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A Growth Path Towards Full Employment


A Growth Path Towards Full Employment Policy Perspectives of the Congress of South African Trade Unions Consolidating Working Class Power in Defence of Decent Work ... – PowerPoint PPT presentation

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Title: A Growth Path Towards Full Employment

A Growth Path Towards Full Employment
  • Policy Perspectives of the Congress of South
    African Trade Unions
  • Consolidating Working Class Power in Defence of
    Decent Work and for Socialism

Background Context
  • Based on historical positions of the democratic
  • Economic Policy for a Democratic South Africa
  • COSATU Economic Policy Conference (1992)
  • Ready To Govern ANC Policy Guidelines (1992)
  • Making Democracy Work (MERG Report) (1993)
  • Reconstruction and Development Programme (1994)
  • Social Equity and Job Creation (1996)
  • The September Commission (1997)
  • Accelerating Transformation (2000)
  • This demonstrates labours contribution to
    progressive thinking about economic policy
  • Another contribution A Growth Path Towards Full

The Six Pillars of the Growth Path
  • The Creation of Decent Work
  • A living wage, eliminate discrimination in the
    workplace, skills development and training,
    balance between work and family, social dialogue
  • Redistribution of income, resources and economic
  • Redistribution of income decent wages
  • Redistribution of resources quality healthcare,
    education and basic infrastructure and services
    to working class and poor communities
  • Redistribution of economic power changing
    patterns of ownership and control of the economy,
    addressing monopoly domination, the power of
    conglomerates and colonial domination
  • Industrial development Building downstream
    industries, increasing labour absorption, meeting
    basic needs, dealing with balance-of-payments
  • Meeting Basic Needs
  • Increasing access to quality healthcare,
    education, housing, basic infrastructure and
    services, public transport
  • Addressing food security, sustainable
    livelihoods, combating hunger and malnutrition

The Six Pillars of the Growth Path...Contd
  • Environmental Sustainability
  • Mitigating the effects of climate changemoving
    towards a low-carbon growth path
  • Conserving and protecting the environment
  • Development of Southern Africa
  • Building social and economic infrastructure
  • Promotion of democratic processes and
  • Building economic linkages that promote the
    growth of downstream industries in the region
  • Managing natural resources, protecting and
    conserving the environment and making sure that
    natural resources benefit the regional population
  • Promoting fair and equitable trade between
    regional economies, including the promotion of
    worker rights

The GEAR Growth Path Has Failed
  • Unemployment Rate Rose from 31 in 1995 to 35
    in 2010, Unemployment rate of Africans rose from
    38 in 1995 to 45 in 2005
  • Poverty Using a benchmark of R322 a month,
    individual poverty declined from 52.5 in 1999 to
    48 in 2007
  • Redistribution
  • Gini Co-efficient Rose from 0.64 in 1995 to 0.68
    in 2009
  • Workers Share Declined from 56 in 1995 to 51
    in 2009
  • Expenditures 50 of the population lives on 8
    of national income
  • Executive Pay Top 20 paid directors in JSE earn
    1728 times average workers
  • Apartheid wage gap On average, Whites earn 7
    times more than Africans
  • Concentration of economic power
  • Blacks own 1.6 of JSE
  • 50 of JSE accounted for by 6 companies
  • More 80 of JSE is banks and minerals-energy-compl
    ex companies
  • Persistence of high concentration in value-chains

The GEAR Growth Path Failed...Contd
  • Control of the economy has not kept with the
  • 62 of all promotions and recruitments were White
    in 2008/09
  • 45 of these accounted for by white males
  • 13 African males and 6 African females
  • Structure of the Economy Has Not Changed
  • Economy still mineral dependent for exports
  • Petro-chemicals, mining, basic iron and steel
    make up 69 of exports
  • Imports are made up of sophisticated manufactured
    itemsfailure to break colonial production
  • Health profile of the population has
  • Life expectancy declined from 62 years in 1992 to
    48 years in 2009
  • With an average life expectancy of 71 years,
    whites expect to live 23 years more than blacks

