Business Day
*Patel targets rand, pay, prices**Michael Bleby and Sam Mkokeli, Business Day, Johannesburg, 24 November 2010*
ECONOMIC Development Minister Ebrahim Patel yesterday laid out his plan for a reformed economy that he hopes will create 5-million jobs between now and 2020, mandate lower interest rates and cap wages and salaries in a bid to roll back inflation and inequality.
The policy document sets the minister on a collision course with labour and business.
Among highlights of the plan:
* *Curbing pay increases for those earning R3000-R20000*, and
capping bonuses for executives earning more than R550000 a year;
* Creating a sovereign wealth fund- style African Development
Fund to channel some of SA's capital inflows into the
continent and to manage foreign reserves and the value of the
currency;
* "Looser monetary policy" and steps to address the effect of
the rand on the economy and jobs;
* A review of existing black economic empowerment to assist the
redistribution of wealth; and
* A stronger role for competition policy.
The rand fell to a two-month low against the dollar after Mr Patel's
announcement, which coincided with the release of weaker than expected
growth figures.
Business and labour were cool in their responses, with Business Unity SA saying the social pact between the state, business and labour envisaged by the minister would be hard to achieve, but that it is open to sincere proposals.
National Union of Mineworkers general secretary Frans Baleni said the union was uncomfortable with the proposed wage cap, as it would delay efforts to close the wage gap.
"I hope there's still room to make suggestions on the issue of wages," Mr Baleni said.
The Congress of South African Trade Unions (Cosatu) would not comment yesterday, but is expected to raise its concerns at a meeting of the tripartite alliance in January.
The tone of the New Growth Path, the first comprehensive economic policy document of President Jacob Zuma's administration, shows a willingness to highlight the failings of the government in the country's post-apartheid development journey. However, it is blunt in its insistence that the state should drive the economy and in its prescriptions of what is needed to cut unemployment from 25% to 15% and expand the economy at a rate of 4%-7%.
However open his approach, Mr Patel is unlikely to be able to stave off revolt over the prescriptions the Cabinet-approved document makes for labour-intensive employment.
Still, the broad scope of changes envisaged and the pace with which the government wants to start implementing them --- from as early as February, after just a two-and-a- half-month consultation period --- echoes the growth, employment and redistribution policy of former president Thabo Mbeki .
That policy, labelled "neoliberal" by critics, soured the relationship between the African National Congress (ANC) and its leftist allies, and was bulldozed into effect with little consultation.
While Mr Patel's plan was endorsed by the ANC yesterday, with spokesman Jackson Mthembu welcoming its jobs focus, business complained about not being consulted ahead of the release.
"He's taken quite a strange approach here because he consulted Cosatu (on Monday). He has tabled it in Parliament but it's not clear when he is going to present to business," Aspen Pharmacare executive Stavros Nicolaou said.
The New Growth Path, which specifies job creation principally in infrastructure, agriculture, mining, the "green economy", manufacturing and tourism --- in addition to in the government itself --- identifies the persistently strong rand as a threat to economic prosperity.
Mr Patel, addressing Parliament on the plan, suggested the difficulty lay in bringing the plan to fruition.
"The key challenge will be that of implementation and we are frank about the need for a more co-ordinated and effective state," he said.
*From: http://www.businessday.co.za/articles/Content.aspx?id=127627* ** ** -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] .
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