A Growth Path Towards
Full Employment
Policy Perspectives of the Congress of
South African Trade Unions
Consolidating Working Class Power in Defence of
Decent Work and for Socialism
1
Background & Context
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Based on historical positions of the democratic forces:
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Economic Policy for a Democratic South Africa (1990)
COSATU Economic Policy Conference (1992)
Ready To Govern: ANC Policy Guidelines (1992)
Making Democracy Work (MERG Report) (1993)
Reconstruction and Development Programme (1994)
Social Equity and Job Creation (1996)
The September Commission (1997)
Accelerating Transformation (2000)
This demonstrates labour’s contribution to progressive thinking
about economic policy
Another contribution: A Growth Path Towards Full Employment
2
The Six Pillars of the Growth Path
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The Creation of Decent Work
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A living wage, eliminate discrimination in the workplace, skills development
and training, balance between work and family, social dialogue
Redistribution of income, resources and economic power
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Redistribution of income: decent wages
Redistribution of resources: quality healthcare, education and basic
infrastructure and services to working class and poor communities
Redistribution of economic power: changing patterns of ownership and
control of the economy, addressing monopoly domination, the power of
conglomerates and colonial domination
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Industrial development:
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Meeting Basic Needs
Building downstream industries, increasing labour
absorption, meeting basic needs, dealing with balance-of-payments
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Increasing access to quality healthcare, education, housing, basic
infrastructure and services, public transport
Addressing food security, sustainable livelihoods, combating hunger and
malnutrition
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The Six Pillars of the Growth Path...Cont’d
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Environmental Sustainability
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Mitigating the effects of climate change—moving towards a low-carbon
growth path
Conserving and protecting the environment
Development of Southern Africa
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Building social and economic infrastructure
Promotion of democratic processes and institutions
Building economic linkages that promote the growth of downstream
industries in the region
Managing natural resources, protecting and conserving the environment
and making sure that natural resources benefit the regional population
Promoting fair and equitable trade between regional economies, including
the promotion of worker rights
4
The GEAR Growth Path Has Failed
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Unemployment Rate:
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Poverty:
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Redistribution:
Rose from 31% in 1995 to 35% in 2010,
Unemployment rate of Africans rose from 38% in 1995 to 45% in 2005
Using a benchmark of R322 a month, individual poverty declined
from 52.5% in 1999 to 48% in 2007
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Gini Co-efficient: Rose from 0.64 in 1995 to 0.68 in 2009
Workers’ Share: Declined from 56% in 1995 to 51% in 2009
Expenditures: 50% of the population lives on 8% of national income
Executive Pay: Top 20 paid directors in JSE earn 1728 times average
workers
Apartheid wage gap: On average, Whites earn 7 times more than Africans
Concentration of economic power:
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Blacks own 1.6% of JSE
50% of JSE accounted for by 6 companies
More 80% of JSE is banks and minerals-energy-complex companies
Persistence of high concentration in value-chains
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The GEAR Growth Path Failed...Cont’d
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Control of the economy has not kept with the times:
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Structure of the Economy Has Not Changed:
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62% of all promotions and recruitments were White in 2008/09
45% of these accounted for by white males
13% African males and 6% African females
Economy still mineral dependent for exports
Petro-chemicals, mining, basic iron and steel make up 69% of exports
Imports are made up of sophisticated manufactured items—failure to break
colonial production structure
Health profile of the population has deteriorated:
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Life expectancy declined from 62 years in 1992 to 48 years in 2009
With an average life expectancy of 71 years, whites expect to live 23 years
more than blacks
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The Post-1996 Growth Path Failed...Cont’d
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Education:
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70% of matriculation passes accounted for by 11% of schools
Only 3% of children who enter the schools get out with higher grade maths
24% of learners finish schooling in the record time of 12 years
On average 400 000 learners who write matriculation exams do not proceed
with further studies, this was 89% of those who wrote in 2008 & 2009
Housing:
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Progress has been registered: 74% of households live in brick structures
But 46% live in dwellings of no more than 3 rooms; average household size
is between 4 and 5 people
55% of Africans live in less than 3-room houses
50% of whites live in no less than 4-room houses
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The GEAR Growth Path Failed...Cont’d
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Access to basic services:
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Progress has been registered:
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But, there are problems:
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Electricity access: 51% to 73% between 1994 and 2009
Households with no water: Fell from 36% to 4% between 1994 and 2009
