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We urgently need a social compact, but labour and the private sector will have to get on board

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Oscar van Heerden is a scholar of International Relations (IR), where he focuses on International Political Economy, with an emphasis on Africa, and SADC in particular. He completed his PhD and Masters studies at the University of Cambridge (UK). His undergraduate studies were at Turfloop and Wits. He is currently a Deputy Vice-Chancellor at Fort Hare University and writes in his personal capacity.

Business, labour, civil society and government must all be prepared to make sacrifices in pursuit of a social compact. This will not be easy, but the alternative is rising instability, more July 2021 protests and looting and continued policy vacillations leading us down a path that nobody wants.

It was Nhlanhla Nene, the then minister of finance, who said: “we must find a balance between meeting the earnings expectations of shareholders, the realisation of the vision of economic transformation required by the electorate and occupying our rightful place as global corporate citizens.” Easier said than done it seems since our government has been wanting to enter into a social compact for the longest time.

The notion of a social compact between government, business and civil society as a basis for long-term economic development and growth underpins economic models in many industrialised countries.

According to Prof John Luiz from UCT, “the East Asian authoritarian historical experience saw political legitimacy arise from high economic growth rates. Social protection and political participation were suppressed. The state had to keep delivering the high economic rents and, in return, labour focused on productive activities and long hours of work.” 

In the South African context, this already presents a serious challenge.  First, the unions will not agree to labour focused on productive activities and to work long hours. This will never happen within the current labour laws we have. Secondly, anything that speaks of “authoritarian” in our constitutional democracy will simply not fly. 

I remember in the mid-1990s when then Minister of Education Kader Asmal wanted to insist that better qualified and resourceful white teachers should spent at least one day a week in a poorly resourced black school in the townships to better assist with the lack of trained black teachers. The country almost came to a standstill with the massive revolt offensive from our white compatriots. So, you see, authoritarian approaches just won’t fly here.  

Luiz goes further: “in Europe, a very different social compact emerged that saw a more collaborative, corporatist framework, which focused not only on production, but also on the general wellbeing of the populace. Despite these differences, what ties them together is the implicit or explicit compact that exists between business, government and labour as to the future direction of the socio-political economy.”

As for social security, it does not address the root causes of unemployment and inequality in South Africa; instead, it is putting an increasingly unsustainable pressure on the fiscus to support an ever-growing number of welfare recipients with a static and limited taxpayer base. But what to do when we have continuously failed to grow the economy and create much-needed jobs? This issue has become increasingly politicised, thus reinforcing the importance of social compacts.

It is a fact that the negotiated settlement meant no voice for the majority of our people, so a search for a social compact now is of course more pressing. Hence the need for a long-term social compact, where all stakeholders must come to the party. Business, labour, civil society and government must all be prepared to make sacrifices in pursuit of such a compact. This will not be easy, given the country’s past and the antagonistic relations between these stakeholders. The alternative is rising instability, more July 2021 protests and looting and continued policy vacillations leading us down a path that nobody wants.

Marianne Merten reminds us that the president stated that he needs a “hundred days for a new social compact to get all South Africans on board to do their bit to set the country on the right path to deal with poverty, joblessness and inequality.”

He indicated that, “from April 2022, third party operators will get slots on the trains from Transnet to South Deep. And by October 2022, private-public partnerships will be in place at the ports of Durban and Ngqura. Amended electricity legislation that would allow a ‘competitive market for electricity generation’, among others, would shortly be published for public comment.” 

The president said that “the presidential State-owned Enterprises (SOEs) Council is busy drafting recommendations on which SOEs to retain, which to merge and which to jettison.” 

Ramaphosa announced, “a year-long extension of the R350 Social Relief of Distress Grant because no one should have to bear the pain and indignity of hunger.”  This by the way was a much-needed relief for the very poor among us. “It remains our ambition to establish an income support for those in greatest need,” said Ramaphosa.

Energy, transport, including road and rail infrastructure, has remained a priority and hence the rural roads, rural bridges project. The South African National Defence Forces (SANDF) is set to lead this initiative. An additional seven bulk infrastructure projects in cooperation with the private sector were also announced. Altogether, there was a commitment of R1.8-billion of government investment, and the projects were valued at R133-billion combined. 

