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Address by Neil Coleman, COSATU Parliamentary Office, to theNALEDI Conference on Employment Creation: Strategies that Work10 March 2000 |
Is a National Agreement for Employment Creation Feasible and Beneficial?
INTRODUCTION
Few people in SA would oppose the ideal of a vehicle of some sort - whether a national agreement, programme, accord or institution - which is aimed at reducing unemployment, poverty and inequality. The focus of this conference on tackling these three evils is welcome, and we agree that this objective needs to be placed centre stage on the national agenda. Labour has been at the forefront of discussions aimed at promoting a type of national agreement, which has employment creation and the reduction of poverty and inequality as its central objective. This was the case in 1994, 1996, 1998, and now in 2000.
There is a danger, however, that if pursued incorrectly this quest for an employment accord may degenerate into an approach which ends up achieving the opposite of what was intended. That an obsession with the idea of an accord may lead, because of a perceived stalemate, to the adoption of solutions which create more problems than they resolve. In other words the 'feelgood' factor becomes the 'do-wrong' factor. An obvious example of this would be adoption of an accord which in the name of creating employment, reduces income of the low paid and results in growing poverty and inequality, which leads to growing pressure on social security to absorb this deterioration, rather than the overall lifting of standards, employment, economic demand and expanded production.
We need rigour in approaching the debate around national agreements or accords. In particular, it would be a mistake to mechanically apply international models without looking at the conditions which made these models possible in other countries, or alternatively led to their failure. Discussion around this issue also needs to avoid a meaningless ideological polemic which attaches superficial labels to concepts without focussing on what society is attempting to achieve through pursuing a particular route.
Perhaps most importantly we need to define what would constitute the elements of such an agreement, and what conditions would need to obtain for an agreement to be feasible. Much as labour would desire success on this front, current realities indicate that we are barely in the pre-negotiation phase.
THE INTERNATIONAL EXPERIENCE AND ITS RELEVANCE TO SA
While the topic of this conference refers to a “national agreement” which is closer to the language which labour prefers to use, there is clearly a link to the history of social accords in various countries. It is useful to briefly review the international experience and the lessons it holds for us.
Looking at this experience one can schematically distinguish between two types of accord processes, namely what we can call a social reconstruction accord on the one hand driven by an all-round social economic and political crisis or national challenge; and the incomes accord on the other, driven by narrower economic concerns. While there may be grey areas or overlaps between these two categories, it is important for our purposes to look at the different character of these processes internationally.
The first type of accord – which for convenience I will call a social accord – was typified by the social democratic framework adopted in post-war Europe. This reflected the demands of societies requiring all-round reconstruction, the relative strength of unions and social democratic governments, and the threat posed to capital by the socialist alternative. In this sense a political agreement driven by unions and labour parties compelled employers to accept a social arrangement in which they were subjected to a degree of discipline in terms of co-determination, incomes solidarity, labour market arrangements, social security, training, etc. The state was also given an important role in leading aspects of the economy. In other words while business pursued their interests under these specific conditions as they saw fit, nevertheless the result was a real 'class compromise' which also entailed compromises by capital, albeit within a capitalist framework.
While the context of our reconstruction challenge is vastly different, this is similar in certain respects to the approach attempted by COSATU and the ANC in the Reconstruction Programme adopted by the first democratic government as its platform in 1994. The RDP was essentially a bilateral agreement, which required the buy-in or compulsion of capital. It is a matter of record now, that in this respect, the RDP never flew. A countervailing agenda from the old centres of power faced the new government with the stark choice of either imposing its agenda, or adopting a 'market-friendly' strategy in the hope that capital would come to the party. Choice of the latter path was the combined result of the lack of a detailed strategy to implement the RDP, the undue influence of technocrats in government, pressure from international and local capital, as well as the currency crisis in 1996.
As a result of this experience of the first couple of years in government, the COSATU Executive adopted a discussion paper in 1996 which proposed the need for an Alliance agreement to take forward core strategic elements of the RDP, some elements of which would be negotiated with business at Nedlac. These elements included the need for an active industrial strategy, introduction of a social wage, labour market transformation, public sector transformation and measures to channel investment into the productive sector. While discussions were held in the alliance on a number of these issues, there was a serious disjuncture between what was happening in the alliance and government, with a technocratically conservative centre in government driving an agenda in the opposite direction. The approach of negotiating an Alliance transformation programme or agreement was therefore a non-starter as long as the Alliance had limited influence on strategies adopted by government.
A second type of accord which we have seen internationally is the Incomes accord, largely developed to deal with macro-economic issues, usually precipitated by some form of economic crisis. Invariably this type of accord was defensive in character and required significant trade-offs from unions, particularly in terms of wage restraint. The 'quid pro quo' was typically in the form of tax concessions, social security benefits, and the promise of more investment and employment. Generally, it is true to say that in this type of Incomes accord, while labour always sacrificed, the promised benefits only sometimes materialised (e.g. taxes and social wage in Australia; employment in Ireland; or improvement of the position of women workers in Holland) and the picture was always mixed – with these partial benefits combined with growing inequality and lowering of living standards for certain sections of workers etc.
