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NDP: Doomed from the outset


Neil Coleman is co-director of the Institute for Economic Justice. @NeilColemanSA

If one looks at development plans from around the world and the factors that bring them success, it becomes clear that South Africa’s NDP is a deeply problematic document. And unless we develop a Plan which addresses the structural problems in our economy, we will perpetuate features of our economy which are holding the country back from achieving the vision of full employment, and a decent standard of living, for South Africa’s people.

The Wits School of Governance and the Oliver and Adelaide Tambo Foundation have opened up a debate on a critical issue facing our country. Prof Gumede’s background paper on international experiences of planning raises a number of important issues, but his discussion identifies in particular two pillars of development planning which are critical for our debate: firstly, that Development Plans around the world have been most successful where they have had broad legitimacy and social support. And secondly, the core of all institutionalised development planning has been the question of economic planning, focused on industrial strategy. And on both these fronts – securing broad social support, and advancing coherent economic planning proposals – our NDP runs into serious trouble.

Let me deal first with the question of legitimacy and support: Slick PR from the NPC Secretariat, and the former Minister, with unquestioning support from most of the media, business, and the conservative opposition parties, attempted with some success to manufacture a sense of broad social buy-in to the NDP. Government carefully avoided ventilating the controversial elements of the Plan, and steered clear of real engagement with key constituencies such as organised labour.

Many of the most contentious elements of the Plan were carefully buried in the massive 484-page document. By the ANC’s Mangaung Conference in 2012, the vast majority of leaders, let alone delegates, had not read the document. As with all policy, the devil is in the detail. What they thought they were endorsing, albeit with reservations and question marks, was a motherhood and apple pie vision. But many soon realised that the broad vision contained many problematic details.

COSATU, in discussing the NDP, recognised that the plan was a mixed bag, and didn’t reject it in its totality. But for a trade union federation, the critical issues obviously related to the Plan’s economic and labour market proposals. And this is what COSATU focused on. By the time COSATU produced its detailed critique of the NDP’s economic proposals in February 2013, many had begun to wake up to the fact that the NDP contained deeply problematic, incoherent, and un-implementable proposals. In fact, Jeremy Cronin stated in the Chris Hani debate last year that the NDP was impossible to implement.

The rhetoric of the Plan was one of an ‘active citizenry’, a ‘plan for all’ and a plan based on ‘trust and co-operation between labour, business and government’. The reality, however, has been in many respects the opposite of these noble sentiments.

It soon became obvious, that far from the claim that the NDP was the product of deep and widespread consultation, critical elements of it were highly controversial, and unacceptable to key constituencies. Consultation was selective and superficial, and to this day there has been no serious engagement with the labour movement on issues of fundamental concern, identified by us.

It even became apparent that there was significant unhappiness amongst a number of commissioners with important elements of the Plan. Unlike many Commissions in the past, there was no final sign-off on the Plan. Although we can expect this to be denied, history will prove this assertion to be correct.

In any event it became clear that the Plan not only failed to represent a broad social consensus, but that serious and substantial opposition was emerging from-different quarters in society. These included progressive economists, a range of university intellectuals from different traditions, gender and youth activists, civil society activists, the South African Communist Party, COSATU and its affiliates (who also raised a number of sectoral concerns) and some of the opposition. Concerns were also being raised by important actors in the ANC and in government.

Trenchant criticism of key aspects of the Plan culminated in the landmark resolution of the Alliance Economic Summit in September last year, where it was agreed that concerns being raised were legitimate, and that the NDP needed to be realigned to address these concerns. We come back to this issue later.

Even if opposition had only come from COSATU, I argue that this would have been fatal for the success of the NDP: There is no way that the NDP can be implemented without the support of organised workers, when it is this constituency more than any other (except perhaps big business) who are vital for taking such a Plan forward.

‘It’s the economy, stupid!’

The second issue Prof Gumede’s paper raises is that the question of the economy is central.

As with other Development Plans, the NDP’s core is contained in its economic proposals. Or as Bill Clinton put it in the US Presidential elections, “It’s about the economy, stupid”!

The ANC’s 2012 Mangaung Conference called for a radical economic shift. But what does the call for a radical economic shift mean? It means getting to the root of structural problems in the economy, and systematically addressing them.

It is not surprising that the NDP fails abysmally to do this, or that its proposals actually entrench existing power relations. In recent years there has been sharpened contestation by progressive forces in society and the state over economic policy. The NDP represents a ‘fightback’ by conservative economic forces, led by National Treasury and conservative business elites.

