Howard Barrell
Over a Barrel
A talent for compromise is usually considered a political virtue. Since so much politics is about putting and holding together disparate interests in the pursuit of common goals, it is no surprise that this should be so.
>From time to time, however, there arise issues on which a government should not compromise, equivocate or seek massed hoorays when it makes a decision.
There are issues on which a government must establish its seriousness and credibility by risking unpopularity – when it must expose the fallacy that the decision that is most immediately popular or expedient among its constituency is best.
One such issue – public service pay – is upon the government. Several other, similarly difficult decisions are just around the corner.
If the Mbeki administration comes down on what I consider the better side of these arguments, it risks more than just short- term unpopularity among significant sections of its support base. It also risks the break-up of the African National Congress’s alliance with the Congress of South African Trade Unions (Cosatu) and the South African Communist Party – assuming (and this is uncertain) that a majority of leaders of the latter two organisations have the will to assert an independence.
Another of these crunch issues for government policy is reducing the size of the public service. Does the government have the clarity of purpose to correct a situation in which, by its own admission, some 35 000 civil servants (it used to be 55 000) draw salaries each month yet have no jobs to do?
Will the government finally give itself the legal means to rid the country of this burden? Will it stop pussy-footing around and pass into law a mechanism for what it delicately terms “employer initiated retrenchments”?
The same challenge confronts the government with the defence force. Our armed forces have, by the government’s own admission, 30 000 too many members.
In both the civil service and defence force, the government has evidently been hoping that natural attrition and a system of resignation incentives would solve the problem. But it has not on the scale and at the speed necessary.
The result is that we still have an excessive government salaries bill. This has put upward pressure on government borrowing and, so, on interest rates, and harmed the prospects for economic growth. It has also skewed budgeting and left too little money for new investment in service provision in areas such as crime- fighting, education and health. As a consequence, many of our police stations are still poorly equipped, and our schools, clinics and hospitals are overcrowded, dilapidated or short of textbooks or drugs.
The question before the government is: will it develop the courage to face head-on the challenge before it, and introduce a retrenchment mechanism?
Or will it come down on the other side of the argument? Will it conclude that, in the interests both of immediate social peace and of maintaining its alliance with Cosatu and the SACP, it should find another R5-billion- odd a year by raising taxes or increasing borrowing to make up the investment shortfall in service provision – and bugger the longer- term consequences?
There is a third course of action it can take. It can simply continue to hide its head under the blankets and hope that the problem will go away.
That is, it can continue to equivocate.
The government has spent the past few years under the blankets on another crunch issue: deregulation of the labour market. Many ingenious arguments and academic papers have been deployed to show that deregulation does or does not promote the creation of new jobs.
But it does seem clear to me that, in a market-based economy like our own, we must look to private business rather than the government to create most new jobs. Entrepreneurs, however, do not set out in the first instance to create jobs. Rather, they see an opportunity to make a return and calculate whether the reward they will derive from it adequately exceeds the risks or costs entailed in exploiting it. One of those costs is labour. Therefore, a set of laws which drives up the cost of labour or increases the risk to an employer that he will have to continue to employ a set of workers beyond the point where it makes economic sense for him to do so is unlikely to foster the creation of jobs.
This is, of course, not the way humane individuals like you and I would like things to be – we would prefer a world made up entirely of altruists like ourselves – but the evidence does seem rather overwhelming that this is pretty much how things are.
Things, it seems to me, are also thus: all other things being equal, faced with a choice between putting our money in a bank which allows all its customers freely to withdraw their money at will and another bank which curtails the withdrawal of some categories of deposit, we are likely to choose the first; likewise, all other things being equal, it is easier to understand someone investing in a country which allows unfettered cross-border capital flows, and from which any individual can be reasonably sure he will be able to withdraw his funds at any moment, than one which maintains a tradition of curtailing that movement in the case of some categories of money. I am saying that our few remaining foreign exchange restrictions must go without delay.
I am arguing by analogy on this last issue, of course, and so perhaps unfairly. But I don’t think this detracts from my basic point: we need to reduce the cost and risk of placing money or employing people on our soil.
This is the fundamental challenge before us all. The only thing I can see perhaps sweeping it into irrelevance is the HIV/Aids pandemic taking hold among us – and the many millions of deaths it could cause.
Until we come out from under the blankets on HIV/Aids, however, these issues define our agenda. They will be decided very largely within the ANC-led alliance. And they need to be decided this year, not next, and clearly.
With this in mind, I propose focusing on them one by one over the next few weeks.