The Post-1996 Growth Path Failed...Contd
  • Education
  • 70 of matriculation passes accounted for by 11
    of schools
  • Only 3 of children who enter the schools get out
    with higher grade maths
  • 24 of learners finish schooling in the record
    time of 12 years
  • On average 400 000 learners who write
    matriculation exams do not proceed with further
    studies, this was 89 of those who wrote in 2008
  • Housing
  • Progress has been registered 74 of households
    live in brick structures
  • But 46 live in dwellings of no more than 3
    rooms average household size is between 4 and 5
  • 55 of Africans live in less than 3-room houses
  • 50 of whites live in no less than 4-room houses

The GEAR Growth Path Failed...Contd
  • Access to basic services
  • Progress has been registered
  • Electricity access 51 to 73 between 1994 and
  • Households with no water Fell from 36 to 4
    between 1994 and 2009
  • Access to sanitation Rose from 50 to 77
  • But, there are problems
  • 5 million people experienced water cut-offs due
    to non-payment
  • The cost-recovery system and insufficient amount
    of free basic services to blame
  • Unemployment and low wages account for this
  • The above facts motivate for a radical shift in
    policy which should include
  • A re-think of the role of the state
  • Transformation of the industrial structure
  • A shift in economic policy
  • Taking social policy seriously, as both
    redistributive and transformative
  • Transform economic power relations, deal with
    concentration of ownership

Focus Areas of the COSATU Proposals
  • Role and Character of the State
  • Economic Policy
  • Industrial
  • Skills
  • Rural
  • Labour market
  • Macro
  • Social Policy
  • Ownership and Control
  • Southern Africa

Role of the State
  • Build 4 key capacities
  • Extractive capacity To extract social surplus,
    mobilize national resources in order to fund
    social and economic development
  • Redistributive capacity To deal systematically
    with the history of dispossession and the
    failures of neo-liberalism
  • Transformative capacity To change the industrial
    structure and lead the process of social
  • Administrative To drive efficiency in the state
    apparatus and the economy, improve quality and
    pace of service delivery
  • A state is developmental based on what it does
    develops capacities to address the terrible
    legacy of apartheid and capitalism
  • A need to have medium to long-term perspective to
    guide economic activity

The Four State Capacities
  • Extractive Capacity
  • Mobilization of national saving to fund
  • Regulations on credit allocation by financial
    sector improve intermediation
  • A progressive tax and levy system
  • Redistributive Capacity
  • Access to basic goods and services
  • Social protection measures for those that are
  • Deal with directly unemployment, promote decent
    work directly
  • Promote collective forms of ownership, increase
    support for SMMEs
  • Transformative Capacity
  • Production and allocation of strategic inputs
  • Localization, increase labour intensity of
  • Research and development of new technologies
  • Aggressive targets and punitive measures to
    address social transformation
  • Remove the profit motive in the direct delivery
    of basic goods and services

The Four Capacities of the State...Contd
  • Administrative Capacity
  • Aggressive human resource development of public
    servants across all spheres
  • Career-paths in the public service
  • Closing the pay-gap between public and private
  • Improve education and training, set targets for
    tertiary education
  • Increase the strategic developmental role of
    SOEs and Agencies
  • Fill and create new strategic posts to meet
    developmental needs
  • Efficiently and effectively utilize existing
  • Aggressive measures to fight corruption increase
    public awareness of consequences, naming and
    shaming lists, strengthen watchdogs and civil
    society organizations

Economic Policy
  • Industrial Policy
  • Rural Development
  • Employment Policy
  • Skills Development and Training
  • Macroeconomic Policy

Industrial Policy
  • Goals of Industrial Policy
  • Decent work
  • Meeting basic needs
  • Address balance of payments problem
  • Expand production for domestic and Southern
    African regional market
  • Its Features
  • Build backward and forward linkages
    Supply-Demand linkages
  • Strategic inputs must be available downstream at
    affordable prices
  • Build technological capabilities, support RD for
    targeted sectors
  • Procurement for localization, support the
  • Factors to be considered when targeting sectors
  • Labour intensity
  • Skill intensity
  • Value-addition
  • Export-Import orientation
  • Redistribution
  • Water and Energy Intensityenvironmental
    sustainability considerations

