SA’s sputtering engine of growth – in need of reconditioning

There has been a great deal of wringing of hands about South Africa’s unemployment rates. Justifiably. And typically in a vibrant democracy, the blame for this appalling state of affairs is being slung around from all sides.  Of course, the government takes the bulk of the blame for all the usual catalogue of crimes governments are blamed for–spending too much, spending too little, spending on the wrong things, not spending on the right ones–particularly, very particularly the education system. But increasingly, it is  COSATU and its affiliates that have been heaped with the most opprobrium, coming in large part from the business establishment and the opposition. So it is that Ms. Lindiwe Mazibuko, spokesperson for the leading opposition party, the Democratic Alliance, penned an opinion piece criticizing COSATU and its President one Zwelenzima Vavi thus:

“[..] one would be hard-pressed to find an organisation which has had a greater, and more detrimental, effect on public policy than his trade-union federation. It is no overstatement to say that Cosatu is the main roadblock to job creation and redress for millions of South Africans. It consistently vetoes government policy in education, labour and economic reform.”

She continued with an indignant defense of the unemployed poor, attacking COSATU’s campaign to ban labour brokering. “When Vavi cynically says that labour broking is like human trafficking,” she thundered, “he speaks with the callousness of one who has never asked a person in a badly paid job if they would be prepared to give it up if there was no alternative.”

Right. Fighting words indeed. But at least we know the Democratic Alliance feels that South Africa can not create alternatives beyond the current reality, so poorly paid workers than to accept their lot and struggle on.

This is the run of the mill bashing that COSATU receives. Nothing out of the ordinary, and COSATU can give as good as it gets. So probably my violent reaction to the piece (in the form of this blog) was based on the mounting irritation I have with the Democratic Alliance’s poverty of policy offerings, my general annoyance with all the politicking happening around such a serious problem as unemployment, oh and the very uncritical treatment the DA (and the status quo they protect) gets in our national press (do people read their documents?). I tweeted, but decided that was not enough. A more robust response is required to let off that steam. Its not very long, and not so well researched, but someone please join me in moving this thinking forward and open up this debate.

Firstly, its not COSATU’s role to create jobs. COSATU’s role is to make sure those in jobs are treated with dignity, fairness and equitably. And the more of them there are, the better for it no doubt. The prevailing neoliberal thinking tells us that governments are not supposed to create jobs–they shouldn’t intervene in the economy, they should be “facilitators”. Government (whisper “especially an ANC government”) can’t run business-they should outsource all their functions to the market, and help the market in the form of tenders and privatization. Only business can run business; the markets are best left to private actors to run, preferably with as little interference or regulation as possible. So it is that we have had to accept that the private sector (which in South Africa is vast, diversified and well resourced) is the engine of growth. It is the private sector that will create jobs which will grow the economy (which is why we must create an enabling business environment). By and large we have gone with this line of thinking for the past 18 years, tweaking things here and there, and our South African economy has creaked forward at 3% growth or so.

So we have let business be the engine of growth. Why then, are the workers–not our our private sector–being blamed not creating enough jobs? Business tells us they don’t have the right conditions to create jobs. True South Africa has tried to have the labour laws of a self respecting social democracy (in SA business speak “inflexible”), but SA business can count on so many other things that counterparts in Africa with far higher growth rates don’t enjoy. Good roads and infrastructure, electricity, some of the largest corporations in the global South, a “functional” financial system (it didn’t blow up during the financial crisis did it?), a constitutional democracy, freedom of the media, fairly stable property rights. The whole gamut. Okay our skills base is not that great,  but our literacy rates are ranked similar to Mauritius, Ghana or Kenya,  and definitely higher than Angola, Botswana and our great continental rival Nigeria, all of who seem to be managing ok if you use the orthodox economic measures. And we have some of the best universities on the continent to boot. Energy supplies are a problem, but not as much as if we were landlocked like Botwana or Zambia. We are as well if not better positioned geographically as any of our developing country counterparts, with coasts on both the Atlantic and the Indian Ocean. We have climatic conditions (apart from the odd crazy snowfall in parts) that are everything from quasi-desert to tropical to temperate. There aren’t that many engines of growth in Africa (or in Europe, where even if you have the skills base, you can’t afford the child care, swimming pool and private education) have it that good. So why is our engine of growth delivering only 2-3 per cent, when other people’s engines are managing to attain 6-8 per cent without all these advantages. Is not as if they haven’t all had political turmoil of one kind or another. Is it really just the unions?

No the problem is not our business sector. A publication “The New Divide” (new???) sponsored by Adcorp, the leading supporter of informalisation and casualisation today, offers up the question “Will high wages and lack of leadership create an unemployed majority.” A reading of the table of contents alone clearly shows whose high wages and whose lack of leadership is referred to. And its not our business sector. Surely this can’t go unchallenged?

