The final countdown to the long-awaited Presidential Jobs Summit has begun and it is now expected to take place in August.
Negotiations in preparation for the Summit are reported to have made progress in some areas and, as The Shopsteward went to press, labour, government, business and community representatives in Nedlac were meeting to set a final date.
After long delays, government released its proposals to the Job Summit, Creating jobs, fighting poverty – an employment strategy framework, in late June, opening the way for process to go ahead.
Labour was the first to submit its proposals, way back in April, followed months later by the business, government and community constituencies.
Cosatu and its labour allies have been concerned to ensure that the Summit is more than a symbolic gesture. They want the process to emerge with concrete agreements which are the result of meaningful engagement and negotiations between all stakeholders. A Summit which amounts to little more than a public relations exercise and a statement of positions would fail to tackle the country’s urgent jobs crisis.
In preparation for the Summit, five working parties have been set up under Nedlac auspices on the following areas:
Group 1: Issues of highest policy
Group 2: Industrial, sectoral and SMME policies
Group 3: Special employment programmes and public works
Group 4: Human resource development
Group 5: Social security, social wage and the social plan.
Each working group consists of business, government, labour and community representatives. The groups have met frequently in an attempt to set out a vision, framework and principles underpinning employment creation in each area; identify issues for discussion, concrete areas of agreement on policies and mechanisms and issues of disagreement. They will also identify post-Summit processes to monitor implementation and take up issues not resolved at the Summit.
The working groups report to a supervisory structure, made up of high-level representatives — Zwelinzima Vavi and Ebrahim Patel (labour), Raymond Parsons (business), Godfrey Jack (communities) and Les Kettledas and Alec Erwin, who will represent government after Tito Mboweni’s departure to the Reserve Bank.
Group 1 on "issues of highest policy" deals with areas where disagreement is most marked — macro-economic and labour market policy and the public sector. Taxation levels, deficit targets, prescribed asset requirements, interest rates and monetary policy all fall in its scope.
Concrete agreement on these issues is highly unlikely in the short-term. But stakeholders hope to reach consensus on a broad vision and principles underpinning "highest policy" as well as a process to tackle these issues beyond the Summit. Labour will push for a common commitment that such policy be scrutinised and reorientated to maximise employment creation and minimise job loss in the country.
Labour and the community constituency are keen to open up discussion on macro-economic policy. They want an approach that supports a broad job-creation strategy instead of undermining it, including more resources for employment creation, particularly since job creation proposals frequently come up against a brick wall of fiscal constraints. J
Labour’s stand is based on labour’s submission to the Jobs Summit (see The Shopsteward, Vol 7.3, April / May 1998) and other labour policy documents. See also articles following.
Cosatu will push for its job-creation proposals through a combination of engagement, negotiations and mass action.
Regional mass marches "For job creation and in defence of our jobs" are planned in the build-up to the Jobs Summit as part of the first phase of the federation’s Programme of Action adopted at the recent central committee.
On the day of the Jobs Summit, a massive national march will be organised in the region where the Summit is being held, to present demands collected from the employed and the unemployed.
Cosatu will lobby its Tripartite Alliance partners, other MDM organisations and civic bodies to join the marches.
Labour has risen to government’s challenge that it contribute to the job-creation Umsobomvu Fund by calling on the nation to donate one day’s output to the fund.
Labour will ask its own members to implement the call, on a voluntary basis, and says it should also be extended to the rest of society, including the president, MPs, MECs and company executives.
Government proposed the setting up of the Umsobomvu Trust in its submission to the Jobs Summit, "to provide a vehicle for fiscal support of innovative programmes aimed at stimulating employment and development opportunities for young people". It says this should be funded initially from a charge on demutualisation, but adds that "these initiatives may receive further support from the Budget".
Labour has backed the idea of the Fund, but says its programmes should be aimed at all marginalised groups, including the rural poor, women, and not just young people.
A lack of consultation with labour in the demutualisation of Old Mutual and Sanlam has raised labour’s ire, and Cosatu’s recent central committee resolved to oppose the process (see page 24).
Apart from the one-day’s work contribution, labour has proposed other sources of funding, including prescribed asset requirements, a solidarity tax or job creation levy and a job creation bond.
Labour also wants the Umsobomvu Trust to the quadripartite in nature (with labour, community, business and government representatives) and calls for a greater contribution to the Fund from the fiscus.
