Analysis

Economic growth: Solidarity must replace disunion

Saleem Mowzer

Economic success is not in the hands of any single party. Rather, it depends on collaboration and solidarity across society, writes Saleem Mowzer.

Implementing the poverty action plan requires all South African's input. (John McCann)

Room 159 in the Union Buildings was the main Cabinet meeting room under apartheid, but on Wednesday last week a very different kind of meeting took place there.

In that meeting, organised business, labour and community representatives met the president and Cabinet ministers to discuss a package of measures to respond to the twin threats now facing the economy – the recession in Europe and the wave of unprotected and sometimes violent strikes, especially in mining.

The participants ranged from the executives of companies worth billions to community members working for non-governmental organisations and union leaders from the three main federations – Cosatu, the Federation of Unions of South Africa and the National Council of Trade Unions.

This diverse group was drawn together by their common commitment to building a more inclusive and equitable economy. They agreed with the government on the need to bolster the collective bargaining system and ensure peace and security in mining towns. But to achieve success, they also knew that these efforts had to be complemented by accelerated work to upgrade living conditions and, in the longer term, ensure more equitable benefits from economic growth.

The agreement that came out of the meeting sets key signposts on the path to a more sustainable kind of growth, one that will reinforce social cohesion and solidarity in place of today's deep divisions.

The measures proposed reflect a shared understanding of the core challenges to continued economic growth.

Formal sector
To start with, the unprotected strikes by miners do not arise simply because of low pay. Indeed, the workers involved already earn well above the median pay in the formal sector, which was about R3 500 a month in 2010, according to Statistics South Africa.

Rather, the strikes reflect a more complex combination of social and economic factors.

Most obviously, the mining towns have not improved housing adequately even as miners moved out of hostels. The persistence of migrant labour places stress on workplaces and communities.

More fundamentally, mining still reflects the profound inequalities left by apartheid. Miners understandably compare their pay not with poorly paid workers in agriculture or domestic labour, but with what the mine owners earn. After the commodity boom of the 2000s, the share of remuneration in total value added in mining fell sharply in the mid-2000s.

Meanwhile, the economic crisis in 2008-2009 saw the loss of a million jobs in the economy. Although many of those jobs have been regained, each miner still supports more people.

Simultaneously, the economy has been affected by the renewed global slowdown sparked by the recession in Europe. For South Africa, the immediate consequence has been lower prices for key exports, including platinum, iron ore and coal. Total sales to Europe are down by about 15% on last year and export growth to the United States and Asia has slowed.

The package of measures adopted by the president and the leaders of labour, business and the communities seeks to address these intertwined challenges.

Union leaders
The parties agreed that the unprocedural reopening of wage agreements risked undermining constructive negotiations and collective action by workers, so the union leaders agreed to hold meetings to address the issue of unprotected strikes and community leaders ­volunteered to engage their constituencies on the need to avoid the destabilisation of workplaces.

This is a major commitment by labour and community organisations. In return, they asked for ­visible moves to address the inequalities that sustain antagonism in the workplace.

The parties to the agreement, including business, therefore called on chief executives and executive directors in the private sector and senior executives in the public sector to agree to a freeze on increases in salaries and bonuses over the next 12 months.

The parties agreed to send a common message that all protests and industrial action must be conducted within the framework of the law, and to support all lawful action by the police aimed at protecting life and property. They will meet their members to reinforce the message against violence and intimidation.

They supported the Farlam commission of inquiry in Marikana and said people had to be able to give evidence without fear.

The agreement lays out measures to address the socioeconomic roots of the crisis. These include a strong partnership to fast-track improvements to housing in the mining belt, public employment schemes and key infrastructure projects that can draw in private investment and generate jobs and livelihoods on a large scale.

The presidency will establish a strong task force to establish properly served and vibrant communities, especially in mining towns, with large investments being made on housing, municipal services and social capital such as clinics, schools and retail sites. The mining companies agreed to use resources ­governed by the mining charter for this purpose.

Wage negotiations
In addition, high levels of indebtedness among mine workers, often at unfair interest rates, add pressure to wage negotiations. The agreement asks the state to crack down on unscrupulous lending practices in poor communities. At the same time, it recognises the need for legitimate credit services and improved financial education.  

In addition to the immediate challenges of the mining belt, the persistence of high levels of poverty and unemployment across South Africa add to the pressures on workers.

The government will scale up the community works programme from 171000 job opportunities now to a million a year. The programme works through civil society organisations to establish community structures to manage projects and allocate work. It has proved able both to grow rapidly and provide a platform for improving social cohesion and collective action.

The government also committed itself to growing the expanded public works programme to reach 1.6-million people by 2013-2014, from the present level of about one million.

Public employment schemes are an immediate solution, but in the longer term the challenge is to grow overall employment. As a key step in this direction, the government committed itself to fast-track projects in the national infrastructure plan that will improve living conditions and create employment, especially in poor communities and regions. These projects include improvements in the supply of water and electricity, extending broadband and improving road and rail infrastructure along the main economic corridors and in rural areas.

Presidential infrastructure
Arising out of this agreement, a memorandum of understanding was signed by organised business, labour and communities on October 19 at the presidential infrastructure conference. The parties agreed to support more cost-effective infrastructure programmes, encourage local procurement as a way to maximise the impact on employment and work to increase productive investment based on the benefits arising from projects in the national infrastructure plan.

The government committed itself to maintaining and, where necessary, improving a number of facilities designed to support companies facing short-term problems as a result of the slowdown overseas, among them the jobs fund and the manufacturing competitiveness enhancement scheme.

Taken together, these measures provide a programme of action to address the immediate triggers as well as the structural roots of protest action.

But success is not in the hands of any single party. Rather, it depends on collaboration and solidarity across society. The agreement lays out a path, but we can only travel it if we act together.

Saleem Mowzer is the acting ­director general in the ­economic development department

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