create in "defence" industries likely to come at the expense of our sisters and brothers in other nations?

6.0 Evaluation and monitoring

6.1 The SACC/CCS forum called upon the South African government to demonstrate its commitment to fighting poverty and corruption by publishing complete details of the offset agreements associated with the arms procurement package and by establishing a broadly representative committee to assess the likely impact of the offset agreements, to analyse their potential for reducing poverty and unemployment, and to consider alternative options for deploying these funds to promote genuine human security through socio-economic development. We hope that the Portfolio Committee on Trade and Industry will press for the establishment of a continuing, inclusive and transparent monitoring and evaluation programme. We also trust that the government will refrain from exercising its option on further arms purchases until it has had an opportunity to consider the findings of such a monitoring team.