President Thabo Mbeki, calling for a Growth and Development Summit last year, announced that the summit would seek to “address the urgent challenges facing us in the economy and build an enduring partnership in which all of us can lend a hand in building a prosperous South Africa”.
This year he added that the task was “to push back the frontiers of poverty and expand access to a better life for all … to accelerate the pace of change”.
The three social partners, government, business and labour, have submitted their position papers. Community groups have submitted papers on women and the disabled, and others will follow.
There have been reports that there are few new ideas, while Democratic Alliance leader Tony Leon has suggested saving the costs by cancelling the summit. How should it be judged from the position papers? What might emerge to justify the build-up and cost?
The social partners agree that despite “sound economic fundamentals”, South Africa is slipping fast down the middle-income countries’ league table in the areas of savings and growth, but also in regard to poverty and crime.
They agreed the agenda would be managed under four main headings: investment (creating the conditions for growth and development); skills and equity (investing in people); job creation and enterprise promotion; and local action (partnerships to build vibrant communities).
As business puts it, the main emphasis is on “practical and achievable initiatives to meet some of the challenges facing our country”.
It is all very “managerial”, in line with Mbeki’s presidential style. This limits the debate and avoids opening up the whole economic policy box that the African National Congress alliance cannot currently tolerate. What is absent from the documents that should be there?
First, there is no attempt to define “growth” and “development”. The government and business seem to agree they are one and the same. Growth generates the means, notably taxes, to pay for “delivered” development.
Under the growth, employment and redistribution strategy, it is capital that is rewarded, not people. But development has a status of its own in the form of policies and programmes that mature the potential of citizens to participate in and enhance the potential for growth.
An example of the difficulty of settling on a “partnership programme” is the labour market. Business wants a more flexible market, arguing that lower wages will generate more jobs. The Congress of South African Trade Unions (Cosatu), mindful that workers carry more unemployed, ill and orphaned dependants every year, wants “decent jobs”.
The real issue is that wage negotiations cannot be a substitute for a comprehensive social security system. Until that gap is filled, or everyone begins to live in working local economies that reward local economic activity, workers can only turn to employers to carry high and rising social costs.
Cosatu emphasises the need to “restructure” the economy and the awful growth of unemployment between 1995 and 2002, from two-million to seven-million. Clearly, more of the same will not do.
The fact, also missing from the documents, is that full employment will not return. Globalisation ensures that new investment raises productivity at the cost of greater import penetration, exported profits and loss of local jobs. What to do about this is the key question facing South Africans.
In his State of the Nation speech this year, Mbeki for the first time acknowledged South Africa’s dual economy and society, formed by colonialism and apartheid, and since 1994 by the further marginalisation of the majority by global restructuring, low-skill job losses and a marked fall in poorer family incomes.
The government has yet to take this insight on board, producing “localisation” policies to offset the bias toward “globalisation”.
Business and government want to avoid a welfare trap, where the state spends so much on social services that it cannot promote a productive environment that draws investment. This fails to confront the impossibility of full employment, and has a terribly long timetable.
Cosatu believes measures like the rejected basic income grant tackle the dualism of the economy and could lift the poverty-stricken millions into economic activity and raise growth potential through domestic demand creation. Which is to come first, returns to capital or building citizen competence and participation? Can they be linked?
The mobility of capital is also absent from the summit agenda. Yet this week’s Economist runs two articles that signal a growing realisation that there is a case for capital controls, and that the tide of global financial integration, supposed to uplift countries, often sinks them (see report below).
A final question absent from the summit agenda is the international bias of South Africa’s economic policy-making since 1994, and the absence of passionate nationalism.
Will the social partners settle for partnership progress on set items, building confidence through limited joint achievements? Or will they find that there is no consensus on the structure, problems, human needs and economic opportunities for partnerships?
The former will help. But rigorous debate on the latter is still urgently needed if South Africa is to provide economic participation for all.
Norman Reynolds is an ecconomist based in Johannesburg