The president concluded with “we are engaged in a battle for the soul of the country. We will succeed… because the spirit of resilience is deeply embedded,”. He continued, “If ever there was a time to work together, it is the time…”

These are all only government initiatives…. where are the private sector initiatives, investments and contributions? This is why I have my doubts about even the possibility of signing and agreeing on a social compact within the next hundred days. Labour is simply not on board and wouldn’t want anyone to tamper with the existing labour legislation, which by and large protects their workers almost always at the expense of the general population. 

Government can only go so far and eventually is forced to introduce social relief packages in order to stall impending uprisings by the masses. 

And the private sector continuously uses the excuse of policy uncertainty, and in the meantime, siphons off their billions offshore. Foreign companies are making some effort to invest locally but our very own home-grown companies remain reluctant. 

This is not how we are going to move closer to any form of a social compact, but I stand to be corrected, come a hundred days from now. DM

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All Comments 11

  • A social compact is not a business or economic principle. It’s a political slogan and delivers nothing more than maybe a tender here or there or a job on a board or a project or two but not more than that. We need to be pragmatic

  • This can never happen with these union leaders since they do not react to realities. They actually believe the revolutionary trash they spout even when it is contradicted by facts on the ground, for instance that whenever they are rewarded with tighter labour laws unemployment increases, and are willing to sacrifice the unemployed in pursuit of an ideological holy grail. As long as this persists and as long as there is an ANC government that fears the withdrawal of union support more than it fears the anger if its voters, there can be no good faith social compact.

  • I don’t trust filthy communists like Oscar Van Heerden, the ANC, or the Labour Unions. Their ideology is poisonous to the concept of civil liberty. Nor do I trust big business either if they don’t have adequate checks and balances in place to curb their excesses.

    Nothing will come of any “social compact” until the following occurs in SA:
    1. Politicians and civil servants found to have betrayed the public trust are punished accordingly.
    2. The policy of cadre deployment is officially and unequivocally abandoned by all.
    3. BEE/AA policies are acknowledged for the failures that they are and heavily revised (if not abandoned altogether).

    • Your more emtional comments apart I agree, the reality is, it is the common man that suffers not organisations nor their masters & officials. The common man must engage the institutions on local level & expose the real goals of the current systems & propose solutions & controls for a democracy with a developmental focus not individual power & greed then unions, business, politicians will have to change or become irrelevant

  • The only social compact we need is for the ANC to deliver the civil services that they were elected to perform and to do so with consequence management being central. Look at the Western Cape and then tell me it’s not possible.

  • I don’t think the author is a filthy communist (whatever that may mean) and I think he generally writes quite insightful and sensible stuff. But I do not understand his ‘fact’ that our negotiated settlement — that is, I presume, the resulting Constitution — ‘meant no voice for the majority of our people’. Surely parliament and representation therein through political parties or (hopefully) independents is that voice — however inadequate in its results?
    What other practical means of expressing the people’s voice does he have in mind?

    • I fully agree with you Craig. Insulting each other does not take us forward. Using expressions such as filthy communists indicates, for me, a lack of healthy arguments to counter those proposed by the writer.

    • This is like an EWC bell pottinger thing the negotiated settlement. It wasn’t that, it wasn’t a compromise……… it was the most sane document for the country hammered out by competing minds and an absolutely massive public engagement process and then enacted by a virtually unanimous democratic house. That is not a settlement it is Vision
      .

  • Why does social compact seem to apply to everyone but to the ANC? Clearly accountability would be the most basic requirement for such a thing to even function.
    It is the ANC that has abandoned any social responsibility when they enabled state capture, tenderpreneurs, corruption and criminals. It is primarily their people that have destroyed the ability to support the poorest including the ability to even support themselves (over 40% unemployment)…but yeah keep on blaming capitalism instead of corruption (a word that was not mentioned even once in the entire article).

  • We still lack two necessary deliverables from CR: a ‘unity’ compact in the ANC (don’t hold your breath), and demonstration of the leading party’s well-meaning intent for the well-being of all citizens.

    • Forget about Uncle Rammi & everyone currently in power, they are committed to what they delivered. Get involved yourself, convince one voter to an alternative solution join local structures eg ward committees politicians & business & unions etc etc they will then follow or fall away. Practice democracy or fall pray to your own inaction…

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