Leading up to the SONA, Cosatu called for implementation instead of more economic plans. Nedlac can play a key role in facilitating the support from business that is so badly needed to drive economic growth, says Thozamile Botha, in part I of a three-part series.
On 7 February this year, the Congress of South African Trade Unions (Cosatu) issued a statement containing what it hoped President Cyril Ramaphosa's 2021 State of the Nation Address (SONA) would say.
In short, it called for more action on key issues including vaccine rollout, energy security and the stabilisation of state-owned enterprises (SOEs).
Cosatu did not call for new economic plans, but for details and definitive timeframes that would speak to the implementation of the existing Economic Reconstruction and Recovery Plan (ERRP).
Four days later, Ramaphosa delivered his address.
But first, another plan
The address came on the back of the Thabo Mbeki Foundation (TMF) having released its own document titled Let us advance from an inspiring vision to a transformative plan – which had critiqued the ERRP, published in October 2020, as "essentially a vision, not the required transformative plan".
This document argued that due to the magnitude and importance of the challenge of eradicating poverty, alienation and inequity, the National Economic Development and Labour Council (Nedlac) should reconvene to conclude a Strategic Economic Reconstruction and Recovery Plan (SERRP).
But in Cosatu's view, we do not need new economic plans. The existing ERRP must be accepted as a plan. What is necessary is that government must provide the required details and definitive timeframes.
Can the ERRP work?
I believe that a worker who reads will ask the question: Does Cosatu truly believe that the ERRP, supported by the necessary details and timeframes, is an appropriate response to the grave socioeconomic challenges our country faces?
Here is one extract from the ERRP:
"The estimated impact of the plan as modelled by National Treasury is about 1.7% GDP growth additional to the 1.3% baseline from a no policy intervention scenario, bringing the total to about 3% GDP growth on average over the next ten years.
"It is also estimated that the plan shall result in additional 1.6 million jobs over and above the two million jobs in the case of the baseline scenario without further policy interventions. Thus, the plan is projected to add 3.6 million jobs over a period of ten years."
Cosatu therefore supports an ERRP which will:
- create 3.6 million jobs during the period 2020 – 2030; and
- ensure a 3% annual economic growth rate during the same period.
Unemployment crisis
Yet in the above-mentioned statement on SONA, Cosatu itself points to "more than 12 million unemployed people" and says that "unemployment has surged past 50%".
The National Development Plan (NDP) released in August 2012 had said that in terms of the actions it was proposing, unemployment should be 14% by 2020 and 6% by 2030. It said all this would require the creation of 11 million additional jobs.
It went on to say that to achieve all this, would require an average annual GDP growth rate during the period of the NDP of 5.4%.
Compare all this to what the National Treasury modelling and Cosatu itself said about the ERRP – that is, the ERRP Cosatu says we must accept as the plan.
Does the country need Nedlac?
In its document, the TMF suggested that the Nedlac social partners should reconvene to negotiate and agree on a SERRP.
I believe that a worker will ask: Has Cosatu determined that because we should all support the ERRP, there's no longer any need to have a real ERRP agreed by the Nedlac social partners?
Firstly, in its statement on SONA, Cosatu makes no reference to Nedlac. This is despite the fact that it is the convenor of the Nedlac Labour Chamber and has been involved in the Nedlac processes to agree on an economic recovery plan.
In its document, the TMF drew attention to the key fact that Business for South Africa (B4SA) had presented its own document, namely A New Inclusive Economic Future for South Africa: Delivering an Accelerated Economic Recovery Strategy (AERS).
Quite correctly, the TMF proposes that the ERRP should have integrated the AERS and the contributions that would come from labour and civil society into one plan, and in so doing, combining all the resources and capacities available in the country. It was significant that for first time since 1994, business had come together to make a firm commitment to provide the much needed and considerable investment in our economy.
But importantly, the Nedlac process provided the appropriate mechanism to take such important developments on board.
Fortunately, important players in our economy support this approach.
Facilitating investment: A key role for Nedlac
Speaking on 1 February 2021 at a gathering hosted by the Minerals Council, themed State of the Mining Nation, Minerals Council President Mxolisi Mgojo said: "…[G]iven that – as a rule of thumb – every job in our sector supports two downstream jobs, and every employee supports between five and ten dependents, the investment (in mining) becomes even more critical if between two and four million South Africans depend on the viability of this (investment)."
And yet Mgojo emphasised that the ERRP did not address the critical nature of the structural and institutional reforms needed to revive the economy.
Instead, it focused on a huge infrastructure plan which government has neither the capacity nor the balance sheet to be able to deliver.
This was not, he added, the product of a business-government "meeting of minds" – rather, the mining industry, through Business for South Africa, had "done an enormous amount of work in making a meaningful and proactive contribution to what needs to be done to be competitive and create investment in South Africa", he said.
"It has been incredibly disappointing that a lack of decisive action has meant that – six months after the proposals were tabled – we still don’t have a coherent and inclusive plan."
Mgojo called for urgent decisive action from the president. "Words and vague intentions simply do not cut it in the worlds of dollars and yen," he said. "Government needs to partner with, and enable the private sector investment to grow the economy. It can do this by allowing private sector investment into rail, ports, electricity, pipelines, for example. The current SOE model has failed the nation, and so SOEs continue to constrain competitiveness and economic growth."
The best way to respond is urgently to effect the integration of the various plans – which the Nedlac processes provide for – and therefore to produce the "coherent and inclusive plan'" which Mgojo called for.
So, I repeat, has Cosatu made the determination that because we should all support the ERRP, there is no need any longer to have a real ERRP agreed by the Nedlac social partners?
The author is a former member of the national executive committees of the South African Congress of Trade Unions (Sactu) and the ANC and a former civil servant. Read part II of this column on Tuesday.