The relevance of this type of incomes Accord to the South African situation needs to be closely scrutinised. It has been repeatedly stated in this conference that unemployment, poverty and inequality are the key problems facing S.A. Therefore any proposed agreement which exacerbates any of these problems must be rejected as inappropriate to our conditions, no matter how good the intentions of those proposing it. This is particularly the case for proposals for an Incomes accord aimed at freezing the real wages of low paid workers in SA. These workers have battled to register marginal improvements in real wages, with limited exceptions, such as the public sector. Such an approach would therefore worsen already unacceptable levels of income inequality, and swell the ranks of the working poor. Further it would exacerbate poverty, as growing numbers of unemployed are being supported by the wages of these workers. Any accord to promote the agreed objectives would as part of its overall thrust have to look at the higher echelons of the wage and salary structure and promote a model of wage solidarity – a model which has been implemented in the public service to some extent, and has significantly reduced the levels of inequality between the low and high paid.
Further, it has been repeatedly stated in this conference that there is no evidence that lower wages for low paid workers will increase employment. In fact, it is the low wage sectors of the economy which have shed the most jobs. Structural problems of the economy, including the high cost of capital, lack of training of workers, low levels of investment, and the lack of demand caused by poverty, are far more significant factors which need to be looked at in terms of employment creation. Any proposed agreement on employment therefore needs to look at these questions.
PROSPECTS FOR AN AGREEMENT IN SA
To assess the prospects for successful negotiation of an employment agreement or accord, we need to look at the current approach of the 3 major parties.
Labour
Labour more than any other party is committed to seeking solutions to the current economic and social crisis. We say this not to be self righteous. The reality is that working people and the poor bear the brunt of poverty, inequality, and job loss. Unlike business, they have only one economy, they cannot move, they either sink or swim in this economy. Therefore labour remains committed to seriously exploring all options which could move us forward. At the same time enormous suspicions exist in the ranks of labour of any talk of an accord or agreement, since this is usually packaged by conservative proponents of an accord as involving an attack on the income of workers. Therefore those who genuinely want to promote the notion of an employment accord need to carefully consider the advisability of continuing to promote solutions which suggest that the victims of this economic crisis must be the ones to make the sacrifices. Despite its reservations, labour has nevertheless committed itself to continue talks this year aimed at finding a way forward. The proposals put forward by labour at the 1998 Jobs Summit in fact constituted a comprehensive proposal for an employment agreement although a number of our proposals were not dealt with. This platform would remain the basis for labour's engagement with business and government if current discussions develop into fully fledged negotiations.
Business
Unfortunately, business remains remarkably unfazed by the social and economic crisis our country is facing. Unlike workers, they are economically mobile, and are insulated to a greater extent from the effects of this crisis. This is certainly true for the large conglomerates ,particularly financial capital, who wield the political clout, compared to medium sized and small enterprises, which continue to go under at an alarming rate. Further our racial history has largely insulated SA business from the social impact of the economic crisis. This complacency was clearly evident in the Job Summit negotiations where business displayed little sense of urgency, and avoided substantive negotiations on many issues. Significantly, business refused to entertain labour's proposal for a national productivity agreement, which attempted to link gains in productivity to increased employment security, new employment and investment - in itself a risky proposal by labour which required considerable debate in our ranks. At the same time there are glimmerings of a recognition by sections of business that we are sitting on a social time bomb, which requires urgent intervention. This was an important factor underlying the informal discussions which have been held with top business leaders, and the proposed launching of the Millennium Council this year. It is also significant that the major concern expressed by foreign investors, and stated in Standard and Poor's assessment of South Africa as a credit risk, are the high levels of income inequality, poverty and unemployment.
Government
As long as key elements of government policy commit it to market-driven economic policies which effectively hold it hostage to the whims of speculative capital, it will be unable to forge a meaningful national employment agreement. Thus although government would like to see such an agreement, as stated by Deputy President Zuma at last year's NEDLAC Executive Council, it is unlikely to discover the political will to make it a reality, as long as the current economic structural adjustment programme is pursued. This model focuses on creating conditions for private sector investment through inter-alia restrictive fiscal and monetary policies, relaxation of exchange controls, export orientation, supply side measures focused on “getting our prices right” and international competitiveness etc. This model of structural adjustment is incompatible with an employment accord for various reasons. Firstly it requires the destruction of both public and private sector jobs to create a “lean mean competitive economy”; secondly it is incompatible with the element of discipline and regulation of capital which is an inevitable element of the type of agreement which would create employment under our conditions.
MOVEMENT TOWARDS AN AGREEMENT?
At one level it is correct to characterise the current situation as a stalemate, as some commentators have done. At the same time, engagement continues to take place on a range of fronts. There needs however to be a qualitative breakthrough in the nature of these engagements if there is going to be any meaningful progress.
Importantly there needs to be a willingness to engage on critical issues of economic policy, which we remain convinced are inappropriate in their current form to address the triple challenge of tackling unemployment, poverty, and inequality. The stranglehold over debate in this area which is preventing meaningful engagement, particularly by technocrats in the Department of Finance, needs to be broken before irreparable damage is done to our country through the zealous pursuit of failed policies. The openness and willingness to engage which characterises our country's political life now needs to be extended to the intractable economic problems which are threatening to explode the gains made by our democracy.
Discussions are currently taking place via various institutions and processes. These include the President's working groups set up under the Investment Council, the business-labour discussion in preparation for the launch of the Millennium Council, discussions in the Alliance, as well as ongoing engagement in NEDLAC. While those discussions must obviously be encouraged and nurtured, a real breakthrough will only happen when all parties have a shared sense of the nature of the crisis facing our country. This will then make it possible for a fundamental engagement to take place, which will pave the way for an agreement of the type being spoken about by the organisers of this conference. Ultimately, this will require a political agreement at the level of the Alliance and with government, and a preparedness by all parties to engage in substantive negotiations on all critical issues through NEDLAC, an institution which was set up with precisely the intention of achieving this kind of objective.
