An intense political contest over the future structure of the labour market has been taking shape for the past six months in the African National Congress, as the ruling party weighs up radical steps to accelerate job creation and economic development.
A suggestion that the party consider supporting the introduction of a ”two-tier” labour system, with fewer regulations for certain categories of workers, has the backing of some of the party’s most senior figures. But it faces intense opposition from within ANC structures and the tripartite alliance.
After a series of leaks to Business Day, the party released four documents for discussion ahead of its National General Council meeting in June. Party officials stress that they do not represent ANC policy, but aim to encourage ”bold engagement” at the important mid-term policy meeting.
The most controversial of the documents — first floated in draft form last December — sets out the terms for a debate on economic growth and job creation, listing among other concerns the effects of high labour costs and regulations, which limit flexibility on hiring and firing.
The document suggests easing, or eliminating, some of these measures in some areas of the economy.
A dual labour market ”either for young people, for small businesses or for certain labour-intensive sectors has to be considered given the high unemployment rate, even though this will be very difficult to sell”, it adds.
That difficulty is already manifest. When debate on the proposals began last year, the Congress of South African Trade Unions (Cosatu) dismissed them outright. A member of the ANC’s national executive, who spoke on condition of anonymity, said that when the discussion documents were tabled at a National Executive Council (NEC) meeting at the end of last year, they were ”outright rejected and sent for re-drafting … even President [Thabo Mbeki] said the idea of a dual labour market was nonsense”.
Deputy Minister of Finance Jabu Moleketi confirmed in an interview this week that he had faced ”very tough” questioning when he presented the proposals to the NEC.
At a March meeting of the economic transformation committee, which reviewed a slightly toned-down draft, there was also intense resistance from ANC members concerned about the potential political cost of another rift with labour.
Chairperson of Parliament’s finance committee Rob Davies, according to those present, described the document as flawed and said its proposals would result in too much pain and too little gain for the ANC.
According to a senior party official, deputy director general in the Department of Labour Les Kettledas, a former unionist, argued that labour laws were not to blame for worsening the situation of those ”outside” in the second economy.
”It would seem implausible that the solution would lie in ‘deregulating’ the labour market, so that market forces alone would improve the lives of our people,” he said in a written submission.
Some on the left of the ANC and the alliance were seemingly caught off guard when the latest draft of the documents appeared with the NEC’s apparent endorsement.
”We were assured at the Economic Transformation Committee and the Presidential Working Group that there would be extensive consultation and research before this was taken further,” Cosatu economist Neva Makgetla told the Mail & Guardian. ”Research has not been done.”
However, Moleketi says ANC President Thabo Mbeki strongly supports far-reaching debate. Other senior party figures said they believe Cosatu, which is planning protest marches over unemployment, is being short-sighted about the proposals.
Deputy Secretary General of the ANC, Sanki Mthembi-Mahanyele, warned unions this week to consider the documents ”carefully”. ”We need, together with the alliance partners, to review the strategies for employment creation and ask what [protest action] will do to the economy.”
But, the document is hardly a libertarian manifesto. It dismisses fiscal reform and market liberalisation recommended by proponents of the Washington Consensus as a failure. Instead, it draws inspiration from the European Union’s regional development programmes, the Marshall Plan for the post-war reconstruction of Germany, and state-led east Asian development.
Davies said he could not comment on the proceedings in a private meeting.