Access to sanitation: Rose from 50% to 77%
5 million people experienced water cut-offs due to non-payment
The cost-recovery system and insufficient amount of free basic services to blame
Unemployment and low wages account for this
The above facts motivate for a radical shift in policy which
should include:
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A re-think of the role of the state
Transformation of the industrial structure
A shift in economic policy
Taking social policy seriously, as both redistributive and transformative
Transform economic power relations, deal with concentration of ownership
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Focus Areas of the COSATU Proposals
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Role and Character of the State
Economic Policy
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Industrial
Skills
Rural
Labour market
Macro
Social Policy
Ownership and Control
Southern Africa
9
Role of the State
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Build 4 key capacities
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Extractive capacity: To extract social surplus, mobilize national resources in
order to fund social and economic development
Redistributive capacity: To deal systematically with the history of
dispossession and the failures of neo-liberalism
Transformative capacity: To change the industrial structure and lead the
process of social transformation
Administrative: To drive efficiency in the state apparatus and the economy,
improve quality and pace of service delivery
A state is developmental based on what it does; develops
capacities to address the terrible legacy of apartheid and
capitalism
A need to have medium to long-term perspective to guide
economic activity
10
The Four State Capacities
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Extractive Capacity
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Redistributive Capacity
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Mobilization of national saving to fund development
Regulations on credit allocation by financial sector; improve intermediation
A progressive tax and levy system
Access to basic goods and services
Social protection measures for those that are vulnerable
Deal with directly unemployment, promote decent work directly
Promote collective forms of ownership, increase support for SMME’s
Transformative Capacity
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Production and allocation of strategic inputs
Localization, increase labour intensity of production
Research and development of new technologies
Aggressive targets and punitive measures to address social transformation
Remove the profit motive in the direct delivery of basic goods and services
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The Four Capacities of the State...Cont’d
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Administrative Capacity
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Aggressive human resource development of public servants across all
spheres
Career-paths in the public service
Closing the pay-gap between public and private sectors
Improve education and training, set targets for tertiary education
Increase the strategic developmental role of SOE’s and Agencies
Fill and create new strategic posts to meet developmental needs
Efficiently and effectively utilize existing capacities
Aggressive measures to fight corruption: increase public awareness of
consequences, naming and shaming lists, strengthen watchdogs and civil
society organizations
12
Economic Policy
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Industrial Policy
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Rural Development
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Employment Policy
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Skills Development and Training
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Macroeconomic Policy
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Industrial Policy
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Goals of Industrial Policy:
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Its Features:
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Decent work
Meeting basic needs
Address balance of payments problem
Expand production for domestic and Southern African regional market
Build backward and forward linkages: Supply-Demand linkages
Strategic inputs must be available downstream at affordable prices
Build technological capabilities, support R&D for targeted sectors
Procurement for localization, support the linkages
Factors to be considered when targeting sectors:
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Labour intensity
Skill intensity
Value-addition
Export-Import orientation
Redistribution
Water and Energy Intensity—environmental sustainability considerations
14
Proposed Baseline Industrial Structure
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Proposed Policies to Support Industrial Development
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Regulation of exports:
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Raw minerals and materials
Metals, Scrap Metal and Steel
Industrial financing and state investment in target sectors
Link state support with local procurement and job-creation
Wholesale and retail sector must carry 75% local content
Codes and targets for SMME and co-operative support
Sharpen the national innovation system around target sectors
Change South Africa’s corporate culture
A strategic approach to foreign ownership
Measures to reduce energy and water intensity of production
Recycling: Formalized, regulated and promoted
Environmental sustainability: Pollution and waste disposal systems
Competition Policy: Monitor value-chains associated with targeted
sectors
16
Rural Development: Our Vision
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Provision of Decent Work
Large-scale land reform
Non-Farm activities: agro-processing, light manufacturing
Reduce income and asset inequalities
Eradicate poverty and improve food security
Access to basic goods and services
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Rural Development: Proposals
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Leading role of SOE’s and SETA’s; skills development and training
Extension of public transport, ICT and other economic infrastructure
Revitalizing irrigation systems, water catchments, etc.