Really we need to leave COSATU alone and start pointing fingers at our business sector. Businesses created jobs in Japan, China, Thailand and Korea–Japanese and Koreans were able to attain the highest standards of living. It is–to use a word that has become popular in our politics this last week–disingenuous to suggest that it is only government and the trade unions that are blocking our path to further job creation. Our businesses have had a head start, with a good century of being able to rely on slave labour (for which we did not ask reparations), pollute at will, and receiving form of state support including handing over vast amounts of land to “business.” So why can’t our businesses to do better than just hobble along at two percent?

The South African business establishment has been Houdini-like in managing to escape even a whiff of of responsibility for our current state of affairs. The ANC is busy speaking about employment equity and BEE, rather than to tell business (especially big business) to stop whinging, step up to the plate and start delivering. Our opposition party has told us we must resign ourselves to our structural inequalities and make it cheaper for employees to hire workers. When COSATU points out that “its the economy, stupid”, business, its supporters in government, international financial institutions and the opposition all say “no its not the economy, its the labour regulations.” Business has excelled only in beating COSATU and government in the art of controlling narratives and pointing fingers. We can’t even blame apartheid these days, because when we do, we are accused of ‘being stuck in the past’. So at the moment its labour regulations and strikes that are to blame for companies bad performance. Tomorrow it will be the universities and how they can’t produce “employable” (black) people, or the informal sector who are not paying taxes. Or the global economy and China. Or the price of oil and electricity. Or corruption and BEE. Oh and don’t forget crime. In fact business has realized that it doesn’t have to perform if they  just push the panic buttons and hysteria about everything that is wrong (pointing darkly to Zimbabwe as the example of what lies ahead), and cast themselves as the victim of a terribly difficult set of circumstances created by terribly difficult people who just don’t get it.

Back to the question of high wages and lack of leadership. Last year our CEOs awarded themselves a whopping 23.3% pay rise, while complaining that workers were asking for an extravagant 8-10% pay increase. There was a bit of a stink about it, but with all the Malema diversions it died down pretty quickly. There was no strident wailing from the white led opposition, and the media are rather preoccupied by laws on access to state information and changes to media laws. I am sure that someone asked the question about why our captains of industry, mining, finance felt they deserved a 23.3% raise for only delivering 2% growth? And creating negative employment? Business blaming COSATU for the state of unemployment is as rich as Mugabe blaming the British for ruining Zimbabwean economy (and even Mugabe has more credible points to his argument). The South African economy is pretty much run by the white establishment: rather than take responsibility, they have done little for 20 years other than vehemently protect their interests and find scapegoats to take the blame. Interestingly, we have managed to create just enough jobs to keep white unemployment at constant levels of under 10%–where COSATU fits in this picture would be interesting to find out.

SA Inc has failed to do what successful businesses in many other parts of the world have been able to do in a globalized, competitive environment. Innovate, work with the state, change management practices, shift paradigms, offer visions, open opportunities in new areas, bring in new technologies, think out of the box. Our banks have barely changed their banking and lending practices from since before apartheid. And yet there are millions of potential job creating businesses that could be supported, capitalized and grown to deliver goods and services and create jobs. Corporates are constantly fleecing the consumer and the state–our cellphone and internet rates are amongst the highest in the world. The mining sector continues to pollute the environment and destroy lives and miss commodity booms. Big SA business still get more out of South Africa than they put in. They should not be surprised that they have made themselves sitting ducks for pushes for nationalization. And that is not COSATU’s fault.

It’s not COSATU’s fault that business is so self absorbed and spoilt that they can’t think of the long term benefits of supporting an equality and transformation agenda 100%. The much lauded capital controls that protected us from the financial crisis were imposed despite big finance rather than with its support. And as for the myth that the private sector is more efficient–that is the biggest myth of all! The ANC for all its very bad faults, and real pre-apartheid disadvantages in learning about the art of governing–still managed to deliver a good World Cup! Some of the businesses we deal with still give us the service equivalent of a Soviet bureaucracy, and have failed to give the nation just one big World Cup like “wow” moment. Rather the biggest whingers have been those who have always had the most advantages.

So lets leave COSATU alone, and be honest about who is/isn’t doing their fair share for growth and employment. The workers taking home R5000, R10,000 R15,000 a month or the CEOs grossing 20-30 million rand? The blame game as to end and business must be put on the spot–for once.

Last week, at the invitation of the Mapungubwe Institute for Strategic Studies, South Africa had the pleasure of hosting on of Africa’s best and brightest brains, a Malawian by the name of Prof.Thandika Mkandawire, who as the first Chair of African Development at the London School of Economics should know a thing or two. He spoke in a radio interview (SABC’s Forum@8) about social compacts and ways to get business, government and the workers to work together. Social compacts could only be successful on the basis of give and take between all parties, and government–if it has to–must drag by the hair those who refuse to play ball. And if they still won’t “come to the party” then we have to find ways to side step them and move on. But we the public need to accept that our antiquated, pampered, high maintenance/low speed engine of growth needs serious reconditioning in its practice and attitude if it is going to bring South Africa up to speed with our fast moving counterparts in Africa and the global South.

Otherwise, it really is time to look at other options.