Proposed Baseline Industrial Structure
Proposed Policies to Support Industrial
  • Regulation of exports
  • Raw minerals and materials
  • Metals, Scrap Metal and Steel
  • Industrial financing and state investment in
    target sectors
  • Link state support with local procurement and
  • Wholesale and retail sector must carry 75 local
  • Codes and targets for SMME and co-operative
  • Sharpen the national innovation system around
    target sectors
  • Change South Africas corporate culture
  • A strategic approach to foreign ownership
  • Measures to reduce energy and water intensity of
  • Recycling Formalized, regulated and promoted
  • Environmental sustainability Pollution and waste
    disposal systems
  • Competition Policy Monitor value-chains
    associated with targeted sectors

Rural Development Our Vision
  • Provision of Decent Work
  • Large-scale land reform
  • Non-Farm activities agro-processing, light
  • Reduce income and asset inequalities
  • Eradicate poverty and improve food security
  • Access to basic goods and services

Rural Development Proposals
  • Leading role of SOEs and SETAs skills
    development and training
  • Extension of public transport, ICT and other
    economic infrastructure
  • Revitalizing irrigation systems, water
    catchments, etc.
  • Improve access to healthcare, education, housing,
    safety and security
  • Establish a Rural Development Agency A technical
    arm to drive the states programme of agrarian
    transformation, support for land reform
  • A regulatory authority to deal with the food
    value-chain, opening access for SMMEs,
    co-operatives and small-scale farmers
  • Review the capacity, financing and loan criteria
    of the Land Bank
  • Improving access to industrial inputs by the
    agricultural sector Linking industrial
    development and agrarian transformation

Labour Market and Employment Policy
  • Goals of Labour Market and Employment Policy
  • Full Employment
  • Redress
  • Skills Development and Training
  • Workplace democracy
  • Address the Apartheid wage gap
  • Address executive pay gap

Labour Market and Employment Policy Proposals
  • Employment GuaranteeELR
  • Direct way of creating employment
  • Scope to expand skills development of workforce
  • Productive use of human resources
  • Stabilizing the economy in a progressive way
  • Youth Unemployment
  • Address the leaks in the schooling system
  • Expand the FET sector
  • Strategic role of SOEs, Agencies and Departments
  • Aligning curriculum content manage supply and
  • Re-skill unemployed graduates, fill vacant posts
    in public service, to improve service delivery
  • Support youth development SMMEs and

Labour Market Policy Proposals...Contd
  • Wage Policy
  • Target executive pay
  • Mandatory base drift to close the apartheid wage
  • Wage solidarity measures

Skills Development and Training Proposals
  • Challenges
  • Incursion of profit-driven service providers
  • Poor quality education from schools
  • Very high functional illiteracy
  • Lack of focus on ABET and RPL
  • Government departments
  • Scarce and critical skills now exceed 1 million
  • Proposals
  • Align skills development and education system
  • Skills development integral to EE/scorecards
  • ABET universally available
  • Apprenticeship training
  • Skills levy increased to 4 of payroll
  • ABET teachers must be permanent
  • SETAs must link with HETs and FETs

Macroeconomic Policy
  • Fiscal Policy Goals and Elements
  • Goals
  • Full employment
  • Redistribution
  • Social and economic transformation
  • Environmental sustainability
  • Core Elements
  • Stabilize employment over the cycle and increase
    employment in the long-term
  • Influence changes in income distribution
  • Influence the structure of the economy
  • Balance social and economic infrastructure

Macroeconomic Policy...Contd
  • Elements
  • The primary target Employment
  • Industrial development
  • Foreign exchange controls
  • Exchange rate management
  • Support expansionary developmental fiscal policy
  • A broader framework for fiscal-monetary

Social Policy Proposals
  • Education
  • Universal free education
  • Early Childhood Development
  • Infrastructure and resourcing backlogs
  • Reduce class sizes
  • Teacher development
  • Healthcare
  • Focus on HIV/AIDS
  • Community Care Workers
  • State-led training of nurses and doctors
  • Increase the Nurse/people ratio from 4 to 8
  • State pharmaceutical company
  • Capacity for clinics