Special employment programmes and Public Works
In its Employment Strategy Framework, government has proposed six Special Employment Programmes (SEPs) to create jobs in the short-term: Clean cities campaign; Working for water; Land care campaign; Municipal Infrastructure programme; welfare programmes and community based public works programmes. Labour believes the proposals should form part of a broader job creation strategy and wants more government funding of SEPs and Public Works. It says they should:
On human resource development, labour will push for the fast-tracked implementation of the 1% levy on company payrolls provided for in the Skills Development Bill, which is being tabled in parliament. Labour says the levy should be implemented immediately after the Job Summit, and not wait until next year. Labour has also restated its demand that the skills levy be set at 4% and will push for a commitment to this from the Summit.
Labour has warned that big business’ Job Summit proposals for more labour market flexibility and a reversal of gains made in new labour laws will plunge industrial relations into renewed conflict.
In an article outlining labour’s position in the build-up to the Jobs Summit, Nedlac’s labour convenor Ebrahim Patel says business has adopted the neo-liberal approach, based on a blind belief that "the market" will deal with all economic problems. This calls for lower trade tariffs, deregulated labour markets, privatisation of state-owned enterprises, reduced levels of state spending, reduced corporate taxes and weakening of unions.
Patel says a publication by the South African Foundation (SAF), which represents the country’s top 50 companies (including some parastatals), on the Summit, rails against inflexibility, regulation and powerful unions. It sets out proposals to reverse the social progress made in new labour laws since the 1994 elections and calls for labour market flexibility.
"By labour market flexibility they mean lower wages, longer hours of work, and reduced protection against unfair dismissal," says Patel.
SAF proposals also seek to re-open the historic 1995 agreement on the LRA, the bedrock of SA’s post-election industrial relations dispensation.
But he warns that, "Not only are their prescriptions inappropriate on economic and social grounds, there are in addition, dangers and lost opportunities in that approach."
"The danger is that if business seeks to lower labour standards, in the guise of flexibility, they will plunge industrial relations into renewed conflict. Society would lose an important opportunity to forge a consensus on the challenge of job creation and job security."
Instead of a comprehensive review of industrial, trade, public sector and other policies, the Job Summit will get bogged down in the quicksand of labour market "flexibility". There is no such "silver bullet" to the jobs challenge.
Labour argues that instead, there is a need to focus on how to sustain and increase rising productivity and how to ensure that investment (in technology, in plant and machinery and skills) converts the productivity growth into jobs and higher incomes.
It calls for a set of integrated short-term and long-term policies to address the crisis of job loss and unemployment.
"Some of the proposals are aimed at a short-term stimulus, with their economic multiplier converted into long-term jobs through appropriate industrial and other policies. Others address the systemic constraints to the economy absorbing large numbers of workers."
But the golden question is: who initially pays for the job creation programmes? This question cannot be separated from aspects of macro-economic policy such as the deficit target, taxation levels and monetary policy. Labour has put forward three major proposals to address the cost of job creation.
On deficits, instead of the current inflexible target of 3%, we propose a fiscal deficit that may fluctuate within a band, depending on the size of the social deficit and the state of joblessness.
On taxation, we proposals for a "solidarity tax" on wealthier South Africans, similar to the idea alluded to by Deputy President Thabo Mbeki in his "two-nations" speech in May this year, as a short-term measure to deal with the financing challenge.
On capital mobilisation, we proposed a prescribed asset requirement on the financial sector, including on worker provident/pension funds, to raise capital for social investment.
Other labour proposals for the Job Summit can be summarised under the following headings:
Industrial and economic development policies for employment creation. These embrace a careful blend of demand management and appropriate supply-side initiatives. The objective of demand management is to maintain and expand demand for domestically produced goods and services.
This needs monetary policy geared to lowering interest rates, fiscal policy which is redistributive in character, and trade policy which limits the erosion of the domestic market through imports. The supply-side measures seek to lower cost, improve quality and promote product and process innovation into South African made goods and services.
The trade proposals focus also on improvements in customs administration and rules of origin, a review of tariff reductions where these have been decreased below, or faster than, the required World Trade Organisation (WTO) rates, and the implementation of a social clause to ensure that multilateral trade flourishes on a bedrock of rising labour standards.
The proposals address specific mechanisms to improve labour productivity, introduce technological innovation and promote active investment policies towards the goal of job creation.
Labour puts forward a range of proposals that recognise the key role of the state in employment creation, economic activity and service delivery.
Public works programmes are identified as a particularly important short-term employment creation mechanism with important implications for longer-term development.
The current programme to restructure state assets should have as an explicit goal the retention and, where possible, expansion of jobs. There are specific proposals to improve the social wage and rebuild the public service.