Improve access to healthcare, education, housing, safety and security
Establish a Rural Development Agency: A technical arm to drive the
state’s programme of agrarian transformation, support for land reform
beneficiaries
A regulatory authority to deal with the food value-chain, opening
access for SMME’s, co-operatives and small-scale farmers
Review the capacity, financing and loan criteria of the Land Bank
Improving access to industrial inputs by the agricultural sector: Linking
industrial development and agrarian transformation
18
Labour Market and Employment Policy
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Goals of Labour Market and Employment Policy
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Full Employment
Redress
Skills Development and Training
Workplace democracy
Address the Apartheid wage gap
Address executive pay gap
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Labour Market and Employment Policy: Proposals
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Employment Guarantee—ELR
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Direct way of creating employment
Scope to expand skills development of workforce
Productive use of human resources
Stabilizing the economy in a progressive way
Youth Unemployment
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Address the leaks in the schooling system
Expand the FET sector
Strategic role of SOE’s, Agencies and Departments
Aligning curriculum content: manage supply and demand
Re-skill unemployed graduates, fill vacant posts in public service, to improve
service delivery
Support youth development; SMME’s and Co-operatives
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Labour Market Policy: Proposals...Cont’d
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Wage Policy
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Target executive pay
Mandatory base drift to close the apartheid wage gap
Wage solidarity measures
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Skills Development and Training: Proposals
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Challenges
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Incursion of profit-driven service providers
Poor quality education from schools
Very high functional illiteracy
Lack of focus on ABET and RPL
Government departments
Scarce and critical skills now exceed 1 million
Proposals
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Align skills development and education system
Skills development integral to EE/scorecards
ABET universally available
Apprenticeship training
Skills levy increased to 4% of payroll
ABET teachers must be permanent
SETA’s must link with HET’s and FET’s
22
Macroeconomic Policy
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Fiscal Policy: Goals and Elements
Goals
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Full employment
Redistribution
Social and economic transformation
Environmental sustainability
Core Elements
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Stabilize employment over the cycle and increase employment in
the long-term
Influence changes in income distribution
Influence the structure of the economy
Balance social and economic infrastructure
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Macroeconomic Policy...Cont’d
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Elements
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The primary target: Employment
Industrial development
Foreign exchange controls
Exchange rate management
Support expansionary developmental fiscal policy
A broader framework for fiscal-monetary co-ordination
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Social Policy Proposals
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Education
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Universal free education
Early Childhood Development
Infrastructure and resourcing backlogs
Reduce class sizes
Teacher development
Healthcare
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Focus on HIV/AIDS
Community Care Workers
State-led training of nurses and doctors
Increase the Nurse/people ratio from 4 to 8
State pharmaceutical company
Capacity for clinics
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Social Policy Proposals...Cont’d
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Housing
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Minimise profit motive in housing delivery
Set up a Housing Parastatal
Strengthen the NHFC
Establish housing brigades
Expropriate land to address housing backlog
Break down apartheid geography, increase densification, housing close to work
Basic Infrastructure
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State directly deliver infrastructure
Mobilize communities
Link to sector development
SMME and co-operatives
Scrap cost-recovery and promote cross-subsidization
Review the quantity of Free Basic Services
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Ownership and Control
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Building a mixed economy
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Private ownership
Social ownership
Public ownership
Sectors
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Mining
Metals Fabrication
Petrochemicals
Pharmaceuticals
Forestry
Cement
Construction
Finance
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COSATU’s Critique of Govt’s New Growth Path
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The Tools are either Absent or not Firmly Proposed
Analytical Framework: The Pillars
The Role of the State: What of Tenders
Industrial Policy: Where are the instruments?
Rural Development: Very thin
Labour Market Policy: Where is transformation?
Macroeconomic Policy: Continuities more than change (old
instruments)
Social Policy: Absent
Ownership and Control: Absent (weird proposals on BEE)
Development of Southern Africa: Narrow
28
The Policy Tools
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It is not what the document wants to achieve
It is not what the document mentions
The most critical issue is the set of policy tools, instruments, that are
proposed
The set of tools marks a break, or continuity of policy
Policy without tools is empty
Examples:
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Macroeconomic Policy (p.16)
Industrial Policy (p.17)
Labour Market Policy (p.23)
Developmental Trade Policy (p.24)
Resource Drivers (p.27)
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Analytical Framework
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The pillars are not clearly spelt out
Theoretical basis, perspective of the New
Growth Path not spelt out
Interrelationships between pillars leads to
perceived trade-offs
No clear strategy:
30
Cosatu Proposals on Analytical Framework
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Pursuing a strategy of redistribution of income, wealth,
economic power and resources
Creating productive, decent work for all South Africans
Pursuing a strategy of industrialization: identifying sectors
and building linkages between sectors
Meeting the basic needs of the people: housing, water,
energy, education, healthcare and social protection
Promoting fair and equitable trade, industrial and social