Social Policy Proposals...Contd
  • Housing
  • Minimise profit motive in housing delivery
  • Set up a Housing Parastatal
  • Strengthen the NHFC
  • Establish housing brigades
  • Expropriate land to address housing backlog
  • Break down apartheid geography, increase
    densification, housing close to work
  • Basic Infrastructure
  • State directly deliver infrastructure
  • Mobilize communities
  • Link to sector development
  • SMME and co-operatives
  • Scrap cost-recovery and promote
  • Review the quantity of Free Basic Services

Ownership and Control
  • Building a mixed economy
  • Private ownership
  • Social ownership
  • Public ownership
  • Sectors
  • Mining
  • Metals Fabrication
  • Petrochemicals
  • Pharmaceuticals
  • Forestry
  • Cement
  • Construction
  • Finance

COSATUs Critique of Govts New Growth Path
  • The Tools are either Absent or not Firmly
  • Analytical Framework The Pillars
  • The Role of the State What of Tenders
  • Industrial Policy Where are the instruments?
  • Rural Development Very thin
  • Labour Market Policy Where is transformation?
  • Macroeconomic Policy Continuities more than
    change (old instruments)
  • Social Policy Absent
  • Ownership and Control Absent (weird proposals on
  • Development of Southern Africa Narrow

The Policy Tools
  • It is not what the document wants to achieve
  • It is not what the document mentions
  • The most critical issue is the set of policy
    tools, instruments, that are proposed
  • The set of tools marks a break, or continuity of
  • Policy without tools is empty
  • Examples
  • Macroeconomic Policy (p.16)
  • Industrial Policy (p.17)
  • Labour Market Policy (p.23)
  • Developmental Trade Policy (p.24)
  • Resource Drivers (p.27)

Analytical Framework
  • The pillars are not clearly spelt out
  • Theoretical basis, perspective of the New Growth
    Path not spelt out
  • Interrelationships between pillars leads to
    perceived trade-offs
  • No clear strategy

Cosatu Proposals on Analytical Framework
  • Pursuing a strategy of redistribution of income,
    wealth, economic power and resources
  • Creating productive, decent work for all South
  • Pursuing a strategy of industrialization
    identifying sectors and building linkages between
  • Meeting the basic needs of the people housing,
    water, energy, education, healthcare and social
  • Promoting fair and equitable trade, industrial
    and social development across the Southern
    African region
  • Promoting an environmentally sustainable social
    and economic development strategy

Role of the State
  • The NGP document is obscure about the role of the
    state in the new growth path
  • On institutional drivers, building the
    developmental state is inadequately treated (in
    one page)
  • The NGP documents view of what the developmental
    state should do is very high-level, and fails to
    elaborate the perspectives of the 52nd Conference
  • Shape the key sectors of the economy through
    strategic interventions
  • Ensure that our natural resources are used to
    maximize national development
  • Ensure that SOEs and other state-aligned
    agencies respond to a clearly defined public
    mandate and act in terms of an overarching
    industrial policy and economic transformation
  • The role of the private sector in a mixed economy
  • The state is expected to create only 2 of the 5
    million projected jobs by 2020

Cosatu Proposals on the Role of the State
  • Contain a separate section that deals with the
    role and character of the state in the economy
  • Outline steps to build the required
    state-capacities as identified in the 52nd
    Conference and in the Cosatu document
  • Clarify the bias of the state in line with
    clarifying the class, race and gender character
    of the new growth path
  • Clarify the role of the state in directly
    building infrastructure and providing basic
  • Elaborate on the role of the state in shaping key
    sectors such as the minerals-energy complex,
    natural resource-based industries, etc. in line
    with the 52nd Conference resolutions
  • Re-think the role of the state in directly
    absorbing the unemployed, in line with proposals
    contained in the Cosatu document and in the 52nd
    Conference resolutions