We call for the introduction of social plans in every industry to manage the economic restructuring process in a way that is sensitive to job creation. Unions propose a review of the legislative framework, which currently makes retrenchment too easy for employers.
Other proposals seek to:
These are primarily among marginalised and isolated groups, and include women, the informal sector, and the rural unemployed. Labour has also called on its members to promote SA goods, through a national "buy local, buy fair labour" campaign.
Together, these proposals constitute a package that addresses the need for immediate action on the jobs front, and also the structural dimensions of the jobs crisis.
The Job Summit process is an opportunity for society to tackle some of the short-term and longer-term challenges of growing the number of jobs in the economy. There is no guarantee of a successful outcome.
One of the obstacles is that the discussion and the negotiation flounders on the rocks of a sterile debate about labour market reform and labour flexibility. We can and should do better.
This is a summary of a longer article by Ebrahim Patel.
Labour has proposed a national productivity and equity framework agreement to be negotiated in Nedlac to ensure that growth in labour productivity creates jobs.
Despite claims to the contrary, SA Reserve Bank data shows that labour productivity has increased while labour costs have declined.
Nedlac labour convenor Ebrahim Patel says that, according to figures in the latest Bank Quarterly Bulletin, labour productivity in the non-agricultural sector grew by at least 1,3% from 1993 to 1997. Last year, labour productivity grew by 3,5%.
Unit labour costs, on the other hand, decreased by 3,1 in 1993 and by almost one percent last year. Put simply, Patel says, productivity growth has exceeded real wage increases.
In addition, labour’s share of national income dropped from 60,9% in 1993 to 59% last year, while capital’s share of national income rose.
Despite this evidence, the Bank still insists that wage hikes have outstripped productivity increases. Patel quotes the Bank’s March Quarterly Bulletin: "As a consequence of productivity increases not fully keeping pace with the rises in the average remuneration per worker, nominal unit labour costs kept on growing, thereby putting upward pressure on the output prices of domestically produced goods and services."
In June, the Bank repeats its standard line, "Despite the growing excess supply of labour, worker remuneration continues to grow at a rate that was not consistent with low inflation."
Patel says it does not require a rocket scientist to know that if labour productivity grows faster than real wage increases, then real unit labour costs decrease. "This means in turn that, all else being equal, aggregate labour costs are exercising a deflationary pressure on the SA economy," he says.
This reflects a deep bias in the Bank, which won’t accept the evidence that the core problems of the SA economy do not arise in the labour market, even when their own data shows it.
"It is a bias dressed up in techno-speak beloved of economists. It seems objective and factual," says Patel, "but in truth it feeds a ‘conventional wisdom’ which argues for a particular form of labour flexibility." The danger in this is that some citizens and policy-makers may uncritically accept this conventional wisdom.
It is beyond dispute that labour productivity growth has been accompanied by massive job losses. The challenge for society is to convert productivity growth into jobs.
In labour’s view, the critical missing link in the supply side of the economy is investment in productive activity, and in the demand side of the economy, the size of the market. Domestic market growth and South Africa’s penetration of global markets is not fast enough.
Whether productivity growth leads to job losses or to job gains does not depend on the nature of the productivity growth. It is determined by overall company strategies and philosophies, social agreements, legal regulation and the macroeconomic performance of the SA and global economy.
But even more needs to be done to improve productivity. In labour’s view, the combination of poor training of blue-collar workers, the effects of slow economic growth on capacity utilisation, the lack of world-class technology and work planning systems and importantly, a managerial layer not always up to the challenges of modern production, all contribute to the problem.
And the problems go beyond the workplace. The residential policies of the past which still require workers to spend long periods travelling to and from work (in parts of the country workers wake up at 4am to be at work at 7.30am) is one example of a social policy which limits opportunity for productivity growth.
To address these issues, labour proposes a national productivity and equity framework agreement to be negotiated through Nedlac to cover all industries. This should cover the goals and methods of improving productivity levels of managers, workers, raw material and capital. It should cover equity issues such as the distribution of productivity gains, and the re-organisation of relations on the shopfloor. It should deal also with job security and job creation.
The agreement should embrace a range of vital matters influencing efficiency and productivity, such as the effective implementation of competition policy, corporate structures, education and training, and the role of institutions such as the Industrial Development Corporation.
Such an agreement would also have to address the critical element of public sector and private sector investment.
Business associations have contended that they have no control over the investment decisions of individual businesses. Yet there are a range of mechanisms available to foster and promote overall investment, from the use of prescribed asset requirements, tax mechanisms to encourage the reinvestment of profit, to the introduction of a job creation levy on companies to finance public investment.