While we have recognised that there are elements of the Plan which are positive, our view is that ultimately the proposed economic paradigm will impact negatively on all dimensions of the plan, and the lack of coherence in the Plan’s proposals will undermine achievement of its objectives. The conservative Macro Economic Policy framework will impact profoundly on every facet of the NDP, both economic, and ‘non-economic’. We should also recognise that all aspects of economic policy are interconnected, and therefore need to talk to and reinforce each other: e.g. industrial policy has a bearing on regional development strategies; competition policy is linked to agriculture and food security; the economic role of the state has a major bearing on employment strategies, etc.

The NDP, especially in relation to its economic and labour market analysis and proposals, not only fails to advance a radical economic shift, but actually threatens to reverse certain progressive advances made by the ANC and government over the last few years.

It fails to take forward key progressive policies which have been adopted since the 2007 Polokwane Conference, through the ANC’s 2009 Manifesto, at various Alliance Economic Summits, or through aspects of policies such as IPAP and the NGP, including: the need to fundamentally transform the structure of our economy, and promote a new path of growth through redistribution; the need for a massive concerted push to industrialise our economy, and that of the region; the need to place the creation of decent work for all at the centre of economic policy; and to place redistribution, and combating economic inequality and poverty, as a fundamental pillar of economic development. The NDP does none of these things.

The NDP’s economic proposals represent entrenched economic interests, and an attempt to consolidate existing power relations. Because of limited time given for this input, we can’t go into our detailed critique of the NDP’s economic proposals, but our critique is being placed on the Wits School of Governance website and can also be found here.

Those expecting that COSATU was too divided to take a unified position on the NDP were shocked to discover that this was one matter our affiliates were united on, when the COSATU CEC adopted a resolution on the NDP by consensus. Particular areas of concern with the economic analysis, proposals, instruments, and goals of the NDP, which are articulated in the COSATU Resolution, and outlined in more detail in the COSATU critique, include the following six points:

a. The NDP’s jobs plan is problematic and unsustainable, and is based on creating low quality precarious jobs outside the core productive sectors of the economy;

b. It fails to pursue the IPAP and NGP vision of industrialising the economy, policies which themselves are being undermined by an inappropriate macro economic policy framework;

c. The NDP is premised on undermining worker rights, and a low wage strategy, institutionalised through a two-tier labour market, centred particularly on repressing wages of first-time workers;

d. The NDP proposes a business as usual macroeconomic stance which fails to address the inherited structural deficiencies of the South African economy, or the domination of mining and finance capital; it also fails to propose the fundamental change of ownership that is needed, or to ensure effective economic intervention by the state;

e. The NDP’s modest ambition on the persistence of high levels of inequality is deeply troubling, aiming only to reduce the gini coefficient to 0,6 by 2030, which would still make us the most unequal major country in the world, if we look at current statistics;

f. Its poverty and unemployment projections are dubious and won’t be realised if the proposed Plan is implemented.

These defects in the NDP are of huge concern because no national development plan can succeed without an appropriate economic strategy, which must form the core, and the base, on which any plan rests. It is critical to address these defects if we are to have any hope of unleashing the two major drivers of economic development – a diversified industrialisation strategy and large-scale investment in the productive sector of our economy. South Africa is no different from all other development experiences worldwide – these interventions will have to be state-led. But the NDP’s vision of the role of the state in the economy is wishy washy at best.

Our opposition to the NDP’s economic paradigm isn’t in the first instance ideological, as some claim, but grounded in solid, coherent, analysis of our realities, and detailed proposals for alternatives, contained in COSATU’s 2010 policy document A Growth Path for Full Employment. Indeed, we would argue that many of the NDPs economic proposals are ideologically driven, rather than evidence- based. COSATU’s analysis points out numerous errors and inconsistencies in the NDP. To this day, no one has effectively rebutted COSATU’s critique of the NDP. On the contrary, it has been widely cited, and many recognise the validity of concerns raised by the organisation. Even Business Day described the COSATU critique as “devastating”.

Certain areas of the NDP are positive, including some proposals in the chapters on integrated human settlements, social protection, building a capable state, education and combating corruption. However the success of even these, hinge on the appropriate economic strategy being adopted. For example proposals to improve the public sector and social delivery will not be able to succeed, if the economics of the Plan denies the state the resources to implement these effectively. The notion of promoting a decent standard of living, while welcome, is completely contradicted by the NDPs ultra low wage strategy.

