By Neva Makgetla, COSATU Fiscal, Monetary and Public-sector Policy Co-ordinator
In May 2001, the Department of Trade and Industry (DTI) presented to NEDLAC a discussion document: Driving Competitiveness: an integrated industrial strategy for sustainable employment and growth. It has some useful proposals, especially around skills development and improving retail linkages, but does not provide a real development strategy.
It looks only at manufacturing, its limited focus diverging from the usual understanding in the democratic movement where industrial strategy means restructuring and deveoping the economy. The narrow focus high-level manufacturing means Driving Comptitivesnss will, at most, fine tune existing supply-side measures geared principally to support exports. It does not start with an analysis of South Africa's problems and how we should address them but explores measures the authors think succeeded in driving economic growth in other countries.
That means its proposals do not deal with key problems like job losses and poverty. Besides, what works overseas may not work here.
Support for privatisation
Driving Competitiveness strongly supports privatisation, especially in telecommunications, and implicitly even in health and education, claiming that this will ensure better services for business and overlooking that it will deprive poor people - including micro enterprises - of quality services.
It argues that markets have extended beyond earlier bounderies through both an increase in international trade and privatisation and contends that this made production more efficient, benefiting the consumers.
It agrees however that markets have limitations and that the state must set the rules for the market - especialy through competition policy and by regulating privatised sectors like telecommunications.
Despite these cautions, however, the document essentially assumes that markets are the most desirable form of social organisation and the state should only step in where markets fail.
In contrast, COSATU calls for measures to strengthen collective capital - the public sector, co-operatives and other forms of social capital - to empower the majority of our people.
Driving Competitiveness then turns to an assessment of global markets, arguing that these are run under unfair rules. As usual with the DTI, it does not suggest ways to reduce the impact on our economy but focuses only on lobbying to get new rules.Where are the jobs?
It includes three boxes on what the DTI calls its broader objectives. These are black economic empowerment (BEE), support for small and micro enterprise, and employment creation. The relegation of these issues to separate boxes suggests that the DTI still sees export promotion as its key aim - not alleviating poverty nor creating jobs.
On employment, the document says manufacturing cannot create more jobs and suggests that employment be created through land reform, wage subsidies and public works projects. But it argues that these fall outside the scope of industrial policy.
It suggests supply-side measures can create jobs by:
- Encouraging investment in services and retail.
These proposals do not, however, feature in its overall policy framework.
Driving Competitiveness then assesses South Africa's industrial policy so far. It argues the democratic government aimed to:
- "Liberalise imports and encourage exports...
- "Shift from demand side measures (import controls, tariffs, subsidies, GEIS) to supply side measures.. aimed at reducing costs and improving the efficient use of inputs."
In this context, it argues: "Certain input prices, principally unskilled and semi-skilled labour, were seen to be high..." and that high wages caused job losses in manufacturing.
COSATU would argue that the cause lies in the export drive and tariff cuts - two of the main elements in government's industrial strategy.Knowledge-based industries
Driving Competitiveness then assesses existing DTI policies. It argues that exports, productivity, and investment in some industries increased, although total investment and employment declined. (In 2000, investment fell to 14,9 per cent of GDP - the lowest since 1994.)
Nonetheless, it argues that its policies did not cause these problems and should continue. In other words, the operation was a success but the patient died!
Based on this analysis Driving Competitiveness argues that DTI will continue with the core elements of its existing policy, especially the export drive. At the same time, it stresses the need to shift increasingly to "knowledge-intensive industries" - not only in the normal high-tech areas, but in all sectors.It lumps a lot under the vague heading of 'knowledge', which seems to mean mostly innovation in production and the use of the internet in trade. It ignores the potential for job losses if electronics replace workers.
The document admits that limited skills form a major obstacle to this strategy but it is distressingly clear that DTI officials do not know much about the existing skills development strategy.
Driving Competitiveness stresses that we are losing skills to emigration and limits on immigration, reflecting a tendency in government to see the import of skills as a quick-fix strategy. This could undermine efforts to improve local education and training.
To improve in telecommunications, they argue that we need "high levels of competition combined with an effective regulatory regime" - that is, regulated privatisation.
In contrast, COSATU argues that competition in telecommunications will only serve the rich and big business. To meet the needs of the poor, we need a state-owned universal service provider.Overall, this new strategy will not address the key problems of the South African economy:
- It does not pretend to find ways to create jobs on a mass scale, especially for relatively low-skilled people.
- Its proposals for privatisation will aggravate unemployment and inequality.
- It provides no serious assessment of whether South African can in fact compete in knowledge-based sectors.
Still, its proposals could be helpful for the top end of the manufacturing sector and improvements in retail linkages could help cut the cost of basic necessities and support small and micro enterprise.
Circulation of racist e-mail pictures and messages have of late been haunting the country's workplaces and other institutions. Former president Nelson Mandela was last year manipulatively illustrated in an e-mail that was circulated among few companies - in what was obviously to be regarded as a racist activity.
The Food and Allied Workers Union lately expressed their "disgust" at the racist email circulated by Nestle employees at one of the company's plants at Esteourt in the Kwazulu/Natal province. The e-mail, which is the second to hit the union members within a year, has contents of Blacks being assimilated to 'lazy' grasshoppers and whites being assimilated to 'hardworking' ants.The message goes on to present the ,successful' story of a 'wise' and which works hard collecting grass and relevant supplies in preparation for winter - whereas, on the other hand a grasshopper cats the grass, doing nothing in preparation for the future winter conditions. The 'story' takes an expectable turn: during winter the ant is warm and comfortable when the grasshopper complains about the ,social inequality' - between it and the ant. As the 'story' unfolds, familiar acronyms such as PAGAD and TRC are being twisted into "People Against Grasshoppers Abuse and Distress" and "Take and Redistribute Commission" respectively.
Fawu said the c-mail is ridiculing the turn of events in the history of South Africa and further said the union's National Office Bearers will hold a meeting with the, Nestle company management to disciiss the issue. "This kind of attitudes (conveyed in the e-mail) must never be tolerated in any circumstances," said FAWU.
