Part 2 in USB-ED’s SOS for Our SOEs series. 6 months on, we chat to Lord Hain on what he believes needs to happen for confidence in SOEs to be restored .

South Africa, 19 August 2019: “The trade unions have to change, or they’ll be hit as well. The status quo is not sustainable.” Addressing Eskom and state-owned enterprises former UK cabinet minister and lifelong trade unionist Lord Peter Hain stressed that if trade unions “don’t go with the grain of the necessary reforms and changes” they may face a similar mass membership wipe-out to British trade unions under Thatcher.

“I listened to a COSATU channel secretary and I just didn’t think he was fessing up to the reality of Eskom’s predicament… If trade unions say no to change, there’ll be a similar scenario to what happened under Margaret Thatcher in Britain.

At the time Margaret Thatcher came to power in 1979, trade union membership was at an all-time high under the labour government at the time. By the time she finished, it had virtually halved… Whole industries were wiped out and the trade unions lost millions of members. That’s the membership wipe-out unions here will be facing. They can do their best to protect jobs, but they shouldn’t say there can’t be change. Because, if there isn’t change, then the whole economy goes into meltdown.”

Elaborating on Eskom and other SOEs’s dysfunctional states, Lord Hain said the only way to bring about change is for the reforms being driven by Pravin Gordhan and the President to be successful. “I think the unions have got to buy into that and the politicians must buy into that. I can’t understand some of the opportunism coming from other politicians and some of the factions of the ANC. They don’t seem to realise that every million that Eskom costs the taxpayer is a million less for housing, for schools, and so on.”

Lord Hain called Eskom an “albatross around the economy”. “It’s been allowed to get into this state having been a pretty efficient entity, because of corruption and cronyism under President Zuma and all the looting… its productivity has fallen, its staff number has risen, and that’s unsustainable.”

He called the SOE unwieldy and said there are far too many state enterprises leeching off South African taxpayers. “I say this on the left of politics; I’m not in favour of small governments. I am in favour of actual government, but you can’t have a bloated, inefficient state that’s not delivering the services that people rely upon. That’s not investing in infrastructure; it’s not investing in other services, including housing. You’ve got to re-shift priorities to create jobs in the process; there just has to be change.”

From a foreign investment perspective, he emphasised that improving performance at state-owned enterprises and building up basics – like having good infrastructure and well-regulated SOEs – are a must to restore international confidence. “SAA is costing taxpayers millions, Eskom is costing taxpayers millions, Transnet costing taxpayers millions – and none of these entities are functioning efficiently. Obviously, there’s no country in the world that doesn’t subsidise its railways so that’s not the issue…but Transnet and Eskom must be run efficiently. Eskom can’t just be a comfort blanket for jobs, it’s got to deliver the very best energy efficiently. Otherwise you’re just wasting resources on a big black hole.”

USB-ED is committed to catalysing the leadership South Africa needs to thrive and therefore offer a myriad of leadership courses across levels to bring about the kind of visionaries like yourself who can turn the country – and its SOEs – around.