Instead of exploring these proposals, some top business representatives call regularly for labour market flexibility. They have focused on labour legislation as the easier front to tackle the problems of unemployment. Their proposed labour market reforms will either reduce aggregate earnings or lower aggregate labour standards.
Labour’s proposal for a productivity and equity agreement is an alternative to the calls for labour market flexibility predicated on a return to the past.
THE community constituency in Nedlac could be a key ally for labour in the build-up to the Jobs Summit and the two social partners share a common approach on many issues.
Addressing Nedlac’s labour caucus in mid-July on the communities’ submission on the Jobs Summit, constituency convenor Godfrey Jack said labour and communities were increasingly speaking the same language. He said there was a need for the two to form a united front to strengthen their collective voice.
The community constituency includes the South African National Civics Organisation, the Women’s National Coalition, Disabled People of SA, the South African Youth Council and the rural development sector.
Jack said his constituency represents society’s most marginalised groups — rural people, youth, women, and people with disabilities. Their Jobs Summit submission, Jobs for All, aims to address the plight of this marginalised sector, which suffers disproportionately high unemployment levels.
Their key priority is to ensure that the informal or "survivalist" sector is located within the economic mainstream and can engage in sustainable economic activity.
"The necessary gateways need to be created to ensure the marginalised sectors in society can escape their daily poverty grind," the document says, pointing to differences between the informal sector with its estimated 3,5 million people, and the 800 000 in small, medium and micro enterprises (SMME).
"The SMME and informal sectors should not be a ghetto for women, youth and poor black people, instead policies must enable easy mobility from these sectors into the mainstream economy."
Other issues in Jobs for All include:
Labour market transformation: An extension of worker rights to the informal and SMME sectors, including extending LRA and other provisions to these sectors as well as a code of minimum labour standards for SMMEs. The social security system must be redesigned to incorporate informal sector and SMME workers by registering casual, seasonal, piece-rate, home-based and self-employed workers.
Skills training: A quota system and strict targetting measures to incorporate marginalised groups into training programmes and measures to improve school-to-work transition programmes.
Employment incentives: Economic incentives, such as better access to credit and subsidies to encourage employers’ compliance with job creation strategies for specific groups, including disabled people. An employment subsidy in the form of tax credit, to lower the cost of hiring labour while avoiding lower wages and living standards.
Rural people: Tackling rural poverty needs improved wages and working conditions for the employed and policies to widen access to rural wage opportunities, particularly in agriculture.
Social security net: Government should speedily implement a more comprehensive social and welfare security net for the poor.
Better implementation: Short-term programmes emerging from the Summit should be carefully planned, targetted and quickly implemented. Public Works and Special Employment Programmes can achieve sustainability through labour-intensive processes and local economic development objectives. Community participation in project design, implementation and maintenance is essential.
National Agreement: Wider consensus over macro-economic policy is essential to build investor confidence. The Jobs Summit should explore a Social Accord which addresses macro-economic policy, productivity growth and the distribution of its benefits between wages and profits in ways that ensure increased employment.
Macro-economic policy must complement job-creation by being expansionary rather than restrictive. Government economic policies should direct the economy towards a long-term labour-absorbing growth path instead of the present jobless growth path.
Fiscal policy: There is a need to explore broader consensus on the approach to the fiscal deficit since this would reduce risk and volatility in financial markets. Government should increase the level of funding for Special Employment Programmes as short-term job creation measures, and increase public investment in economic and social infrastructure.
Monetary and exchange rate policy: Lower interests rates and a depreciated exchange rate will help growth by encouraging investment, durable goods consumption and exports. While this will produce a small inflation increase, monetary policy should focus not just on achieving a very low inflation rate but also be concerned with economic growth and employment levels.
The Jobs Summit is the first step in an ongoing process. The Summit’s job creation strategies must incorporate monitoring and evaluation systems to assess their effectiveness and sustainability and enable adjustments to maximise employment impacts. All the social partners must participate fully in these processes.
The South African Communist Party held its 10th Congress in Johannesburg from July1–5. While the sharp polemical inputs from President Mandela and ANC president Thabo Mbeki occupied much media attention, many other important issues arose in the Congress.
