SA Labour Bulletin Vol 26 Number 1 . February 2002

The year of the summits

There has been much speculation in recent weeks about whether real
engagement on economic policy will take place. Reneé
Grawitzky looks at the process leading up to the drafting of a new economic
growth path, which could lay the basis for a
social accord.

Within days of the African National Congress (ANC) and Cosatu meeting in
January 2002 to 'confront the past' and lay the basis for more constructive
engagement, the headlines proclaimed 'changes to Gear', 'ANC to adopt new
economic policies'.
These headlines emerged following the ANC's annual lekgotla which agreed on
the need for a comprehensive discussion on economic policy in preparation
for the organisation's national conference in December. This process would
include an
economic growth summit which would lead to 'conceptualising a social accord'
between government, labour and business.
The immediate cynical response to this announcement could well be that this
was as an attempt to deal with the crisis in
the Alliance, by creating the impression that economic policy was finally
open for debate. The call for a social accord within
this type of climate would be far more favourably received as opposed to the
proposal made in the growth, employment
and redistribution strategy (Gear). There may well be an element of this
especially in the build-up to the national congress.
However, part of the answer as to the processes that will unfold in the
months ahead lies in a more studied response,
taking into account the work done by the ANC's economic transformation
committee (ETC) and broader developments that have taken place since the
adoption of Gear in 1996.

The concept of a new economic growth path did not just materialise at the
lekgotla, but has evolved over time. It became more pronounced during
collaborative discussions between the Alliance partners within the ETC since
early 2000. (Gear was implemented on the basis that it was a medium-term
programme running until 2000.) Some would argue that these discussions
coincided with a growing realisation within the ANC that other ways had to
be found to make the economy work, without challenging the fundamentals of
Gear.

Discussions in the ETC were based on the view that a new growth path would
go beyond merely relying on 'getting macroeconomic policies right.' Hence,
the move towards the need for an industrial strategy.This realisation led to
an increased focus on sector-specific strategies: 'by defining a clear-cut
trajectory for sectoral development, the state may help large and small
capital, organised labour, state-owned enterprises and other stakeholders
find ways to contribute more to development and growth... While the new
growth path must identify and build on strengths in the economy, it must
also redirect growth to
meet our broader aims - stimulating investment, creating employment and
ensuring a more democratic and equitable economy.'

Ultimately, it was believed that the growth path would be about micro
fundamentals. However, macroeconomic policy will have to reflect the needs
of the proposed new growth path, 'taking into account the need for fiscal
and monetary responsibility'. Whether the fundamentals in Gear will be up
for grabs remains to be seen but what has been acknowledged is
that 'new interventions may require modifications in fiscal and monetary
strategy, or they may involve sectoral changes to improve the effectiveness
of existing macroeconomic strategies... A particular challenge remains the
establishment of a suitable balance between stability and growth.'

Alliance sources believe there is a growing realisation within some quarters
in government that future growth depends on a 'spirit of greater
consultation'. This, one source says, was evident during the lengthy
discussions which took place in the ETC. It is hoped that the desire for
proper engagement on economic policy with key Alliance partners reflects a
real change instead of a mere 'photo opportunity'. The source says a space
has been created for a collective and more rationally considered process, as
opposed to the process leading up to the drafting of Gear. Government, he
says, is facing incredible pressures as it continues to grapple with
sluggish growth on the one hand and increased activism from its support base
on the other.

Opposition to government policy cannot only be laid at the door of the
so-called ultra-left in Cosatu. There are signs of rising activism from the
very constituency that voted for the ANC and continues to support it. An
analyst observes that government
appears to be moving along from one crisis to another. He compares the
current state to that of one scenario outlined in
the September Commission released by Cosatu in 1997. The Skorkoro scenario
talks about a period in South African's
development where government muddles along from one crisis to another.

Move towards a social accord

The call for a social accord is not new and has been made during various
intervals since 1994 by different constituencies.
More recent attempts to foster this ideal lie in the formation of the
Millennium Labour Council (MLC) in 1999/2000 and
the subsequent call by deputy president Jacob Zuma for an employment accord.
Despite still receiving support from the
architects of the MLC, it is becoming increasingly discredited in various
quarters in government and business. This view
became more pronounced following recent negotiations on amendments to labour
legislation. There are claims that business misread the MLC and was
outmaneuvered during the recent negotiations. One unionist asks: 'Who reads
the preamble? It means nothing.' (The preamble to the MLC agreement signed
between labour and business was the basis on which the deal
was sold to a number of captains of industry.) An alternative view is that
business was trying to come up with a corporatist solution which was
far-sighted in of itself. However, business needs to put in place structures
to ensure proper mandating so that agreements struck are binding. This
raises the problem business currently faces in not being able to talk with a
united voice.

Nedlac's business coordinator Vic van Vuuren believes the MLC is, however,
ready for a social accord. He says the
parties should prioritise this, as they are mature enough and ready to move
forward. The parties, he says, should start by prioritising one or two areas
such as investment and marketing the country and reaching agreement on this
in order to show they can deliver. He acknowledges at the same time, the
need for more debate on macroeconomic policy. Cosatu general secretary
Zwelinzima Vavi says the MLC has already begun to tackle a number of issues
around economic transformation such as key components of an industrial
strategy. Vavi says for the next two to three years the country needs to
focus on reaching a set of agreements around key areas in the economy aimed
at turning it around. Fedusa general secretary Chez Milani says in terms of
a proposed social accord, that people do not know how to talk to each other.
One of the fundamental
problems in labour relations in South Africa is trying to find a balance and
move away from positional bargaining. Labour,
he says, does not want to chase away investment but at the same time does
not want to be taken for a ride.

National Economic Development and Labour Council (Nedlac) executive director
Philip Dexter says 'this year we need to strengthen social dialogue'. He
says we need to get agreement around mobilising investment and more
importantly public service transformation. 'We need to see whether we are
getting value for money from institutions servicing the labour market as
well as others. We need an active government that does its job in order to
attract investment. If, for example, we are not getting investment we need
to look at whether those institutions responsible are operating properly,'
he says.

Economic or people's summit?

Vavi says the federation has, for some time, been calling for an economic
growth summit or economic codesa. Cosatu has,
however, proposed a people's summit ahead of an economic summit. Vavi
believes this is necessary in order to unite the people's camp behind a
broad framework before going to an economic summit/codesa. Cosatu's initial
plan was that the series of bilaterals between itself and the ANC would lead
to a people's summit (involving the ANC) and thereafter, the proposed
economic summit. Cosatu sees this process as being between a people's camp
led by the ANC vs the owners of the economy. At the time of going to press
it was understood that Cosatu might be persuaded to incorporate the people's
summit into a broader economic growth summit. This would provide a way out
for all parties as it was unlikely that the ANC would have been able to
agree to participate in a people's summit.

Whether Gear failed or not, was a 'tactical response' and should no longer
be the issue. Rather it should serve as a lesson
of how critical it is to get the process right. The task at hand now is for
labour, government and business to find a more collaborative way of moving
forward to solve the economic woes of the country. A so-called corporatist
model approach
allows for all parties to believe that they emerged with something. Critical
for labour is that it did not believe it had a 'voice' during the Gear
process (as opposed to some elements in business) but now can be part of a
process. The challenge (and the fear in some quarters) is whether the
respective parties are able to engage in proper dialogue and whether
weaknesses in structures will hamper deal making.