On Macroeconomic Policy
  • This deals with fiscal and monetary policies and
    their co-ordination
  • At the core of any development strategy because
    it generates sources of financing the development
  • In order to understand the macroeconomics of the
    NGP document, we have to backtrack and recall the
    macroeconomics of GEAR
  • Inflation control as the overriding concern
  • A tighter fiscal stance to aid anti-inflation
  • A social agreement to facilitate wage-price
  • A stable, competitive exchange rate
  • Low real, but positive, interest rates
  • Budgetary re-prioritization
  • All these are contained in the New Growth Path
    Low inflation, retrained fiscal policy,
    wage-price moderation to deliver low interest
    rates and stable competitive exchange rate
  • No change in macroeconomic policy

Cosatu Proposals on Macroeconomic Policy
  • The proposed macroeconomic policy packaged be
    abandoned it is not in line with the
    perspectives of the Alliance and will not advance
    economic transformation
  • The principles of fiscal and monetary policy be
    clearly outlined, and the mandates be clearly
    formulated so that in both policies employment,
    redistribution and economic transformation become
    the central focus, in line with the resolutions
    of the 52nd Conference, the 2009 Manifesto and
    the perspectives of the Alliance
  • Instead of using the inflation target as a
    coordinating device between fiscal and monetary
    policies, the NGP document should use
    employment-targeting to co-ordinate both policies
  • Rather than exploring tools, the NGP document
    should outline the policy tools that should be
    used to achieve the goals of macroeconomic policy
    e.g. concrete proposals on progressive taxation,
    regulation of short-term capital flows, foreign
    exchange controls, public procurement, etc. all
    geared to support industrial and social policy
  • Mechanisms to regulate the financial sector,
    especially the banking system, so that it
    channels financial resources to targeted sectors
    and advance clearly defined developmental goals.

Microeconomic Reforms
  • The NGP document fails to move beyond AsgiSA in
    its microeconomic reforms monopoly pricing,
    costs of doing business, exchange rate, etc.
  • Based on 3 pillars
  • Competition policy, targeting monopoly pricing on
    wage goods and industrial inputs,
  • A review of administered prices to ensure that
    they do not increase above inflation
  • Interventions to contain other volatility of
    costs of necessities (NGP, p.17).
  • A more progressive position that the document
    could have advanced is for the role of the state
    in the direct production and distribution of
    essential items and critical inputs.
  • SASOL produces essential chemicals for both
    industrial and household use SASOL in turn
    requires massive amounts of electricity and
    relies on natural minerals for its production
  • Arcelor-Mittal Steel depends fundamentally on
    iron-ore production, coke, electricity and other
    chemicals from SASOL, and coal
  • Eskom relies on water and coal, but also requires
    metals such as copper and steel for cables,
    construction and machinery.
  • Price regulation is insufficient, especially when
    NGP is located within the context of the NDR as a
    form of class struggle

Cosatu Proposals on Microeconomic Reforms
  • Pricing of industrial inputs and its control be
    integrated into the discussion on industrial
    policy and/or the role of the state
  • Skills development be treated in a detailed
    fashion, and be incorporated into the discussion
    on labour market policy
  • Measures to support competitiveness and
    innovation must be incorporated in both labour
    market and industrial policy
  • The section on microeconomic reforms must
    therefore be removed and whatever is said in this
    section be incorporated in the relevant section
    of the document, e.g. measures to deal with
    monopoly pricing can be incorporated in the
    section on competition policy

Cosatu Proposals on Industrial Policy
  • The goals and principles that underpin industrial
    policy be clearly outlined
  • Targeted industries must be clearly identified,
    structural linkages between them must be
    presented, building on proposals in IPAP 2
  • Targeted industries must be linked to specific
    infrastructure and critical outputs, help the
    focus of the IPAP 2, direct DFIs
  • Outline the future industrial structure, based on
    an analysis of 8 indicators
  • The NGP document must dedicate special attention
    on the transformation of the wholesale and retail
  • Industrial policy measures to support targeted
    industries must be clearly outlined, e.g. local
    procurement, regulation of raw materials etc.
  • Given the need to reduce carbon emissions,
    specify concrete ways in which the state will
    intervene to ensure that industrial processes
    optimize the use of energy

Labour Market Policy
  • This section of the NGP document is also
  • It is not clear what the goals of the labour
    market policy of the NGP document are
  • The direct role of the state in employment
    creation is not mentioned
  • absence of ideas on how the South African economy
    can realize and guarantee the goal of full
    employment in the NGP document
  • A national productivity accord supplemented by
    sector and workplace productivity agreements
  • The wage policy of the NGP document is still
    stick in the old GEAR mode

