At the Sacob conference, a German industrialist warned South Africa against consensus-building policies, writes Max Gebhardt
FOREIGN businessmen, discussing this week’s South African Chamber of Business (Sacob) annual convention at the World Trade Centre in Kempton Park, expressed surprise that “big wigs” from Europe were giving South Africa lessons on how to become a winning nation, the subject of this year’s conference.
Surely, they said, it was a moot point whether European nations were good economic examples.
Jrgen Schrempp, chairman of Daimler-Benz, agreed. In his speech, presented by Mercedes Benz SA chairman Christoph Kpke, Schrempp warned South Africa against following the German model.
The gross national product (GNP) of Germany shrank during the second quarter of 1996, and for the whole of this year growth of just 0,75% is on the cards.
This, he said, is the lowest growth rate recorded by any of the 15 largest industrial nations.
“The German `social market model’ was regarded as a model by many, even in countries with a strong free market tradition.”
But Germany was now realising the dubious nature and high costs of such a system. Yes, he said, the emphasis on social stability had paid off for Germany, because for more than 40 years the German system of a corporative approach, in other words, a consensus-based democracy in politics and industry, was a guarantor of everybody’s fast and steadily growing prosperity.
But the German economy was now too rigid and inflexible and prevented the possibility of rapid adjustment to economic necessities.
“The policy based on consensus was efficient during the post-war period in many cases. But now it may be too slow,” he said.
This is the type of consensus that Minister of Trade and Industry Alec Erwin said had led to South Africa’s successful transition, laying a strong foundation to transform the economy successfully and take advantages of the new opportunities.
Erwin warned that the institutional changes needed for previously closed economies to make it in the global economy were considerable, and difficult to manage.
While nobody disagrees that consensus-based policy led to a successful transition to democracy in South Africa, the question begs to be asked – can it do the same for the economy?
There is no doubt the South African economy has to undergo radical changes if it is to compete in the global market.
World Competitiveness Report director Stephane Garelli said for South Africa to compete in the global market it has to have a flexible and resilient economy and while the consequences of an open world might be more business opportunities than ever before it also means there are more players than ever before.
In a poll conducted in China by Gallup, when asked what they most wanted, 68% of respondents wanted to “work hard and get rich”.
This is the type of attitude that South Africa must develop if it wants to become a global competitor, he said.
Raymond Parsons, director general of Sacob and overall business convenor in the National Economic Development and Labour Council (Nedlac), defended Nedlac’s role and that of consensus-building. It remains a valuable forum on issues and policies where consensus-seeking can add value to policy- making in a complex society, he said.
“Nedlac does not govern the country – but helps to make it governable,” he said.
First prize, said Parsons, would be if Nedlac operates in a way that enables the government to implement realistic and sensible economic policies – especially where painful adjustments may be required.
“Nedlac must be part of the solution, not the problem.”
Parsons feels the lessons of successful economies have clearly been that, as a minimum condition, there has to be sufficient consensus in the country around the primacy of growth in the hierarchy of national objectives.
But it was towards the government, especially Minister of Labour Tito Mboweni’s speech, that delegates expressed their hostility.
“I have a dreadful feeling that we are going to hire 100 000 Gestapo types from the Department of Labour who are going to ram the Labour Relations Act down our throats,” said one delegate.
Many complained bitterly about labour inflexibility and the time they have to spend managing their labour force.
In a speech delivered on his behalf by Department of Labour Deputy Director General Les Ketteldas, Mboweni said that the government accepted the need for minimum standards to prevent socially unacceptable practices and to deal with the extremes of poverty in the workplace.
While there might be some truth in the argument that certain minimum standards discouraged job creation and rigid labour laws promoted inflexible practices, the observations could be misleading.
“Could it be that very low pay encourages poor productivity … which in turn reinforces low pay? And is it acceptable that almost 40% of our workforce earn below the breadline?” he asked.
He said there was no need for the government to apologise for the fact that the new law favoured organised labour to some extent.
Mboweni said they couldn’t push issues of redistribution onto the backburner. And we cannot ignore the fact that we have inherited a fragmented and volatile society.
“We have to regulate where necessary to enhance social stability.”
Maybe Schrempp had the last word on how to turn South Africa into a “winning nation” when he was talking about the German experience: “Employers and unions must accept that they have a responsibility towards the economy and towards society as a whole. The government has sympathies which can vary, but it has never come out one- sidedly in favour of one or the other.”
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