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Mbeki: Growth and Development Summit (07/06/2003)

7th June 2003


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Date: 07/06/2003
Source: The Presidency
Title: Mbeki: Growth and Development Summit


Deputy President Jacob Zuma
Minister Membathisi Mdladlana and other Ministers
Other leaders of the Nedlac Constituencies
Phillip Dexter, Executive Director of Nedlac
Premiers and MECs
Delegates, ladies and gentlemen

After more than a year of consultations, we have finally assembled to seal the common agreement between government and business, labour and community organisations about the steps we need to take to speed up economic growth and development.

This is a meeting of the people of South Africa, variously represented by the organisations present here and the democratic government, to pursue the lofty ideals that our nation holds for economic growth that benefits all, for a society that cares, for the realisation of what the Constitution enjoins all of us to do.

Underpinning this assembly of South Africa's leaders is the common understanding that successful societies are built on the foundation of common purpose. One of the most important features of our system of governance is to ensure consultation and dialogue, in order to build not only a shared national vision, but also in actual practice to attain unity of purpose and action.

It is therefore appropriate that this process was formally co-ordinated by the National Economic, Development and Labour Council (Nedlac), the structural expression, in our setting, of our common intent to work together to build a firm foundation for a better quality of life for all South Africans.

In crafting the Bill of Rights, the founders of our democracy knew too well that political rights without a socio-economic foundation would be unsustainable. They knew that a political settlement without an enduring contract among the economic role-players for growth and development would in time collapse on a foundation of sand.

Thus in addition to political and other "first generation" rights, they asserted citizens' freedom of trade, occupation and profession; workers' rights; right to property; and right of access to housing, health care, food, water, social security and basic education.

In the final analysis, it is in pursuance of these rights that we need to manage the economy in a particular way. These and other social rights are the critical macro-indices that should inform economic activity. They should be the measure of the impact of the economic and business decisions that we take both in the public and private spheres. They are the indicators of South Africa's - and indeed humanity's - level of civilisation in the socio-economic arena.

As long as the legacy of apartheid manifests itself in our society, so long shall we be challenged to find urgent and practical solutions to the poverty, underdevelopment, illiteracy, paucity of skills and jobs, and mistrust among various social spheres that that system spawned.

Driven by this sense of urgency, we could easily have hurriedly convened and made pious declarations about our wishes as various partners in NEDLAC. But in agreeing on the need for this Summit, we were all conscious of the fact that the concrete programmes that we sought required hard work and intense negotiations among us.

As such, we meet with the confidence that we have not only identified practical things that need to be done in the immediate, but also steps required to consolidate our agreement in the medium-term into a comprehensive people's contract for growth and development.

Driven by the sense of urgency that the fractures in our society demand of us, we could have conjured up, in our various spheres, prescriptions that could quickly be seen to make an impact and win us instant popularity for what would in fact be a fleeting mirage.

But we know that the poor require sustainable relief and dignity. They demand of us programmes to build a growing economy which generates more decent jobs and more resources that can be used for social programmes; programmes that ensure the macro-economic balances for sustainability; programmes that mobilise higher levels of local and foreign investment in productive activity and services; and mechanisms that would allow for redistribution of wealth, income and opportunities to benefit all of society.

We are convinced as government that, over the years, great progress has been made in pursuing these objectives. But the fact of our meeting here today attests to the reality that what has been done by all of us in the past decade is not enough.

While the aggregate of our individual actions and tentative steps towards common programmes has ensured steady growth and social progress, this Summit is an injunction for us to integrate our plans better, to facilitate better contribution by each sector to the common good and to lay the foundation for enduring partnerships in actual practice in our day-to-day work.

As participants would agree, the idea of this Summit was not a bolt from the blue. Neither was it some clever idea emerging from boardrooms. It is a natural progression in the consultative interactions that we have had with various stakeholders over the years.

Over and above Nedlac, among the fora where mutual confidence has been consolidated over the recent period are the Presidential Working Groups where we regularly interact with big business, black business, labour, commercial agriculture, religious leaders and, recently, leaders of higher education institutions. In addition to these Working Groups, the Business Trust and the Millennium Labour Council are the other institutions that have become a critical part of consultative governance of the economy.

What gives these interactions their critical importance, including their role in laying the foundation for this Summit, is the fact that they afford leaders in the economy an opportunity for strategic reflection on the needs and interests of society as a whole, rather than just the pursuit of sectional self-interest.

They have over the years laid the basis for movement from an understanding of the common interest merely as an aggregate of individual sectional interests to one in which these interests can be synthesised into an integrated whole. In what way does the Growth and Development Summit take us towards this goal? At the Joint Working Group meeting held late in 2001, we agreed that, while we had built a strong economic foundation, the economy was not delivering as much as it could and as much as the country needed.

We recognised that while the economy was growing at an average of nearly 3% per year, South Africa was experiencing structural unemployment. According to our official statistics, the total number of unemployed people was rising in spite of the fact that the number of jobs since 1995 had increased from 9.6 million to 11.2 million (in 2002). This was because in the same period the number of new entrants to the labour market increased by about 5 million. The unique feature of our structural unemployment is the fact that the economy is at the same time experiencing a shortage of skills.

As participants would know, government in 2000 announced a micro-economic reform programme based on three elements: firstly, to identify the critical growth sectors in the economy for focussed attention; secondly, to pursue, in this focussed attention objectives such as job-creation, employment equity and black economic empowerment; and thirdly, to ensure the development of infrastructure and human resources required by the economy.