Cosatu Proposals on Labour Market Policy
  • The section on labour policies be expanded and
    given more depth. It should have a separate
  • The goals and principles of labour market
    policies must be clearly spelt out, e.g. full
    employment, redress, workplace democracy,
    apartheid wage gap and executive pay, skills
    development, etc.
  • The NGP document must propose a concrete way to
    guarantee full employment
  • There must be a clear statement on the banning of
    labour brokers and concrete measures to regulate
    contract and other forms of non-permanent
  • There must be clarity on how to deal with youth
  • The role of the state, especially SOEs, in
    skills development and training needs to be
    strengthened and co-ordination with FET colleges
    must be improved
  • Respond to the proposals in the Cosatu document
    on labour market policies, skills and human
    resource development
  • The NGP document must abandon its proposed
    conventional wage-price controls and instead
    focus on progressive and active taxation policy
    set targets to close the apartheid wage gap, set
    targets for executive pay gap and use taxation to
    achieve this, etc.

Cosatu Proposals on Social Policy
Cosatu Proposals on Rural Development
  • Re-assert the pillars of rural development and
    transformation Land reform, agrarian
    transformation and rural development
  • Take a stand on land ownership, e.g. foreign
    ownership, what to do with under-utilized land,
    the conversion of productive land to golf estates
  • What mechanism should the state adopt to
    intervene in land markets, now that the 52nd
  • Outline ways in which facilities such as banks,
    colleges, clinics and hospitals can be delivered
    in rural areas
  • The role of SOEs in rural development should be
  • The role of agriculture should be strengthened,
    obstacles to access to agricultural inputs such
    as water, fertilizers, pipes, etc should tackled
  • The role of the state in the agriculture,
    especially food, value chain must be spelt out
  • Re-look at the 52nd Conference resolutions on
    Rural Development, the Comprehensive Rural
    Development Strategy and the Cosatu document

Ownership and Control of the Economy
  • 52nd Conference says a mixed economy is one where
    the state, private capital, cooperative and
    other forms of social ownership complement each
    other in an integrated way to eliminate poverty
    and foster shared economic growth
  • The SACP resolved to build a developmental state
    that should have capacity to compel and/or
    expropriate the means of production for
    development purposes (12th Congress)
  • The NGP document does not raise the question of
    patterns of ownership and control of the economy
  • The NGP envisions an economy in which private
    capitalist enterprises dominate
  • In 1990, it was noted that natural monopolies and
    strategic industries that are crucial for
    national development must be brought under state
  • Should public entities be categorized as black

Cosatu Proposals on Ownership and Control
  • The NGP document in its clarification of the role
    of the state, should take a stand on the
    nationalization of strategic companies such as
    SASOL and Arcelor-Mittal and those engaged in the
    forestry sector
  • The document must be clear on the nationalization
    of the mines, and the role of the state in
    beneficiating raw materials
  • The NGP document must take a stand on the
    continued dominance of critical sectors such as
    cement, construction and finance by monopolies,
    to deal with unequal power relations in the South
    African economy and is an obstacle to economic
  • The NGP document must be clear on the need to set
    up a state-pharmaceutical company
  • In general the document must identify the range
    of interventions from nationalization to
    regulation, where the state can decisively play a
    role in shaping economic and social development
  • We propose that the NGP document engages with the
    proposals contained in the Cosatu document

Concluding Remarks
  • A synthesis of ANC, COSATU, SACP and SANCO
    perspectives is required
  • Need a confident and strong lay out the policy
    path and the tools in a clear and coherent way
  • Fails to take us forward, hence Cosatu position
    that this document falls far short of a new
    growth path framework
  • Call for the overhaul of the NGP framework
  • Way forward since NGP unveiled Cosatu engaged in
    NEC January 2011 Lekgotla
  • Still awaiting a more detailed engagement on the
    policy framework through ETC of the ANC and
    Alliance Economic Summit

Thank you
  • An Injury to One is an Injury to All!
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