The South African Institute of Race Relations (Sairr) said on Tuesday that some of South Africa's current policies were at odds with greater economic growth going into the future.

Currently, banks and economist are predicting economic growth of between 2,5% and 3,5% for 2010, and growth of around 3% to 4% for the 2011/12 year.

However, Sairr CEO Frans Cronje said at a Rode conference in Johannesburg that a 3% average growth rate could result in a rocky political future.

He said that even though South Africa had some excellent macro-economic policies in place, some of its micro-economic-, and political policies were letting it down.

"Failure in the country's educational system, the ineffectiveness of its labour markets, and racial preferencing policies are the more likely culprits for South Africa's failure to reach higher growth rates than roughly 3% over the last 15 years."

Sairr predicted that with an average growth rate of 3% over the next ten- to twenty years, a host of social and political risk factors would become prominent, with government further retreating from growth-led development to interventionist and redistributive policies.

"The fact that a public sector union can go on strike to demand double the rates of inflation, in a country with an unemployment record of 20 percentage points lower than most developing countries, proves that our labour markets do not work.

"In addition, the country's affirmative action policy seems to be oblivious of failures in its labour market. The gatekeepers of affirmative action had done a sterling job of protecting the policy from scrutiny playing on past fears and insecurities, and we are regularly warned about the risks of inherent high levels of inequality.

"It is a fact that we are indeed one of the world's most unequal societies, but few people realise that black South African economic groups are now more unequal as a distinct racial group than we are as a country."

However, the institute pointed out that if South Africa's ruling party, the African National Congress, were able to stand up against trade unions and break the power of those unions, address the nature of labour market regulation, and radically amend the concept of affirmative action to provide "real opportunities" to disadvantaged people to reach their potential, a higher growth trajectory could be achieved.

With a 6% economic growth rate, South Africa would move onto a clear middle-class income trajectory, which would also enable the State to fund social welfare and redistributive campaigns, but the institute expected the country's future would lie somewhere in-between.

Also speaking at the event, the South African Federation of Civil Engineering Contractors (Safcec) chief economist Henk Langenhoven pointed out that South Africa's current economic infrastructure could not sustain high economic growth numbers.

He noted that despite the South African government committing itself to spending R846-billion on public infrastructure growth over the next three years, an institutional vacuum in the lower tiers of government as far investment decision-making was concerned had resulted in almost 40% decline in civil engineering spending in 2010.

"Following the 2010 FIFA World Cup event, the total stock of economic infrastructure activity supporting the economy had now declined to early 1960 levels.

"However, the current slowdown, or almost a standstill, in construction activity cannot be ascribed to the completion of the World Cup build programme.

"Rather, it can be best explained by the lack of planning coordination among different public sector entities, as well as a general institutional vacuum."

Even though cumulative tender invitations had seen some improvement during the first quarter of the year, the value of contracts that had been rewarded dropped by 62% over a six-month period, with employment dropping accordingly with 13% in the sector, owing to companies not being able to hold on to their unoccupied staff.

Langenhoven said that the country needed to start building again, and believed that the country's need for economic infrastructure, represented great economic opportunity and that the investment that still needed to take place would be highly profitable.

"During the period leading up to the World Cup, the country has proved that it can do wonders, and we have worked on our infrastructure relating to airports and stadia."

However, Safcec believed that the market was still fundamentally underpinned by the massive need for infrastructure development in the fields of electricity, roads, water, harbours, rail capacity and possibly oil refining.