Work has begun at the National Economic Development & Labour Council (Nedlac) on President Cyril Ramaphosa’s much-trumpeted social compact. He promised in his state of the nation address in Cape Town on February 10 that he would have it done in 100 days. The first serious attempt to start talking began at Nedlac last Thursday. Typically, late again.
The government, business, organised labour and civil society sat down at Nedlac’s fading headquarters in Rosebank, Johannesburg, last week and decided quickly to throw out the latest draft of a government attempt to describe what would be in the pact and who had to do what.
Just as well. Draft six of a “Framework for a Social Compact in SA — July 2022” was 32 pages of absolute drivel, much of it emanating, I suspect, from the department of trade, industry & competition. Where else would the following proposal come from? “Business commits to increased investment and response to market opportunities in SA and further afield, job protection and creation, reduced income differentials between the lowest and highest-paid employees, profit sharing and inclusion of worker representatives in (sic) company boards.”
So you get the intent here of this “pact”. Ramaphosa’s administration has run out of tax revenue and it now wants business to fund its ideological programme going forward. But take the knee now and business may as well never stand up again. On Friday all the parties started afresh, but to what end? The whole purpose of a social pact is political, to save a political career, in this case Ramaphosa’s. Business should not help him. He has been too slow, too negligent, too smug or cynical, too careless, too soft and too indifferent for going on five years in office to warrant our empathy or support now.
I can’t write about this without my head hurting. No-one on the government-labour-civil side of the table has the slightest idea how business works
You have to feel for the business negotiators, Martin Kingston, Adrian Gore and Cas Coovadia. There’s nothing for them to do in these “talks” or work groups or whatever the Nedlac process is. Basically, the government, labour and civil society all want the same thing — more and more money. And the only people in the building who know how to make it are the business trio. But they are the last line of defence for our economy. It’s their job to make sure, on behalf of the ordinary South African on the street, in the gutter or trapped in some awful rural or urban hell, that government gets not a cent it doesn’t deserve.
I can’t write about this without my head hurting. No-one on the government-labour-civil side of the table has the slightest idea how business works. They actually think if the business trio sign a document it might mean something, that they would have achieved something profound. But it wouldn’t mean a thing. They don’t, and cannot, represent anyone but themselves. That’s the whole point of business in an open market.
I know the ANC used to like to hear itself talking about a mixed economy in which the state played a business role. But the truth is that the only part of the mixed economy that works is the private part. Ah, I hear the cry, what about Transnet, which just reported a R5bn profit? Or the turnaround at Denel?
Fixing Transnet’s books has always been easier than getting its trains and pipelines working. Maria Ramos did it years ago and cleverly moved on. Current Transnet CEO Portia Derby has a bigger hill to climb than merely reporting a profit. At Denel, staff have been paid up for the first time in many months. But its job is to develop and sell weapons and it isn’t anywhere near doing that on any appreciable scale yet.
Invite Papenfus
Business has nothing to lose in these “social pact” talks. If the other side needs money then it needs to be able to answer some simple questions. Of course, we will never hear the questions, let alone the answers. We are too small and unimportant. But here’s an off-the-cuff to-do list:
First, invite Gerhard Papenfus to join the negotiating team. He runs the National Employers Association of SA (Neasa), representing more than 8,000 companies and employing more than a quarter-of-a-million people. Ask him what “business” wants.
Second, require the immediate lifting of all punitive duties protecting industries selected by trade, industry & competition minister Ebrahim Patel. These duties raised prices for imports like steel to the point where Neasa members, small businesses, fabricators and industries are going out of business.
Third, put in place incentives, not commands à la Patel, to drive corporate reforms. If you want unions on company boards, find a tax incentive to make it palatable. If you want to stop companies chasing quarterly earnings targets and cutting jobs to meet them, make long-term investing more profitable than short-term speculation. Tax investment profits made over six months at 80% and don’t tax those made over eight years at all.
All these good people being holed up at Nedlac means, sadly, that nothing much will come of it. There’ll be a pact, of course. In fact, there already is one; the 2020 Economic Recovery & Reconstruction Programme (ERRP), forged in the heat of Covid. I remember business putting its back into making a contribution, and it was significant and genuinely represented a broad business view.
When he got it, it seemed as though Ramaphosa handed it to Patel, who threw it into his wastebasket and produced a plan of his own that Ramaphosa swooned over. He called it the ERRP. It has done nothing. Neither will this one, but what the hell, we may as well go through the motions. Keep the politicians at bay for a while longer.
• Bruce is a former editor of Business Day and the Financial Mail.
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