Business Unity South Africa (Busa) has railed against the government’s economic policy track record and some of its latest job-creation and growth proposals in a new discussion document released on Thursday.
In counter-proposals to the government’s recently released economic policy framework, the new growth path (NGP), Busa also tilts at Cosatu, saying that the union federation’s approach “constantly calls for more state intervention and involvement. This not only flies in the face of international best practice but also places more stress on government delivery.”
Among proposals that are certain to rile labour, it moots the privatisation of Transnet to “secure a road transport and logistics system that is efficient and effective” and argues for labour market reforms that result in “strategic wage setting”, rather than rigid adherence to the current labour relations regime.
In the document, titled “Perspectives on an inclusive job-rich growth path for SA by 2025”, South Africa’s main business federation criticises the lack of coordination between the economic plans of different departments. It says it is concerned about the extent to which the NGP would “override previous high-level economic policy positions such as Asgisa [Accelerated and Shared Growth Initiative for South Africa] and Jipsa [Joint Initiative on Priority Skills Acquisition]”, and that “multiple state units … appear to be developing policy frameworks that do not necessarily align … with each other or the growth path”.
It says there is insufficient action and far too many talk shops on economic policy. “There is a strong feeling in the business community that too many previous commitments to the well-intentioned policies such as RDP [Reconstruction and Development Programme], Gear [Growth, Employment and Redistribution], GDS [Growth and Development Summit], Asgisa and Jipsa have led to much talk and little action,” it says.
The state already lacks capacity to deal with its basic responsibilities or to implement many of its policy commitments, says Busa, urging the government to engage more with organised business, saying that this process should start with Collins Chabane, the minister for performance monitoring and evaluation in the Presidency.
Obliquely critical
Busa’s report is the third such document to be thrown into the ring in recent months. It follows Cosatu’s discussion paper, released in September, titled “A growth path towards full employment”.
The business body is obliquely critical of the undertaking of Ebrahim Patel, the economic development minister, in the NGP to create five million jobs in the next 10 years, arguing instead for a “pragmatic approach to job creation”. It is “not useful to make grand assumptions about the number of jobs that will be created in future” without considering the changing nature of employment, as technology and business models evolve, and without employers from specific sectors being included in the debate.
The report argues that even in the unlikely circumstance of very high growth rates of about 9%, unemployment is unlikely to fall below 16% without job-intensive ways of achieving growth.
For South Africa to have “inclusive, job-rich” growth, there will have to be a focus on five priority areas: education, skills development, a delivery state, regional infrastructure and inclusive wage-setting. Wages will have to reflect skill and productivity and entry-level wages should give access to employment.
Busa says South Africa faces tough choices in achieving job-creating growth, implying some sweeping changes in the government’s policy outlook. These include maintaining a disciplined macroeconomic approach rather than “giving in to inflationary employment boosting”. It argues for the retention of inflation targeting and emphasises that improvements in labour productivity are needed.
Incentivised approach
It also argues for the injection of “more skills and support” to the education system, rather than more money. Schools should be incentivised on the basis of how learners are placed in jobs, further education and training colleges and universities. Effective performance management and incentives for schools and teachers should be introduced and teaching skills from other countries could be imported to meet the local skills gap.
Busa proposes an incentivised approach to poverty reduction rather than unconditional grants. This approach would include developing a conditional grant system aimed at “keeping children in school, attending skills development programmes, making use of preventative health services and job-seeking”.
A “bold” overhaul of state enterprises is needed, it says, arguing that “senior appointments to [state-owned enterprises] need to be depoliticised to attract and retain skills”.
Busa calls for a stronger long-term framework for sustainable energy providers and the increased involvement of independent power producers.
It backs proposals for a youth wage subsidy and argues for the regulation, rather than the abolition, of labour broking.