Blade Nzimande was elected as the new general secretary of the SACP, and Charles Nqakula was elected chairperson. The newly elected 30-person Central Committee includes a number of senior trade union leaders — Gwede Mantashe (NUM general secretary), Mbhazima Shilowa (Cosatu general secretary), Willie Madisha (Sadtu president), and Mbuyi Ngwenda (Numsa general secretary). Also elected to the CC were three cabinet ministers, two deputy cabinet ministers, and many senior parliamentarians. Ten CC members are women. The following are substantial extracts from the 10th Congress Declaration:
This Congress has met after four years of ANC-led governance, and it has provided us with an opportunity to take stock of the major achievements, of the real objective constraints and of the subjective shortcomings of the past four years.
The Congress has taken place, also, one year before the next general elections in our country. It is a Congress that has convened in the midst of grave volatility in our domestic and in international financial markets, underlining once more the crisis-ridden character of capitalism. The present crisis is represented as an "Asian" crisis, in fact it is a symptom of the all-round, international disfunctionality of capitalism.
Above all, this Congress has convened at an important strategic moment in the national democratic revolution of our country. The medium and longer-term strategic outcome of the April 1994 democratic breakthrough is class-contested. The debates this past week, and the media coverage of our Congress, underline this fundamental strategic reality.
On the one hand, powerful forces in our country, the beneficiaries of apartheid wealth and privilege, allied with powerful external forces, are bent on blocking and subverting the ongoing radical transformation of our society. On the other hand, there is the real possibility and necessity of pressing fearlessly ahead with national democratic transformation.
The precondition for the anti-democratic strategy to succeed is an ANC/SACP/COSATU alliance that is fragmented, dissipated and divided. This is why there are forces in our society who work so hard to achieve this outcome, and why they so dishonestly goad the SACP into playing brinkmanship with our alliance. Any SACP position that falls short of taking our alliance to the brink is scoffed at as being "timid". This 10th Congress has shown that the SACP has no intention of playing recklessly into that agenda.
On the other hand, the precondition for ongoing national democratic transformation is a powerful, robust Tripartite Alliance, based on a common strategic programme, and rooted in a common working class constituency — the overwhelming majority of our people who continue to be the victims of the apartheid legacy.
It is within this context that the 10th Congress of the SACP declares:
The building and strengthening of the SACP involves several core features:
This 10th Congress reaffirms its deep commitment to the ANC/SACP/ COSATU tripartite alliance. This commitment, rooted in seven decades of alliance experience, is not simply a matter of history. It is, above all, a strategic imperative.
The SACP’s commitment to the Alliance is, in no way a renunciation of our independent, communist organisation, policies and programmes. On the contrary, a strong communist SACP is a precondition for a strong ANC and Cosatu, and vice versa.
An alliance, as decades of experience have taught us, is not built primarily through declarations and meetings (and debates) between leaderships. An alliance has to be built on the ground in common, unifying programmes of action. For this reason, the programme of action we have developed at this 10th Congress of the SACP is a programme that we intend to discuss and develop with our Alliance partners, and other MDM formations. An important part of this programme is to give priority to building in campaigns, and with our allies, a working-class led, democratic national women’s movement. Above all, it is a programme of action that we intend to implement jointly, on the ground.
This 10th Congress mandates the newly elected leadership of the SACP to engage with the leadership of the ANC in the coming weeks, to inform our comrades in the ANC of the resolutions of this Congress, and to discuss constructively the SACP’s concerns about certain assertions made about us.
This 10th Congress mandates the SACP leadership to carry forward our discussions, debates and resolutions into the forthcoming Alliance Summit.
This 10th Congress has discussed in detail numerous specific economic policy issues. In particular, this Congress:
The NDR needs to be advanced and deepened, but it also needs to be defended. There are counter-revolutionary forces in our country bent on undermining our new constitutional order. These forces must be dealt with decisively.
The defence of our revolution requires increasing the capacity and coherence of the state, ensuring that it is continually transformed. But this defence of the revolution also requires an active, vigilant and mobilised mass base. The mobilisational programme of the SACP and of our alliance is directed simultaneously at transformation and defence.
Specifically, this Congress calls on SACP members to take responsibility for active participation in the Commandos, in the police reservists, in Community Police Forums, and generally to play an active civic role in the struggle for peace and security.
This 10th Congress emerges unified behind our Congress slogan — Build Peoples Power, Build Socialism Now!
We dedicate ourselves to implement in the coming weeks, months and years, the mandate given to us by this Congress. In all that we do, we are guided by the understanding that, if we are to succeed in our objectives, we have, as a Party, to work to ensure that the working class of our country more and more emerges as a force in itself, a class force capable of assuming hegemonic leadership of the ongoing transformation struggle.
