Last week an exasperated black small business owner wrote to me. His small firm is being hounded by the law for refusing to register with the furniture bargaining council — a legal requirement in SA. He has written to the authorities, begging them to see reason since he is not only facing fines but even threats to attach his machines.
It’s a story that’s been told many times: the bargaining council system is dominated by big firms that are better able to handle its intensely bureaucratic obligations. They also set the tone for wage negotiations, agreeing to a cost structure that often cannot be borne by the smaller players. This stifles the growth of small firms and retards job creation.
Many economists have urged the government to exclude small, medium and micro enterprises (SMMEs) from the bargaining council agreements set by big firms and big unions, showing empirically that such agreements are associated with a reduction in employment per industry of 8%-13%, with the losses largely concentrated in small firms.
The recommendation was taken up in former finance minister Tito Mboweni’s growth document. But it was excluded from President Cyril Ramaphosa’s post-Covid-19 economic reconstruction and recovery plan (ERRP) because the government’s allies cannot stomach so much as a hint of labour-market reform — even as unemployment mounts.
The other social partners also have their blind spots. The government, for instance, won’t close hopelessly insolvent state-owned enterprises (SOEs), or end cadre deployment, or ban politicians’ families from doing business with the state.
Business is not blameless either. As much as it talks about the need to reduce inequality, many CEOs continue to draw indefensibly large salaries and bonuses while dodging their fair share of taxes. According to judge Dennis Davis of the Davis Tax Committee, the fiscus is being short-changed by up to R100bn a year due to base erosion, profit-shifting and other forms of tax avoidance, both corporate and personal.
So why doesn’t SA need an economics Codesa? The idea is raised every few years by well-meaning individuals and has been floated again after the recent looting. It’s a reflection of the fact that the country is adrift, without the rudder of a social compact or a clear line of sight as to how it will extricate itself from the damage wrought by corruption, the pandemic and the latest unrest.
But, simply, there is no point in talking about how to fix SA if none of business, government nor labour is ready to make the sort of sacrifices required. Until we reach that point all an economics Codesa will produce is a fake consensus, a wish list in which everyone agrees to the need for inclusive growth but continues to leave small firms at the mercy of bailiffs sent by antiquated bargaining councils rooted in 20th century Europe.
If the pandemic and looting did not produce enough of a shock to get Ramaphosa to put the economy first and create a radically different sort of growth path — and cabinet — then nothing will. So instead of wasting time drafting another specious economic policy document, SA must double down on the one it has — the ERRP. If the government just did what it said it would do —restrain public-sector wages, cull loss-making SOEs, free SMMEs from bureaucracy, liberalise Eskom and Transnet, and deliver that promised infrastructure push — then perhaps society would feel less adrift ... and afraid.
As the government continues to drag its feet on even those limited reforms that everyone has agreed to, South Africans are wondering whether the country’s structural fault lines are just too deep to resolve, and the required sacrifices just too difficult to make, to arrest the rot.
The inescapable conclusion is that unless SA is willing to do things differently it will continue on its downhill slide. To keep doing things the same way but expect a different outcome is, after all, the definition of insanity — or wait, is that the definition of stupidity?
• Bisseker is a Financial Mail assistant editor.
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