development across the Southern African region
Promoting an environmentally sustainable social and
economic development strategy
31
Role of the State
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The NGP document is obscure about the role of the state in the new
growth path
On institutional drivers, building the developmental state is
inadequately treated (in one page)
The NGP document’s view of what the developmental state should do
is very high-level, and fails to elaborate the perspectives of the 52nd
Conference
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Shape the key sectors of the economy through strategic interventions
Ensure that our natural resources are used to maximize national
development
Ensure that SOE’s and other state-aligned agencies respond to a clearly
defined public mandate and act in terms of an overarching industrial policy
and economic transformation objectives
The role of the private sector in a mixed economy
The state is expected to create only 2% of the 5 million projected jobs
by 2020
32
Cosatu Proposals on the Role of the State
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Contain a separate section that deals with the role and
character of the state in the economy
Outline steps to build the required state-capacities as identified
in the 52nd Conference and in the Cosatu document
Clarify the bias of the state in line with clarifying the class, race
and gender character of the new growth path
Clarify the role of the state in directly building infrastructure and
providing basic services
Elaborate on the role of the state in shaping key sectors such as
the minerals-energy complex, natural resource-based industries,
etc. in line with the 52nd Conference resolutions
Re-think the role of the state in directly absorbing the
unemployed, in line with proposals contained in the Cosatu
document and in the 52nd Conference resolutions
33
On Macroeconomic Policy
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This deals with fiscal and monetary policies and their co-ordination
At the core of any development strategy because it generates sources
of financing the development strategy
In order to understand the macroeconomics of the NGP document, we
have to backtrack and recall the macroeconomics of GEAR
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Inflation control as the overriding concern
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A tighter fiscal stance to aid anti-inflation
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A social agreement to facilitate wage-price moderation
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A stable, competitive exchange rate
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Low real, but positive, interest rates
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Budgetary re-prioritization
All these are contained in the New Growth Path: Low inflation,
retrained fiscal policy, wage-price moderation to deliver low interest
rates and stable competitive exchange rate
No change in macroeconomic policy
34
Cosatu Proposals on Macroeconomic
Policy
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The proposed macroeconomic policy packaged be abandoned; it is not
in line with the perspectives of the Alliance and will not advance economic
transformation
The principles of fiscal and monetary policy be clearly outlined, and the
mandates be clearly formulated so that in both policies employment,
redistribution and economic transformation become the central focus, in line
with the resolutions of the 52nd Conference, the 2009 Manifesto and the
perspectives of the Alliance
Instead of using the inflation target as a coordinating device between fiscal and
monetary policies, the NGP document should use employment-targeting to
co-ordinate both policies
Rather than “exploring” tools, the NGP document should outline the policy
tools that should be used to achieve the goals of macroeconomic
policy e.g. concrete proposals on progressive taxation, regulation of short-term
capital flows, foreign exchange controls, public procurement, etc. all geared to
support industrial and social policy imperatives
Mechanisms to regulate the financial sector, especially the banking system,
so that it channels financial resources to targeted sectors and advance clearly
defined developmental goals.
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Microeconomic Reforms
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The NGP document fails to move beyond AsgiSA in its microeconomic
reforms: monopoly pricing, costs of doing business, exchange rate, etc.
Based on 3 pillars:
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A more progressive position that the document could have advanced is
for the role of the state in the direct production and distribution of
essential items and critical inputs.
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Competition policy, targeting monopoly pricing on wage goods and industrial inputs,
A review of administered prices to ensure that they do not increase above inflation
Interventions to contain other volatility of costs of necessities (NGP, p.17).
SASOL produces essential chemicals for both industrial and household use; SASOL in
turn requires massive amounts of electricity and relies on natural minerals for its
production processes
Arcelor-Mittal Steel depends fundamentally on iron-ore production, coke, electricity and
other chemicals from SASOL, and coal
Eskom relies on water and coal, but also requires metals such as copper and steel for
cables, construction and machinery.
Price regulation is insufficient, especially when NGP is located within the
context of the NDR as a form of class struggle
36
Cosatu Proposals on Microeconomic
Reforms
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Pricing of industrial inputs and its control be integrated into the
discussion on industrial policy and/or the role of the state
Skills development be treated in a detailed fashion, and be
incorporated into the discussion on labour market policy
Measures to support competitiveness and innovation must be
incorporated in both labour market and industrial policy
The section on microeconomic reforms must therefore be
removed and whatever is said in this section be incorporated in
the relevant section of the document, e.g. measures to deal
with monopoly pricing can be incorporated in the section on
competition policy
37
Cosatu Proposals on Industrial Policy
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The goals and principles that underpin industrial policy be clearly
outlined
Targeted industries must be clearly identified, structural linkages
between them must be presented, building on proposals in IPAP 2
Targeted industries must be linked to specific infrastructure and critical
outputs, help the focus of the IPAP 2, direct DFI’s
Outline the future industrial structure, based on an analysis of 8
indicators
The NGP document must dedicate special attention on the
transformation of the wholesale and retail sector
Industrial policy measures to support targeted industries must be
clearly outlined, e.g. local procurement, regulation of raw materials etc.
