Social pact on prosperity goes beyond wages

Just as South Africa’s transition to democracy was led by a Convention for a Democratic South Africa (Codesa), the country’s transition to prosperity will require what the New Growth Path calls a “social pact”. Call it Coprosa—the Convention for a Prosperous South Africa.

Nic Dawes’s article on the 2011 “strike season” (”The great carve-up”, July 22) eloquently describes the “win-win-win” unwritten deal between government, business and labour of the democratic transition. The deal is one of compromises, which includes a liberal but heavily taxed market system, where labour wields significant bargaining power with both government and business.

Part of the promise of democracy is that we are able to assert our own interests, separately. The idea of anything “separate” has been discredited by apartheid (“separateness” in Afrikaans). Yet separating things is at the core of good governance (and reason, for that matter). Equally, individual freedom requires a degree of separateness, much as we are enriched by our togetherness.

This is reflected in institutions. The judiciary needs to be separate from the executive. Government should stand apart from business and labour; it should be an independent arbiter with the interests of both business and labour at heart, but also those of the poor (who aren’t customers) and the unemployed (who aren’t union members).

Government employees have to stand apart from government business deals and the state cannot become a labour reserve when its duties to the South African public—and the dire consequences of failure—call for nothing short of excellence in service delivery.

Strikes should be dire warnings of great injustice, not an annual event like Christmas. Consumers and the environment should be protected from excess by business, perhaps especially in the financial and mining sectors. Labour should be competitive if it is to survive in the reality of a global market and taxes should be fair and efficiently applied.

Competition (including for state tenders), media freedom and the independence of institutions such as regulators and the public protector are all safeguards that keep things separate for a reason, but without the injustice and inequality of political and economic policy before 1994. What the democratic revolution overthrew was not governance, industry or a working class, but a system in which access to these was confined to one group defined by race.

In governing the relations between people and institutions, the foremost rule is (as for doctors) to do no harm. The law and the Constitution that underpins it are aimed at ensuring that one person or institution does not harm or prejudice any other.

A social pact on prosperity needs to be about more than just wages. And, even on wages, the question is not as simple as negotiating pay or increasing ceilings. The solutions could be softer: agreeing on opening up immigration for people who can offer designated scarce skills, including education; a youth wage subsidy and/or service corps; and the streamlining of labour courts and the Commission for Conciliation Mediation and Arbitration to ensure that companies can fairly dismiss non-performing workers.

Taxation and tariffs also deserve a look: we need to agree on the principles for pricing things such as a carbon tax, electricity tariffs or toll roads, as well as opportunities for simplifying the tax system and reducing compliance costs.

Provided there is a common understanding—a social pact—between institutions and people based on a recognition of their “common but differentiated” responsibilities, they can be free to go about their business in pursuit of their own unique goals, while benefiting rather than harming each other.

Peet du Plooy is programme manager for sustainable growth at Trade & Industrial Policy Strategies

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