It was Nhlanhla Nene, the then minister of finance, who said: “we must find a balance between meeting the earnings expectations of shareholders, the realisation of the vision of economic transformation required by the electorate and occupying our rightful place as global corporate citizens.” Easier said than done it seems since our government has been wanting to enter into a social compact for the longest time.
The notion of a social compact between government, business and civil society as a basis for long-term economic development and growth underpins economic models in many industrialised countries.
According to Prof John Luiz from UCT, “the East Asian authoritarian historical experience saw political legitimacy arise from high economic growth rates. Social protection and political participation were suppressed. The state had to keep delivering the high economic rents and, in return, labour focused on productive activities and long hours of work.”
In the South African context, this already presents a serious challenge. First, the unions will not agree to labour focused on productive activities and to work long hours. This will never happen within the current labour laws we have. Secondly, anything that speaks of “authoritarian” in our constitutional democracy will simply not fly.
I remember in the mid-1990s when then Minister of Education Kader Asmal wanted to insist that better qualified and resourceful white teachers should spent at least one day a week in a poorly resourced black school in the townships to better assist with the lack of trained black teachers. The country almost came to a standstill with the massive revolt offensive from our white compatriots. So, you see, authoritarian approaches just won’t fly here.
Luiz goes further: “in Europe, a very different social compact emerged that saw a more collaborative, corporatist framework, which focused not only on production, but also on the general wellbeing of the populace. Despite these differences, what ties them together is the implicit or explicit compact that exists between business, government and labour as to the future direction of the socio-political economy.”
As for social security, it does not address the root causes of unemployment and inequality in South Africa; instead, it is putting an increasingly unsustainable pressure on the fiscus to support an ever-growing number of welfare recipients with a static and limited taxpayer base. But what to do when we have continuously failed to grow the economy and create much-needed jobs? This issue has become increasingly politicised, thus reinforcing the importance of social compacts.
It is a fact that the negotiated settlement meant no voice for the majority of our people, so a search for a social compact now is of course more pressing. Hence the need for a long-term social compact, where all stakeholders must come to the party. Business, labour, civil society and government must all be prepared to make sacrifices in pursuit of such a compact. This will not be easy, given the country’s past and the antagonistic relations between these stakeholders. The alternative is rising instability, more July 2021 protests and looting and continued policy vacillations leading us down a path that nobody wants.
Marianne Merten reminds us that the president stated that he needs a “hundred days for a new social compact to get all South Africans on board to do their bit to set the country on the right path to deal with poverty, joblessness and inequality.”
He indicated that, “from April 2022, third party operators will get slots on the trains from Transnet to South Deep. And by October 2022, private-public partnerships will be in place at the ports of Durban and Ngqura. Amended electricity legislation that would allow a ‘competitive market for electricity generation’, among others, would shortly be published for public comment.”
The president said that “the presidential State-owned Enterprises (SOEs) Council is busy drafting recommendations on which SOEs to retain, which to merge and which to jettison.”
Ramaphosa announced, “a year-long extension of the R350 Social Relief of Distress Grant because no one should have to bear the pain and indignity of hunger.” This by the way was a much-needed relief for the very poor among us. “It remains our ambition to establish an income support for those in greatest need,” said Ramaphosa.
Energy, transport, including road and rail infrastructure, has remained a priority and hence the rural roads, rural bridges project. The South African National Defence Forces (SANDF) is set to lead this initiative. An additional seven bulk infrastructure projects in cooperation with the private sector were also announced. Altogether, there was a commitment of R1.8-billion of government investment, and the projects were valued at R133-billion combined.
The president concluded with “we are engaged in a battle for the soul of the country. We will succeed… because the spirit of resilience is deeply embedded,”. He continued, “If ever there was a time to work together, it is the time…”
These are all only government initiatives…. where are the private sector initiatives, investments and contributions? This is why I have my doubts about even the possibility of signing and agreeing on a social compact within the next hundred days. Labour is simply not on board and wouldn’t want anyone to tamper with the existing labour legislation, which by and large protects their workers almost always at the expense of the general population.
Government can only go so far and eventually is forced to introduce social relief packages in order to stall impending uprisings by the masses.
And the private sector continuously uses the excuse of policy uncertainty, and in the meantime, siphons off their billions offshore. Foreign companies are making some effort to invest locally but our very own home-grown companies remain reluctant.
This is not how we are going to move closer to any form of a social compact, but I stand to be corrected, come a hundred days from now. DM
This article is more than 3 years old
We urgently need a social compact, but labour and the private sector will have to get on board
Business, labour, civil society and government must all be prepared to make sacrifices in pursuit of a social compact. This will not be easy, but the alternative is rising instability, more July 2021 protests and looting and continued policy vacillations leading us down a path that nobody wants.
Categories: