The stalemate in the current round of social pacting appears to derive, at least in part, from an inappropriate metaphor. The participants apparently believe they are in a complex trade deal, replete with harsh quid pro quos, technical targets and schmoozing between negotiators. In fact, we’re stuck in do-it-yourself marriage counselling.
In a committed relationship you cannot flit between hardnosed transactional deals and sentimental verbiage. Instead, you have to find practical ways to build on strengths while fixing long-standing systems and contradictions. Success is not a hard-and-fast deal with sanctions for noncompliance; it is a recommitment to working together to achieve common aims despite major differences.
The task is made harder by the fundamental SA paradox. The government wants to rebuild trust with organised business. But it cannot simply promise whatever business wants — mostly better services, lower taxes and more love. The deepening crisis brought on by Covid-19 and the energy transition means the government must also vastly scale up efforts to fix SA’s systemic economic inequalities. Otherwise those inequalities will continue to seed conflict and stymie growth.
A successful recovery starts by analysing where the relationship broke down. Business itself usually says state capture was the final straw. It came on top of decades of government failure to live up to agreements, whether to improve infrastructure, change licensing procedures or even meet regularly on critical issues. The government’s lack of responsiveness reflects deeper problems: above all, unrelenting internal debates and a systemic lack of accountability, making it fatally easy for the bureaucracy to avoid innovation and risk.
But these practical challenges do not reflect simple incompetence or corruption. Ultimately, in a profoundly unequal society such as SA every economic measure faces contestation, while both government and business elites live in protected bubbles. The resulting challenges emerge from a central question: is it possible to upgrade conditions for the majority while maintaining the centres of excellence built up under apartheid?
Those centres were created and sustained by concentrating national resources on a comparatively small number of businesses, institutions and neighbourhoods. What should we do, for instance, about the reality that there are twice as many students per teacher in historically black schools as in historically white ones? Should we continue to finance commercial farms, which are critical for the food supply and exports, or shift resources to smallholder schemes? Should we maintain Eskom as a megalithic monopoly or encourage smaller producers?
Short-run horse trades will not fix these wicked problems. They require a platform that enables continued engagement around practical problems and practical agreements, not an overarching pact with rigid macroeconomic prescripts.
Social pacting also does not give the state a pass on hard decisions. The government can work with stakeholders to identify priorities and shortfalls, but it must still deliver the basics. To succeed, it has to be far clearer about what it wants, and where it cannot compromise. It has to target a more inclusive economy, measured by a growing middle class comprising the stable formal working class and small formal business owners.
Critical strategies include a more decisive shift in government spending to improve services, especially education, for working-class communities, funded where necessary by higher and more progressive taxes; greater support for small business through public and private finance, improved access to commercial and industrial sites, mentoring, and procurement reforms; and organisational development to improve workplace equality and collaboration.
Achieving this kind of systemic change requires clarity about common aims combined with flexibility on specific measures. Workstreams could, for instance, include finding ways to double the number of small formal businesses to 1.5-million by 2035; fixing Eskom; and improving workplace relations. From experience, the biggest risk is that both sides lose interest when there is no easy outcome.
Dealing with that risk requires two negotiation fundamentals: efficient mandating systems, and recognition that no-one can afford to walk away.
• Makgetla is a senior researcher with Trade & Industrial Policy Strategies.
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