PRESENTATION ON BEHALF OF THE BUSINESS CONSTITUENCY

30 OCTOBER 1998

Mr Deputy President – Ministers – Delegates and colleagues,

Business is proud to be closely associated with the Presidential Job Summit and we welcome the opportunity to comment on the articles of agreement and understanding recorded today. Together with the President and the other stakeholders represented here, we agree that job creation is probably South Africa’s greatest challenge. Our most urgent priority should be to find sustainable solutions to this problem. Therefore, we commend the President on convening the Job Summit, and focusing the attention of the nation on measures to address the crisis of unemp0loyment.

Business believes that the Job Summit has succeeded in its aim. Even in extremely adverse financial conditions, and in the context of serious differences about our industrial relations system, the parties have arrived at a credible set of agreements and understandings. These will not only begin to improve the lives of those in greatest need, but also demonstrate a resolve by the parties to surmount the challenges facing South African. We would like to believe that this will send strong and encouraging signals to the unemployed, and to those in the financial centres who keenly observe developments in our domestic economy.

Of course much remains to be done. The Summit, for Business, represents the formal commencement of a process, not its conclusion. The dialogue between business, labour, government and the community needs to widen and deepen. New partnerships should be built upon the foundation of the Summit to permit even greater convergence around the requirements for growth and redistribution in our country. This is imperative, for it is only through accelerated growth and wealth creation in South Africa that the prevailing abject poverty and unemployment can be alleviated.

Business has regularly raised these themes during the course of the Summit process, but, inevitably, some disagreements remain between the parties. However, the encouraging possibility exists that serious and sustained discussion may still yield a broader consensus that will almost certainly set South Africa on a new trajectory of growth and employment creation.

I will briefly elaborate on some of these issues as they provide the context for Business’ engagement in this Summit.

• South African needs s sound macro-economic policy that provides certainty and stability and encourages increasing fixed investment, both local and foreign. The current global crisis confirms the importance of sound domestic policy. It is heartening that South Africa has weathered the storm better than most by maintaining the fundamental integrity of its monetary and fiscal system. Variation from these parameters is justified in current global circumstances, but only at the margin. Business remains convinced that Government’s GEAR programme is the correct policy for South Africa at this time. The revision of GEAR’s targeted outcomes may be necessary, but this cannot be at the expenses of its structural macro-economic policy requirements that are necessary for sustained growth and for South Africa’s successful integration into world markets.

• South Africa needs a legislative and regulatory environment that permits and fosters growth and entrepreneurship. Too many restriction remain and insufficient attention is being paid to developing a ‘culture of enterprise’ to allow both the new and established business to create new wealth and employment. Successful modernisation requires a vision and strategy that will expand opportunities for economic participation, particularly among the previsiouly disadvantages. Employer organisations are working actively in this area through projects such as the Programme for the Industrialisation of the Nation (PIN). (a commendable NAFCOC initiative) Rigidities in labour market regulation, and the cumulative effects of increasing legislative obligations in many areas of governance, serve to raise barriers to entrepreneurship, to the detriment of new employment creation. These barriers require more systematic attention that has been possible in the Summit process and need attention as an important post-Summit priority. Similarly, steps must be taken to stimulate small and micro-enterprise, a potentially important creator of jobs. In this regard, the banking sector has made an important contribution in initiating a programme to extend loans to small and micro businesses.

• South Africa needs rapid transformation of its training and education system, which currently does not effectively develop the skills and competence required for a new generation of economic growth. Closer collaboration between the institutions of learning and industry is necessary to develop skills of the changing world of work. We need to forge partnerships between schools and enterprises and link the further education and training system directly to the factory floor. Training and education in entrepreneurship needs to be encouraged, particularly for young people. A start has already been made, but it is in this area that the legacy of apartheid weighs most heavily and demands the greatest commitment from all parties.

• Stability and good order in the industrial relations system are fundamental prerequisites for future growth and job creation. South Africa is experiencing profound structural adjustment to increasing international competition, inevitably leading to restructuring, work place re-organisation and retionalisation. Greater competitiveness and productivity improvements are not necessarily only achievable at the expense of good industrial relations. Work place efficiency and labour equity can be reconciled. However, this will require new and innovative forms of labour relations, where parties are able to collaborate to achieve common goals. This kind of protocol also remains an urgent post-Summit priority.

