SA is indeed a world of contrasts. Looking at Business Day on Friday, one couldn’t help but notice the front-page story about Anglo American giving back $7.2bn (R110bn) to shareholders in 2021/2022, via a generous dividend and $1bn share buyback programme.
They are certainly in good company. Sibanye-Stillwater told the market in June 2021 that it would buy back up to 5% of its stock, and by October had spent R8.1bn doing that. Add to this the R8.54bn dividend paid out, just over a third of group profit to end-June 2021. In sum, in the second part of 2021 over R16bn had been paid back to Sibanye shareholders.
Yet in the same edition of the newspaper, a page and a half later, there was a sobering reference to the looming strike at Sibanye’s gold operations. Favourable commodity prices have not only made investors in commodity stocks happy, they have also made the budget office at the National Treasury smile. Over R12bn more than was budgeted for was collected in 2021/2022 in the form of mineral and petroleum royalties, creating room for the budget to allocate more funds to both social assistance and “growth potential-improving” capital spending.
Many have suggested that this situation might not last long, yet it might last longer than many expect given recent geopolitical developments, which could give us some runway to launch a credible and inclusive growth programme.
The contrast in outcomes is not only about seemingly divergent interests between workers and bosses, but rather illustrates the multiple realities one finds in SA. No growth programme will be considered “credible” without a plan to confront SA’s adversarial industrial and social relations. These are adversarial primarily because of how the historic and contemporary growth path has given those on the margins of society limited vested interest in keeping production going, or keeping the peace.
Wages have not always moved in step with productivity improvements, nor in many instances have the payoffs to bosses or markups to industry had anything to do with innovation, ingenuity or superior outcomes.
Perhaps it is in recognition of this that the language of social compacts has been given new application in political and economic circles in SA. Interests in outcomes (growth, favourable and growing profits, and higher tax collection) might not be commonly shared if there isn’t an agreed-on redistributive framework that confronts trade-offs and the critical bargains required to respond to those trade-offs.
Not all boats rise with the tide of earnings at a firm level, and the strikes in the gold sector are indicative of this. Furthermore, there is a growing challenge concerning the declining credibility of social dialogue and wage-setting mechanisms in workplaces.
Any social compact, and the implicit resolution of trade-offs within that compact, will be shaky if it cannot resolve the uneven relations and at times absent social dialogue in main sectors. This is not only in relation to bosses and workers, but also industry and its obligations to the government and the fiscus as circumstances shift and change.
For instance, if the oil price reaches $150 a barrel by December, will such a compact revisit the windfall tax on Sasol’s super profits that the Treasury suggested many years ago? Or is the expectation that the collection point will be via normal royalties?
The president suggested in his state of the nation address that the sixth administration had given itself 100 days to finalise a comprehensive social compact to grow the economy, create jobs and combat hunger. Such a compact would do well to consider outlining the distributional parameters of how rises and improvements in productivity and value are shared between social partners, as the National Development Plan requires.
If it does not, it may just lead to more fractious and unproductive conflicts that make our story of growth and progress something to scoff at.
• Cawe (@aycawe), a development economist, is MD of Xesibe Holdings and hosts MetroFMTalk on Metro FM.
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