President Jacob Zuma’s recent “social dialogue meeting” on the state of the economy showed up the desperate race between positive and negative signals on the state the South African nation. Amidst also strong global echoes, the proposals that emerged from the meeting are welcome gestures, if perhaps a tad symbolic. However, a firm new social contract is probably needed to come to grips with challenges faced.
The social dialogue was the second such a South African response to a major economic threat, the other having taken place – with positive results - in response to the 2009 global economic crisis.
This time the presidential social dialogue was prompted by the widespread labour unrest that followed the Marikana tragedy. It exposed deep-rooted socio-economic ills and the resultant growing negative perceptions about South Africa in the face of the worsening threat posed to it by the current global economic situation.
Two international risk rating agencies had already downgraded South Africa while the influential financial publication, The Economist, published an article and editorial that takes a dim view of South Africa’s economic prospects after Marikana.
The events associated with Marikana explicitly showed that the Mandela social contract in South Africa has come to an end and that a new one is sorely needed, argues Richard Calland, Associate Professor in the Public Law Department at the University of Cape Town in an article entitled “SA elite will not be making the Sacrifices” in the Mail & Guardian.
A recent report prepared for the United Nations Economic Commission for Africa (UNECA) by the Idasa Institute for Democracy in Africa notes that “pervasive poverty and inequality are perhaps the most important crises facing South Africa 17 years after the transition to democracy”.
The social dialogue meeting attended by leaders in business, government, labour and community organisations resolved to take steps to improve public and investor confidence in the economy and in social stability.
The meeting decided on steps to accelerate infrastructure rollout to create jobs and stimulate economic growth, to address the living conditions of mining communities, measures to address the challenges faced by workers and companies affected by the global economic slowdown, public sector work programmes to create jobs, and to address the growth of reckless lending.
The meeting also resolved “that steps need to be taken urgently to address the large income inequalities in South Africa, which are a primary risk to our future as a sustainable and successful society”.
It consequently called on all those in executive positions both in the private and public sectors to commit to “a freeze in increases in salary and bonuses over the next 12 months, as a strong signal of a commitment to build an equitable economy”.
Unfortunately much of the media and other commentators chose to focus on this aspect alone, missing its symbolic value as a “strong signal of commitment”.
A leading economist said executive belt tightening would lead to major tax revenue losses for the government. Others erroneously portrayed the meeting’s collective call for executive belt-tightening as a cynical call by Zuma for such action whilst he was allegedly squandering taxpayers’ money on improving his private home at Nkandla.
Some commentators lamented the lack of details regarding the package of economic and socio-economic measures announced by the meeting. Perhaps they should be reminded of the saying about fools rushing in.
The parties at the social dialogue meeting did in fact agree to set up a committee to consider the local and international experience in addressing income inequalities and will develop further proposals within the next six months. It also committed itself to time frames and regular progress meetings on other fronts.
The government – through presidential spokesman Mac Maharaj – hit back with a long list of positives to counter negative reports like that of The Economist.
The South African government has in recent weeks been at pains to point out the good progress it has indeed made on many fronts over the past decade or more.
The social dialogue meeting did in essence also refer to the need for revisiting social accords and establishing new partnerships to address issues ranging from sustainable human settlements, to youth employment, reducing income inequality, South Africa’s and more.
In fact, much of the modalities of a new social partnership to eradicate fundamental negatives in South African society through job creation and economic growth were contained in the final draft of the national development plan unveiled by planning Minister Trevor Manuel in August. Unfortunately 24 hours later the events that erupted at Marikana and completely drowned out its impact.
In another article Calland pointed out that Marikana, exposing the inequalities between the “two South Africas”, provided the most perfect illustration of precisely why South Africa needs a national development plan.
This was indeed the spirit in which much of the social dialogue meeting took place, a factor sadly missed by many commentators.
The problems currently confronting South Africa are also not unique to this country and should be viewed within the global context of economic turmoil accompanied by growing socio-political upheavals.
From the United States to South Africa increasing proportions of the population are losing faith in the existing order. In South Africa this was dramatically highlighted by Marikana and its ongoing aftermath. It is exactly this that President Zuma’s social dialogue on the state of the economy is trying to address. And, possibly more light will be shed on the plans in the pipeline when finance minister Pravin Gordhan presents his medium-term budget policy statement on Thursday.