Against this background, South African business has enthusiastically engaged in the Summit process and has actively sought opportunities where business’ skills and resources might most sensibly contribute to the challenge of national growth and job creation. We are pleased to be a signatory to the programmes and projects that have been agreed. We are also confident that the areas where the parties continue to disagree will not jeopardise the progress achieved. These matters will need to be addressed through a continuing engagement.

One area where business has defined a particular contribution to the job creation initiative is through the proposed BusinessTrust. This has been a unique development, involving all sectors of business, big and small, black and white, in mobilising support for carefully targeted projects intended to yield short and longer-term job creation prospects. The Business Trust importantly complements the objectives of the Job Summit and many of our members’ affiliated companies are party to this initiative which seeks to raise a least R1 billion initially to finance schooling improvement and tourism promotion programmes. We believe this will make a meaningful, and lasting, contribution to South Africa’s unemployment crisis. Saki Macozoma will elaborate on the proposed Business Trust in a later speech. (Joint Chairman with Dave Brink – Task Force)

A most positive outcome of the Trust, and of the Summit process as a whole, ahs been the forging of a foundation for new partnerships between stakeholders which has deepened understanding and started to frame common goals. It t is in these partnerships that the real solutions to South Africa’s challenges lie, for clearly these are not surmountable by any one arty alone. This engagement has opened up new opportunities for dealing with South Africa’s important challenges. I would like briefly to touch on two such inter-related challenges.

1. We need clearly to define the terms of our participation in the global economy, while not losing sight of our national goals and regional developments. It is now more important that ever for domestic economic policy to stand the scrutiny of world markets. Globalisation and democracy form a ‘virtuous circle’ and it is a key challenge for the South African social partners to define these terms in a manner that ensures international competitiveness and domestic stability. This challenge arises not only for the parties here today (and in NEDLAC) but also in every workplace across the country. Old struggles will need to yield to new forms of collaboration to build on common goals. In this we dare not fail, as the casualties of the global ‘contagion’ confirm. Success will greatly advance South Africa’s standing as the emerging market of choice, and increase our share of global prosperity.
2. We need substantially to expand opportunities for economic participation in South Africa. Far too many South Africans are excluded from the means of earning a livelihood. This needs not only the effective deracialisation of the structures of ownership and control of the South African economy, but also deliberate strategies to accelerate black economic empowerment. We should review the obstacles to small and micro business development and ensure that the necessary support and advisory services are established. Barriers to entry into the labour market should be investigated and the necessary amendments secured that will permit a greater demand for labour, particularly for those marginalised by decades of apartheid. We need to develop a "culture of enterprise" where all South Africans can participate in the process of wealth creation and nation building.

In addressing these challenges, the parameters of a new economic order will begin to emerge – an order that is inclusive of all the parties and increasingly draws in those who were previously excluded. This is necessary if we are to create a robust, free and open market system that is distinctly South African, but also internationally competitive.

In this endeavour, business has a key role to play in shaping the kind of economy necessary for a renaissance that will transform South Africa into a leading world player.

The Job Summit signals a substantial and important start to this process. It has focussed the constituencies on the task at hand and has caused the parties to mobilise in support of their joint and several contributions to new job creation. The Summit has also reminded us of the very significant number of job creating projects and programmes already in existence, all of which cumulatively represent a real and substantial investment in South Africa’s future. It is business’, and will go some way towards addressing real hardships, whilst also sending a signal to society at large of the commitment of the parties to seek solutions to common problems.

However, I must add, that these objectives will be impeded if very serious inroads are not made in the fight against the crime and violence that plagues our society (most important challenge)

A coherent agenda for growth and job creation is beginning to emerge, although it is by no means complete. We are yet to agree with government on aspects of economic policy, for example, the rate of privatisation, nor have we reached agreement with government and labour on the appropriate function of labour market policy. Small business development and black economic empowerment issues also do not yet command the attention they deserve. These, and other issues, need to be canvassed in post-Summit processes.

For business, an over-riding consideration is that we have started on a road that can lead to a better life for all South Africans. We, like all the other parties, recognise that there is no quick-fix solution to our problems, but we believe we have laid the foundation for a new kind of partnership. For us, it is further open exchanges that will develop a partnership that holds the promise of sustainable solutions to growth and employment. We think the productivity issue needs to be a central topic of this continuing discussion.

Business is wholeheartedly committed to playing its part in such discussions.