Whoosh! Was that a new growth path (NGP) that just came and went?
The new direction for the economy, as outlined by Ebrahim Patel, the economic development minister, appears to have garnered few, if any, supporters and a legion of detractors.
Criticisms include that it is too interventionist, too statist, too market friendly, no different from Gear, too prescriptive, that the state is too weak to make it work, that calls for wage moderation for workers are unfair, that the government should not set private sector wages and that BEE has gone too far to start again.
A plan, then, which was intended to unify a divided nation around common purposes and compromises, appears to have achieved the opposite.
I asked Patel’s spokesperson, Zubeida Jaffer, if I was correct in thinking the NGP appeared to have had little or no support from any key individuals or constituencies?
She replied: “I am tempted to be facetious and ask which planet you are living on?” She said that the NGP had been endorsed by the ANC and it had the full support of the Cabinet. “On Friday all the top leadership of business and unions endorsed the process.”
Jaffer said Patel “got a very good reception at the premiers’ meeting when he briefed them. He has had very good meetings with Busa [Business South Africa] and Business Leadership SA and is generally very chuffed with the cooperation he is receiving.”
The union man
Patel is widely seen to be Cosatu’s man in the Cabinet, but the union federation has been less than enthusiastic to date in its response to the NGP.
Observers have been left wondering whether Cosatu feels that its man, colloquially known as EP, has had a Damascene conversion since joining Cabinet.
He was sent there to get the workers more money, not to tell them that they need to moderate their wage demands. But whatever Patel’s supporters say, it is clear that the NGP has been poorly communicated and that most of the blame for this lies with Patel himself, who is widely seen to be smart but too embroiled in the details to communicate effectively the plan as broadly envisaged.
Patel and his department have played their cards really close to their chests rather than build broad support for the content of the plan through an effective communications strategy.
Key aspects of the plan, notably curbs on wages and salaries, were always going to be controversial. While the NGP intends that voluntary restraint or moral persuasion will be used to create new income expectations, the NGP as released does not emphasise the voluntary aspect.
You could easily have formed the impression that the government intended to regulate wages and salaries, with the attendant problems that would bring.
Intentions
To understand what the NGP is intended to achieve, you’d have to scrap what is out there and start again. At its core it wants to grow the economy and jobs through lower interest rates and a more competitive currency.
It wants to achieve this not by printing money but through tackling inflation, the key driver of prices in the economy. It wants to do this in part through altering wage and salary-increase expectations so that increases are much more closely linked to the actual inflation rate.
At the same time it wants to address inequality of incomes by freezing the incomes of people earning more than R550 000 a year, the top 2% of the population, while allowing real increases for people at the lowest end of the income scale.
The NGP would want Sasol’s Pat Davies, for instance, to have had his R10-million salary frozen for the year rather than getting a 100% increase to R20-million, even though profits are down 3% and one million people have lost their jobs as a result of the recession.
A source familiar with the thinking underpinning the NGP said that its intention was to forge compromises in a highly divided society, to create conditions that get government out of the way of business, for government to focus on areas on which it should concentrate, such as infrastructure and skills development, while reducing expensive regulation.
The source said an issue was that business often complained about excessive regulation but when asked to provide lists of stuff to be fixed, did not come up with specifics.
Broadly put, the NGP appears to have been an attempt to start a new dialogue about improving the competitive pressure in the economy, fixing input prices, such as on electricity, ports, rail and broadband, rolling out new infrastructure and creating greater equity in labour markets.
For many it would need to include a much more frank conversation about productivity and service delivery about bang for taxpayer buck and for increased flexibility to include the labour market.
President Jacob Zuma has the communication skills but is no policy wonk.
His contribution was to put his ministers in a room and tell them to agree on the new policy direction. Then it was left to Patel, who is smart enough to work the policy out, or, at least, its key aspects, but has failed dismally to communicate it.