Given the need to reduce carbon emissions, specify concrete ways in
which the state will intervene to ensure that industrial processes
optimize the use of energy
38
Labour Market Policy
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This section of the NGP document is also problematic
It is not clear what the goals of the labour market policy of the NGP
document are
The direct role of the state in employment creation is not mentioned
absence of ideas on how the South African economy can realize and
guarantee the goal of full employment in the NGP document
A national productivity accord supplemented by sector and workplace
productivity agreements
The wage policy of the NGP document is still stick in the old GEAR
mode
39
Cosatu Proposals on Labour Market Policy
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The section on labour policies be expanded and given more depth. It should
have a separate section.
The goals and principles of labour market policies must be clearly spelt out, e.g.
full employment, redress, workplace democracy, apartheid wage gap and
executive pay, skills development, etc.
The NGP document must propose a concrete way to guarantee full employment
There must be a clear statement on the banning of labour brokers and concrete
measures to regulate contract and other forms of non-permanent employment
There must be clarity on how to deal with youth unemployment
The role of the state, especially SOE’s, in skills development and training needs
to be strengthened and co-ordination with FET colleges must be improved
Respond to the proposals in the Cosatu document on labour market policies,
skills and human resource development
The NGP document must abandon its proposed conventional wage-price
controls and instead focus on progressive and active taxation policy: set targets
to close the apartheid wage gap, set targets for executive pay gap and use
taxation to achieve this, etc.
40
Cosatu Proposals on Social Policy
41
Cosatu Proposals on Rural
Development
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Re-assert the pillars of rural development and transformation: Land
reform, agrarian transformation and rural development
Take a stand on land ownership, e.g. foreign ownership, what to do
with under-utilized land, the conversion of productive land to golf
estates
What mechanism should the state adopt to intervene in land markets,
now that the 52nd Conference
Outline ways in which facilities such as banks, colleges, clinics and
hospitals can be delivered in rural areas
The role of SOE’s in rural development should be outlined
The role of agriculture should be strengthened, obstacles to access to
agricultural inputs such as water, fertilizers, pipes, etc should tackled
The role of the state in the agriculture, especially food, value chain
must be spelt out
Re-look at the 52nd Conference resolutions on Rural Development, the
Comprehensive Rural Development Strategy and the Cosatu document
42
Ownership and Control of the
Economy
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52nd Conference says a mixed economy is one where “the state, private
capital, cooperative and other forms of social ownership complement
each other in an integrated way to eliminate poverty and foster shared
economic growth”
The SACP resolved to build a developmental state that “should have
capacity to compel and/or expropriate the means of production for
development purposes” (12th Congress)
The NGP document does not raise the question of patterns of
ownership and control of the economy
The NGP envisions an economy in which private capitalist enterprises
dominate
In 1990, it was noted that natural monopolies and strategic industries
that are crucial for national development must be brought under state
ownership
Should public entities be categorized as “black empowered”?
43
Cosatu Proposals on Ownership and
Control
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The NGP document in its clarification of the role of the state, should
take a stand on the nationalization of strategic companies such as
SASOL and Arcelor-Mittal and those engaged in the forestry sector
The document must be clear on the nationalization of the mines, and
the role of the state in beneficiating raw materials
The NGP document must take a stand on the continued dominance of
critical sectors such as cement, construction and finance by
monopolies, to deal with unequal power relations in the South African
economy and is an obstacle to economic transformation
The NGP document must be clear on the need to set up a statepharmaceutical company
In general the document must identify the range of interventions from
nationalization to regulation, where the state can decisively play a role
in shaping economic and social development
We propose that the NGP document engages with the proposals
contained in the Cosatu document
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Concluding Remarks
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A synthesis of ANC, COSATU, SACP and SANCO perspectives is required
Need a confident and strong; lay out the policy path and the tools in a
clear and coherent way
GEAR+ESF+ASGISA+IPAP2=New Growth Path
Fails to take us forward, hence Cosatu position that this document
“falls far short of a new growth path framework”
Call for the overhaul of the NGP framework document
Way forward since NGP unveiled: Cosatu engaged in NEC January 2011
Lekgotla
Still awaiting a more detailed engagement on the policy framework
through ETC of the ANC and Alliance Economic Summit
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Thank you…
An Injury to One is an Injury to All!
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