The introduction of South Africa’s two-pot pension system, which allows workers to withdraw a portion of their retirement savings annually, has sparked both concern and reflection on the country’s broader pension system, the glaring inequalities in its labour market and the hypocrisy of capital establishment.
As of September 1, Alexander Forbes administrators reported withdrawal requests totaling just over R1 billion, with an estimated R270 million of that amount being paid into taxes.
Despite the government’s claim to provide relief for a working class drowning in high living costs and debt, the state’s eagerness to extract taxes from this scheme reveals its own contradictions – offering short lived relief, while simultaneously benefiting from the financial vulnerability of the working class.
While the start of the two-pot system exposes the deep financial fragility of the “middle class” in South Africa, it is a pity that this is a class that is not inclined to organise within the class struggle through union movements.
This is a characterisation described by Marxist Rosa Luxembourg when she asserts that “the middle class is a class in a state of continuous dissolution. The middle class is incapable of unity and organisation. It is a class that is constantly being decomposed and recomposed, its elements being perpetually pushed up or down into the proletariat or bourgeoisie. The middle class lacks the capacity for self-organisation and self-representation.”
Despite its regressive posture, the dawn of the two-pot system has exposed the criminal nature of the country’s capitalist establishment.
Developments surrounding the pension system has surfaced a syndicate that funnels wealth from the working majority to a parasitic minority, entrenched in monopolised sectors like retail, security, and municipal tendering systems. The Financial Sector Conduct Authority (FSCA) has identified these sectors as key players who have been withdrawing pension contributions from workers, without securing legitimate retirement savings for these workers.
What is most alarming, however, is the systemic disregard for the wage gap and economic inequality that plague South Africa.
In 2022, 75% of South Africa’s workforce earned less than R5 800 per month, while a basic food basket for an average household costs R5 300. This gap is starkly evident in sectors like retail, where it would take a Woolworths worker 21 months to earn what the company’s CEO makes in a single day. Such disparities are not just statistical anomalies; they are symptoms of a broader economic system that refuses to reckon with wage equity or provide workers with fair wages for their labour. And the two-pot system is not a well thought out or proactive remedial action to address a question of inequality.
Furthermore, while billions of rands in pension funds accumulate, these funds are primarily invested in private entities that serve the interests of the minority ruling class rather than advancing the needs of the working class.
The pension savings of millions of workers are perpetuating the wealth of the elite, leaving workers no closer to financial security or meaningful economic participation. This misuse of workers’ pension contributions is not only unethical but demonstrates the entrenched nature of South Africa’s capitalist system – one that extracts wealth from the very people it exploits.
The labour movement, too, must shoulder some responsibility for these developments.
South Africa’s labour unions and worker representatives are historically vocal about workers’ rights, but their inconsistency has fallen short of ensuring that workers’ pension contributions are used to advance their long-term benefit. Instead of directing these funds into job-creating investments or productive industries that can secure workers’ futures, the labour movement has allowed these funds to be absorbed by private interests that exacerbate inequality.
The future of labour in Africa is one that demands a new kind of organising, where workers are conscientised to view themselves not merely as consumers or passive bodies to be exploited but as stakeholders in the broader economic system.
Research into labour markets across the continent shows that the nature of work is rapidly changing, with increased automation, informalisation, and precarious employment becoming the norm. In this context, it is more important than ever for workers to be involved in decision-making processes, whether regarding their pensions, wages, or working conditions. A labour movement that merely reacts to the whims of capital will never adequately serve the working class.
To ensure a future where labour is not just an instrument of capital, workers must be organised in ways that recognise their central role in shaping the economy. They must demand inclusion in decision-making processes that go beyond wage negotiations, pushing for structural changes that address the root causes of inequality. This includes advocating for the responsible proactive investment of pension funds, the narrowing of wage gaps, and the creation of industries that serve the majority, not just the elite minority.
The two-pot pension system has laid bare the fragility of South Africa’s working class, but it has also revealed the failures of capital to protect the interests of workers. The time has come for a labour movement that is proactive in shaping a future of inclusive growth – one that genuinely serves the needs of the people rather than preserving the wealth of the few. Written by community activist, Lesego Mahlangu.
Disclaimer: The views expressed in the content belong to the author and not Y, its affiliates, or employees.
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