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16th May 2014

By: Terence Creamer
Creamer Media Editor

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With memories of the election fast fading, attention is now turning to the far more prosaic, yet vastly more important, matter of governance.

For the new administration, a critical success factor for the coming five years lies in finding credible and implementable strate- gies for dealing with South Africa’s underperformance in a range of areas, from growth and employment to service delivery and education.

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However, repairing and improving the labour-relations climate will surely also have to be high on the agenda, if not a top priority. There is no question that the current atmosphere is sapping what little investor confidence remains in the mining sector and that this negativity is spilling over into all other sectors of the economy.

The commentary that accompanied the release of the April Purchasing Managers Index underlined the point, as did the index’s 2.9 points decline to 47.4 – the lowest level in nearly three years. The persistent narrative was that the platinum industry strike, which, at that stage, had entered its fifteenth week, was weakening demand and could continue to weigh down manufacturing production for some time to come.

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Analysis provided by Steel and Engineering Industries Federation of Southern Africa chief economist Henk Langenhoven arguably epitomised this viewpoint. “The mining sector is under siege from industrial action . . . Government, labour and business must understand that, collectively, we should prevent a vicious cycle of decline taking hold within the country, while the international environment simply demands competitiveness for us to survive,” he wrote.

The problem is that the issue is inextricably tied to South Africa’s shameful past labour practices, which immediately complicates the relationship between government, business and labour. For instance, while labour seemingly negotiates from a position of theoretical weakness, owing to the country’s appallingly high unemployment rates, in practice, it is far stronger. This arises from labour’s historical proximity to postapartheid political power. That said, this proximity is less than tenuous in the case of the main platinum union and is also weakening in light of the splits in the once dominant Congress of South African Trade Unions.

From the outside, it also appears that the institutions established to provide the space for labour to negotiate improved conditions and for business to communicate their financial limitations are battling to cope. In addition, smaller more-job-rich companies are not always able to absorb some the settlements agreed to centrally.

So where does the answer lie?

It probably doesn’t lie in abandoning, or even radically reinventing, the industrial relations architecture, or the institutions that have been set up to facilitate governance and industrial peacemaking – although a thorough analysis of the system’s efficacy is certainly required.

Instead, the remedy seems to lie in reinvigorating the institutions through a genuine show of leadership by all social partners.

A positive intervention led by Cabinet could lay the basis for a rebuilding of trust among the protagonists as well as in the legislative and institutional framework.

It could well be worth the effort. For one, it would send a strong signal to business that government is finally dealing with what is perceived as being a major impediment to investment. Secondly, it could also lay the foundations for a more comprehensive social accord to help liberate South Africa from its current low-growth, low-job economic trajectory.

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