The Public Investment Corporation (PIC) should direct funds to the under-funded public schools system instead of investing in private education, Cosatu said on Tuesday.
The Congress of SA Trade Unions (Cosatu) criticised PIC and Old Mutual Group Holdings' partnership with JSE-listed private education company Curro Holdings, under which R400 million has been injected into private community schools.
"It is totally unacceptable for a custodian of money held on behalf of public servants to bolster private education at a time when our public education services are in crisis, in part at least because of severe shortage of money," said Cosatu spokesman Patrick Craven.
A R1.2 billion fund has also been established to expand private school infrastructure and to train teachers. It would result in the number of private community schools, also known as meridian schools, increasing to 11 in the next seven years.
Craven said the funds could help narrow the gap between the two spheres of the schooling system.
"The R1.2bn, provided it is properly managed and monitored, could play a significant part in starting to improve the quality of public education and narrow the gap between the two tiers."
Cosatu demanded that the PIC board reconsider its decision and approach the department of basic education to discuss how money could be better used to speed up the transformation in the public education system, he said.