S.Africa's Zuma says to ease economic inequalities

By Peroshni Govender and Alison Raymond

MIDRAND, South Africa (Reuters) - South African President Jacob Zuma promised on Monday to ease inequalities but showed no sign of bowing to union allies who want a shift to the left in economic policies.

In a sign of frustration from union federation COSATU, which was instrumental in helping Zuma to power in April, it said the government could not count on unconditional support.

COSATU condemns policies it sees as too pro-business and has gone head to head with Zuma over a series of pay strikes.

Zuma assured COSATU, which has 1.9 million members, that creating jobs and improving the lives of the poor were the policy priorities of the ruling African National Congress.

"The ANC must now use its victory and control of state power to improve the quality of life of the poor and marginalised," Zuma said.

COSATU President Sidumo Dlamini said Zuma and the government should not take the labour federation's support for granted when it came to choosing his successor, suggesting the union body may toughen its position if its demands are not heeded.

"When that debate comes we shall not be neutral. We will be on the side with those who would have supported the principles that guided our movement," Dlamini said.

Thousands of union members attended COSATU's four-day annual conference. The group wants economic policies it says will bring jobs and improve the lives of millions of black South Africans still living in poverty 15 years after apartheid ended.

Zuma said people's lives could be changed if drastic improvements were made in health, rural development, education, the fight against crime and creating jobs.

His comments did not include new measures to improve the lives of the poor. Instead, Zuma highlighted some measures taken since he came to power like the creation of new government departments, including a human settlements ministry which has a mandate going beyond the mere provision of housing.

Zuma -- dressed in a bright red Mao-style suit -- said the fact that South Africa was in its first recession in 17 years should not make the ruling party and its union and communist allies shift from their goals.

As well as more spending, unions seek an end to inflation targeting by the central bank, which they blame for sharp interest rate increases last year. They also demand a seat on the bank board and want it to come under full state control.

"This is a crisis comrades. But we cannot blame all this on the global slowdown," said Dlamini.

"We have had a large dose of irresponsible policy, particularly by the Reserve Bank. Tightening monetary policy by increasing interest rates brought the economy to its knees."

LAWLESSNESS

Zuma condemned lawlessness seen during recent strikes and protests over slow delivery of basic services like electricity and water in townships.

"Violent strikes violate other people's right of association and undermine the cause of workers".

Dlamini told the congress that the economic crisis was not of workers' making so they should not have to bear the brunt.

Analysts said that while Zuma was likely to be open to debate at the congress, COSATU would not dictate his policy.

"I doubt Zuma is frightened by the unions," said Sanusha Naidu, a political analyst at think-tank FAHAMU.

In the draft resolutions, COSATU also called for a review of the country's black economic empowerment (BEE) policy, saying "the black bourgeoisie benefits on the sweat of workers through BEE companies".

In order to right apartheid wrongs and give blacks a stake in the economy, South Africa requires firms to meet quotas on black ownership, employment and procurement to offset racism and stimulate the economy by creating a black middle class.