Organised business in South Africa has called for the country’s economic policies to prioritise the creation of a ‘delivery’ State ahead of a so-called ‘developmental’ State, asserting that, unless there is an increase in public sector capacity and skills, basic service delivery will suffer further and the goals of the developmental State will remain at the level of lip service.

It has also described recent moves by government to make “grand assumptions” about the number of jobs that will be created in future sectors, or industries, as “not useful”, particularly given the rapidly changing nature of the global economy, employment practices and technologies.

Instead, a “pragmatic approach to job creation” is suggested, which acknowledges the centrality of both social partnerships and accelerated economic growth in dealing with South Africa’s unemployment and inequality problems. However, Business Unity South Africa (Busa) acknowledges that growth alone will not be sufficient to deal with South Africa’s 25%-plus jobless rate and rising inequality.

These suggested shifts in emphasis are contained in a Busa discussion document, entitled ‘Perspectives on an Inclusive Higher Job Rich Growth Path for South Africa by 2015’, which was released by CEO Jerry Vilakazi and Deputy CEO Professor Raymond Parsons on Thursday.

The document follows the release, by Economic Development Minister Ebrahim Patel, of government’s ‘New Growth Path’ (NGP) policy framework on November 23, 2010, and the Congress of South Africa Trade Unions’ (Cosatu’s) ‘A Growth Path Towards Full Employment’, released in September.

Vilakazi and Parsons welcomes many of the key themes contained within the NGP, including the need for more stable competitive exchange rate, larger purchases of foreign currencies to stabilise the rand and the NGP’s suggestion of fiscal policy restraint.

BONUS CAPS AND OTHER AREAS OF CONTENTION

However, Busa is concerned about the implication for the South African Reserve Bank’s autonomy given the NGP’s stipulation of a “looser monetary policy and a more restrictive fiscal policy”.

It also questions the “desirability and practicability” of an incomes policy on wages, prices and executive bonuses, warning that cost management “cannot be promoted through wage and salary caps and the central determination of incentive structures”.

It was also uneasy with the proposed creation of a State mining corporation and a State-owned bank, as well as with the emphasis given to picking sector and job-creation winners through industrial policy.

Sufficient weight, Busa argues, is not given to enlarging role of public–private partnerships, nor to allowing the private sector to play a more active role in infrastructure. It also feels that the NGP fails to acknowledge that more competition should be injected into the areas of electricity, transport and telecommunications.

Parsons and Vilakazi also question whether the “green economy” will indeed generate 300 000 jobs over the next decade as outlined in the NGP and whether it is feasible to unblock opportunities for 300 000 households through agricultural smallholder schemes. They also express doubt over whether it is realistic to produce 30 000 engineers by 2014 and whether it is desirable to align public sector investment decisions exclusively to development priorities.

Concern is also raised about perceived divisions between the National Treasury, the National Planning Commission, the Department of Trade and Industry and the Economic Development Department over the creation of policy frameworks, some of which “do not necessarily align”.

“Ideally, engaging with the NGP should entail a single point of entry for social partners into government and coherent link with other economic policy making entities and processes.”

TEAM SOUTH AFRICA

But Busa also uses the paper to unveil its ‘Team South Africa’ scenario vision, which is premised on a partnership between government, business and labour to achieve a gross domestic product (GDP) growth rate of between 7% and 9% and to reduce unemployment to 12% within five to six years.

The NGP also acknowledges the need for 7%-plus GDP growth and suggests strategies for the creation of five-million jobs by 2020, which would lower South Africa’s official unemployment rate to 15%.

But Busa’s scenario refrains from highlighting specific job and growth intensive sectors, and instead highlights the broad roles that government, business and labour would have to play, as well as 11 “tough choices” that will have to be made to achieve an “inclusive and job-rich growth path”.

For Busa, these choices include:
• Sticking to a disciplined macroeconomic approach instead of giving in to inflationary and temporary employment boosting.
• Focusing effort on actions rather than talk shops in promoting an inclusive job-rich growth path for South Africa.
• Prioritising a ‘delivery State’ before embarking too far on the developmental State.
• Putting more skills and more support rather than more money into the education system.
• Getting business deeply engaged in skills development rather than leaving it to the Sector Education and Training Authorities and the education system.
• Using a targeted approach to skills development and job creation for the unemployed rather than broad-based programmes.
• Using an incentivised approach to poverty reduction measures rather than unconditional grants.
• Employing a targeted value-adding approach to job-rich industrial development rather than sector wish lists.
• Boldly re-engineering State-owned enterprises with new partnerships to build up regional infrastructure rather than tinkering with them and/or opening them up to more competition.
• Introducing strategic wage setting rather than sticking rigidly to the current labour relations wage-setting regime.
• And taking risk and investing in the small businesses and informal sectors rather than waiting for them to knock at the door.

“To achieve higher growth rates means improving the country’s competitiveness. No stakeholder can do this by themselves. It has to be based on a collaborative effort to solve problems and grow the economy,” Busa concludes.