Business Day
/New Growth Path/ *An attempt to provoke a long-overdue conversation* *Ebrahim Patel, Business Day, Johannesburg, 3 December 2010*THE launch of the government's New Growth Path document has sparked a conversation among South Africans on what we need to do to achieve higher employment. It is long overdue. Some participants have made excellent points. But we have also heard serious fears and strong criticisms, some of which reflect misunderstandings about the proposals.
The central aim of the New Growth Path is to generate 5-million new jobs by 2020 through various initiatives across the economy. They range from basic steps (such as building a railway line to move more mining output to markets), addressing stubborn problems (such as reforms in education to improve skills outcomes), taking new opportunities (such as actively promoting continental integration) to a broad pact between business, labour and government on key areas (such as wages, prices, savings and jobs). The document has coherence as its centrepiece --- linking the different actions by the state more clearly.
We cannot achieve our goals through a technical formula or "silver bullet". Nor can a solution be imposed from above. We need to develop a common vision and a joint commitment to doing things differently. Undoing the damage of the past and laying the basis for job-rich growth requires work, solidarity and focus from all stakeholders. It means doing more of the basic things well and getting the big things right.
There is no alternative. We all know we cannot continue to live with the current levels of poverty, unemployment and inequality. So the national conversation is vital. The Cabinet, when it adopted the New Growth Path, called for South Africans to be drawn into the discussion and to shape the outcomes.
But we also cannot afford to debate forever. We must begin to deal practically with our core challenges. W e need to ensure a reasonably rational and evidence-based discourse, acknowledging the power relations that shape our society, and the critical need for common action.
The concern has been raised that the state lacks the capacity to drive the New Growth Path. In this view, the document may have good proposals but we lack a bureaucracy able to implement them. Critics suggest we should therefore abandon the strategy for one that demands less from the state and presumably more from the private sector.
We share concerns about state capacity. But that cannot become an excuse for doing very little, relying purely on market-driven solutions or a few headline measures, which cannot achieve the broad shifts required for more inclusive growth.
Instead, we must work to make the state more effective. Setting clear priorities and measuring progress against them is an important start. We know from hosting the Fifa World Cup that our state and society are able to deliver on large projects when we focus and prioritise. The challenge is to link initiatives effectively. That requires not a larger bureaucracy, but better co-ordination. The New Growth Path itself proposes guidelines for greater coherence. For instance, in providing infrastructure to support economic needs; eliminating duplication and waste through a one-stop small business agency; and improving engagement with social partners. It plans to link the energy-build programme, our green-economy goals and local procurement commitments to catalyse a solid manufacturing capacity. That kind of coherence is central to the path.
Other comments on the document concern the balance between the state and the market. The New Growth Path signals that most new jobs will come from the private sector. But it sets out a role for the state. Core state functions --- infrastructure, skills development, addressing price-collusion, etc. --- profoundly affect job creation. We need to reform these core functions to ensure a more competitive and job-generating economy. If we relied on existing initiatives, we could not hope for a step up across the economy.
The world has moved beyond the 1990s suspicion of state action. International experience shows great diversity in the balance between state and market and public and private ownership. Successful industrialisers have used their public sectors in innovative ways, from Singapore's regulation of savings, Brazil's industrial financing model, Chile and Malaysia's experience with capital controls, South Korea's industrial policy, and China's mix between state-owned and private businesses, to the training partnerships in Germany's social-market economy.
The New Growth Path provides a fair balance between what the state must do and what businesses are best equipped to do. This is where social partnership is critical. The engagement with some of SA's largest companies and business associations will help to spell out the roles each can play.
On remuneration, let me clarify what the document says. It puts forward proposals for commitments by stakeholders to accept moderation in wage increases as part of a deal on price restraint, concrete jobs commitments and measures to address income inequality.
The proposals do not entail pay cuts, set maximum salaries, or rely on state regulation. They seek a consensus with business and labour on remuneration increases going forward. They cover employees earning more than R3000 a month. They propose a modest but above-inflation wage increase at the lower end (R3000 to R20000 a month) ranging to a freeze or below-inflation increase (the so-called "salary caps") for the highest paid, who earn more than R45000 a month. No one ordinarily volunteers for this kind of sacrifice. But we cannot hope to sustain a common purpose in a society marked by extreme inequality without promoting wider cohesion. To secure commitments on partnership and productivity improvements in a divided workplace is difficult unless senior staff also show solidarity.
The official Incomes and Expenditure Survey for 2005-06 found the richest 10% of the population received 51% of all household income, while the poorest 50% got just 10%. If we do not start to deal with this problem now, when will we?
Discussions on wages have in the past polarised society. Some have argued for more wage flexibility and moderation at the bottom end. Others have called for restraint on high- end salaries and bonuses. We need to take the debate beyond strident comments and move both parties to new ground.
The New Growth Path makes proposals to provoke a discussion we hope can build a new consensus on wages and earnings. We made them specific because anything less is unlikely to get South Africans talking.
Let's lift this discussion beyond slogans and calls for the retention of the status quo. The media can play a constructive role by opening a genuine debate, instead of simply pouring cold water on the new proposals.
For the leadership of business and labour, we recognise this may be one of the most difficult issues to raise with their members. But it is helpful to have fears out in the open and address them. The discussion should also explore trade-offs between constituents and between goals, seeking constructive and effective solutions.
No realistic strategy for the local economy will please everyone. Business and labour, rich and poor, urban and rural people have different demands and needs. In this context, the New Growth Path seeks to provide a framework for developing commitments that will benefit all of our people in the long run, laying the ground for dynamic growth, high employment and national unity.
* Patel is economic development minister. *From: http://www.businessday.co.za/articles/Content.aspx?id=128552* ** ** -- 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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