There should be no holy cows. It was simple for the ANC to take a decision to redraft the international chapter of the NDP, because it didn’t advance its strategic vision. The same should be true of the economic chapter – but of course the stakes are much higher in relation to the economy.

Some claim that the NDP economic proposals we are focusing on are ‘marginal’, perhaps because these proposals are not well understood. But the entire NDP, for example, culminates in a plan for a social accord, centred around proposals which are nothing less than an attempt to restructure the economy based on a new cheap labour strategy. The proposal for a Social accord in the NDP goes beyond a model of wage moderation (limiting wage increases to inflation or productivity increases), and proposes a model of wage repression (through reducing entry level wages – this is in addition to its proposal for the youth wage subsidy). Buried in various parts of the NDP, this proposal for “extraordinary measures to transform the labour market” is actually central to the NDP’s strategic vision.

(Treasury’s underlying agenda in this regard, which it has consistently advanced since the adoption of Gear in 1996, is exposed on p58 of the NDP, where it states: “South Africa’s labour market is often characterised by contestation between profitable firms and reasonably well-paid employees. Outcomes determined in bargaining processes leave little room for new entrants to enter the workplace. To address high levels of unemployment, particularly among youth, extraordinary measures will be required”. It then goes on in the Chapter on the economy, and the concluding chapter, to propose an agreement to reduce the entry level wages of young workers.)

The NDP model of wage repression is very different from the proposals in government’s 2010 New Growth Path (NGP), which proposed a cap on salaries at the top, wage moderation in the middle of the wage structure, and more rapid wage growth at the bottom- i.e. a wage solidarity strategy. The NDP’s wage repression strategy goes against the clear observation by Prof Habib in his book South Africa’s Suspended Revolution, “that any proposal for a low wage growth strategy through a social accord ‘is a non starter’”.

The NDP’s proposals do not respond to the causes of current stresses in the labour market – namely growing poverty and income inequality, which require a coherent national wage policy; and the undermining of our collective bargaining framework, which requires the strengthening of our legislation. If the NDP’s proposals were implemented, it would worsen conflict in both areas.

Those in Treasury, and other drafters of Chapter 3, need a serious reality check on their idea that we have ‘high entry level wages’. They need to look at the most recent Stats SA statistics which show that the majority of South African workers earn poverty wages – with half of all workers earning less than R3,033 per month in 2013, (and half of African workers earned less than R2600 p/m in 2013) way below any reasonable calculation of a minimum living level (currently around R4,500-R5,000 pm). Socially the proposal for wage repression is a disaster, will cause chaos in the labour market, and economically does the opposite of what is needed, to revitalise and industrialise our economy. So at least in relation to the economic elements of the plan, it is back to the drawing board.

The way forward

Last year’s Alliance Summit agreement on the NDP provides the only way forward, to resolve this impasse:

It begins by supporting the need for national long range planning, an idea which was pioneered by the Alliance at its 2008 Summit. But it states that “the NDP must support the effort to take forward the programme of radical economic transformation”.

The Alliance resolution proposes to take forward implementation of the NDP where there are areas of agreement, e.g. on the public service charter, proposals to fight corruption, and proposals to address Apartheid spatial planning.

But critically, the Alliance Summit agreed that the NDP should be realigned to address legitimate concerns raised by COSATU and the SACP, particularly on the economy. This realignment should “address the imperatives of reindustrialisation of our economy, promoting a developmental economic policy, consolidating and advancing worker rights, promoting decent work, and addressing inequality.”

The failure thus far to implement this agreement is a matter of major concern, as government is steaming ahead with implementation of a Plan, which is fundamentally flawed in the areas we have outlined above.

It is simply not good enough to punt the line, as the Presidency and business are doing, that even if the plan is ‘imperfect’, we must go ahead and implement it. Why should we saddle ourselves for the next 16 years with a fundamentally flawed plan, which worsens our problems, when we can craft a plan which effectively addresses the country’s needs?

The NDP’s vision of a national agreement around which social partners cohere cannot succeed unless we develop a Plan which addresses the structural problems in our economy. Otherwise we will perpetuate features of our economy which are holding the country back from achieving the vision of full employment, and a decent standard of living, which the NDP claims to espouse. Only with such a realignment would our national plan succeed in promoting the radical economic shift, the majority of South Africans agree needs to take place. We are ready to engage in this enterprise. DM