Although indications from latest employment data show an improvement in the net uptake, these interventions will, however, take time to make their full impact. And in any case, the pace at which this happens would depend on the response by partners to the opportunities that have been created.

In the Joint Working Group meeting we agreed that in order to make an urgent and serious dent into unemployment we needed to ensure better synchronisation among the activities of all the partners.

The simple message of this Growth and Development Summit therefore is: more has to be done by all of us!

In this regard, the programme of government, as articulated earlier this year in the State of the Nation Address can be summarised as follows:

* expanded service provision;
* improvements in the efficiency of the public service;
* increased social and economic investment, impacting on the important issue of job creation;
* black economic empowerment;
* greater all-round attention to the challenge of human resource development, to help reduce the unemployment levels;
* further improvements within the criminal justice system;
* further work on the important matter of moral renewal;
* expanding our system of relations with the rest of the world;
* accelerating the process of the formulation and implementation of the first NEPAD projects; and,
* advancing the African Union agenda, including the important issue of peace and security.

Attached to each of these challenges are concrete programmes and resources, the details of which are contained in government's input to this Summit.

For the programme that should emerge from this Summit, we have jointly identified four key challenges to be addressed through partnerships:

* addressing the investment challenge;
* more jobs, better jobs and decent work for all;
* advancing equity, developing skills, creating economic opportunities for all and extending services; and
* local action and implementation.

As we have agreed, the Growth and Development Summit commits us to:

* Firstly, to build an enduring and lasting partnership between Government and the other social partners. Such a partnership is crucial to ensure that we develop a shared vision and commitment to tackle the legacy of unemployment, poverty and challenge of social development and economic growth;
* Secondly, we need to together tackle urgent challenges - interventions we can make jointly that have the potential to make the biggest impact in the shortest possible time. These interventions relate to accelerating investments, job creation, greater equity, fairer distribution of economic opportunities, etc.; and,
* Finally, we need to lend a hand. It is important that the Summit (the process leading up to it and the Summit itself) is not only a talk-shop, but secures the active involvement of the social partners to tackle the urgent challenges that they have identified.

The final agreement between the social partners is a long and detailed document. Some of the key agreements are:

* To expand Public Investment Initiatives-government has indicated that it is expanding capital investments by national and provincial governments by 15% per year for the next three years;
* To build Expanded Public Works Programmes that support the employment of the unemployed in "soft services" such home-based care for the ill and the aged, early childhood development, school feeding, and feeding at clinics, as well as in more conventional programmes such as access roads in rural areas, fencing of national roads, removal of alien vegetation, and school cleaning and renovation. All EPWP programmes would have exit strategies including skills development programmes and letters of reference;
* To develop suitable instruments to direct 5% of investable income of a wide range of public and private organisations, including the pension funds and insurance companies, towards job creating and poverty alleviating projects;
* To support the growth of co-operatives as a means of improving the lives of the poor;

* To agree on sectoral strategies aimed at job creation and growth;
* To boost the number of unemployed people drawn into learnership programmes to 72 000 by May 2004;
* To increase the number of employed people in learnerships to more than 80 000 by may 2004;
* To place high level representatives on the boards of the Sector Education and Training Authorities to improve their performance;
* To ensure that the poorest households should have access to essentially free general education.

What is also critical is that concrete timelines have been set for these agreements to be implemented. So as we leave from here, we should all be certain of when the Project Team bringing together all the partners in the implementation of the extended Public Works Programme would convene and start giving leadership to the process.

We should be certain of when the investment mechanism for the employment of the 5% of investable income from retirement funds and other businesses, would be set up and start operating. We should set in place processes to ensure that the interaction we have had today at the national level finds expression at provincial and local level.

We have agreed to prioritise a number of labour-intensive sectors in the coming period, such as clothing and textiles, agriculture and agro-processing, tourism, call centres and back-office processing, cultural industries including craft, music, film, publishing and other media.

Certainly, it cannot be business as usual for these industries, on the part of government, labour, business and the community sector. Concrete programmes have to be developed as a matter of urgency to improve on what is already being done.

We should congratulate the sectors that have made specific commitments for massive investments in the coming period, including the automotive, chemical, mining, metals and engineering, oil, pharmaceutical and clothing and textiles sectors. This we hope will inspire other sectors to do likewise. Further, government and the other partners should answer the question, what is it that we shall contribute to ensure that these commitments are in fact surpassed.

The conditions are in place for an acceleration of economic growth and development. We have identified a set of strategies that if properly implemented will take South Africa onto a higher growth trajectory. Success in implementation depends on an enduring and deepening partnership, based on our common vision. We have prioritised urgent challenges that can be addressed relatively quickly, but also key longer-term issues. We have a firm commitment to active participation by all the social partners.

The Growth and Development Summit should not be seen as an isolated event. It is a major step forward in a protracted process that should in time culminate in a Peoples Contract for Growth and Development. This social contract will lay the basis for a South Africa that continuously improves the quality of life of its people, a South Africa that plays its role in the recovery of our continent.

We are grateful for the co-operation that all partners have shown in the preparations for this Summit; and we are certain that even more enthusiasm will be evinced in the crucible of actual work.

The tide has turned. Nothing can stop us now!

Thank you.

Issued by Presidency
7 June 2003


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