Engine of development? South Africa's National Economic Forum 070213032X

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ENGINE OF DEVELOPMENT? South Africa’s National

Economic Forum

EDITED BY EBRAHIM

PATEL

To the members of Cosatu, who led the general strike by three million workers on 4 to 5 November 1991, in support of the demand for the formation of the National Economic Forum,

and to Amilcar.

First published in 1993 € Juta & Co. Ltd 1992 PO Box 14373, Kenwyn 7790 This book ts copyright under the Berne Convention. In terms of the Copyright Act, No 98 of 1978, no part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission from the Publisher. ISBN 0 7021 3032

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Printed by Creda Press (Pty) Ltd, Eliot Avenue,

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Eppindust II

LIST

OF CONTRIBUTORS

DAVID BRINK Is the chief executive officer of Murray and Roberts, a large construction company and 1s chairman of the Business Forum. The Business Forum brings together the 17 business organisations represented on the NEF.

Bossy GODSELL 1s an executive director of the Anglo American Corporation, a large South African mining/industnal/financial conglomerate. He is the business co-ordinator on the NEF. DEREK KEYS 1s Minister of Finance and of Trade and Industry in the South Afmcan government. TREVOR MANUEL 1s the head of the Department of Economic Planning of the African National Congress. JAY NAIDOO 1s the general secretary of the main trade union federation, the Congress of South Afncan Trade Unions (COSATU). JAYENDRA NAIDOO is the national negotiations co-ordinator of the Congress of South African Trade Unions (COSATU) and 1s the labour co-ordinator on the NEF. EBRAHIM PATEL is the deputy general secretary of the SA Clothing and Textile Workers Union (SACTWU)

and is the labour co-ordinator of the Short-Term

Working Group of the NEF. KLAUS SCHWAB Is president of the World Economic Forum, a Swiss based organisation bringing together leaders from business, government and the sciences.

ABBREVIATIONS ABACOR

Abattoir Corporation

BLNS

Botswana, Lesotho, Namibia and Swaziland

COFESA

Confederation of Employers of South Africa

COSATU

Congress of South Afnican Trade Unions

CODESA

Convention for a Democratic South Africa

FAWU

Food and Allied Workers Union

FEDSAL

Federation of South Afncan Labour

GATT

General Agreement on Tariffs and Trade

IMF

International Monetary Fund

LTWG

Long-Term Working Group

NACTU

National Council of Trade Unions

NEF

National Economic Forum

SACCOLA

SA Employers Consultative Committee on Labour Affairs

SACTWU

SA Clothing and Textile Workers Union

STWG

Short Term Working Group

TBVC

Transkei, Boputhatswana, Venda and Cisket

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PREFACE

This book 1s ‘history on the hoof’, an attempt to record the progress of a young new institution. It draws on speeches given by prominent trade union, business and political leaders in the course of two public meetings: a conference on worker nghts convened by the SA Clothing and Textile Workers Union (SACTWU) in mid June 1993, and the first plenary of the National Economic Forum on 5 July 1993. The articles which follow pursue some similar themes: on the inadequacy of government as the sole shaper of economic policy, on the representivity of the three participants in the NEF, on the need to link issues of economic growth and social development, and of the powers of the NEF in relation to a democratic parliament. The contributors to this book reflect the diversity of interests represented in the NEF: their perspectives are different, but all have in common a belief 1n the importance of the National Economic Forum as a new institution of development and decision-making. I hope this collection of articles, document and agreements will allow for focus the debate over the future role, Economic Forum in a democratic South

and the reproduction of the founding greater insight into this institution, and structure and powers of the National Afmica.

I thank Liv Torres and Halton Cheadle for their useful comments on the book,

Shaheid Teladia and Lynn Taylor for help with typing and setting, Lindsay Norman and Simon Sephton of Juta’s for their assistance, and their patience when my trade union commitments clashed with publishing requirements, and to the contributors to this book who cheerfully tolerated tight deadlines. CAPE TOWN

August 1993

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FOREWORD

The pioneering creation of the National Economic Forum has to be seen against the background of major global developments, first, the new world situation, and second, the new concept of the role of enterprise. The new world situation is a result of the fundamental technological, political and economic forces that are rapidly changing traditional assumptions of global competition and global co-operation. We have not seen such radical changes since the industrial revolution in the nineteenth century which gave birth to our modern industrial society but which also created the seeds to split the world for nearly a century into different ideological camps. The scope and pace of the changes over the past two decades qualify this

period as a second industrial revolution with many years to come to provide final shape to the current historical transformation. The most striking characteristic of this new revolution is the end of the cold war. This end came mainly as a consequence of the extraordinary progress in information and communication technologies which together with the globalization of the world economy and the ever increasing acceleration of technological advances made centralized decision making an antipode to the requirements of responsible and above all competitive utilization of human and capital resources. I predict that the impact of dismantling central control in eastern Europe, Asia, Latin America and also in Africa will create a completely new competitive challenge. It has been estimated that this evolution will place a potential labour force of almost a billion people — at very low labour costs — on world markets. Since capital and technology today can move around the world, worldwide competitive pressure will become tremendous. No country will be able to resist the pressure of this mega-competition since the forces are irresistible in these times of rapid and inexpensive reallocation of resources and markets. Even a country of enormous natural resources, such as South Africa will have to face the strains of the new competition. I am personally very concerned with the political and social consequence of this new revolution. But the history of many countries, above all recently in eastern Europe, teaches us that hundreds of millions of people have been condemned to lower levels of poverty as a result of centralized government policies that protect enterprises and individuals from competition. Such policies are self-defeating and the cases of several East Asian countries show us that the most successful economies are those characterized by intense internal competition that creates efficiency, quality and customer service.

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Thus, the economic welfare and as a consequence the social stability of a

country will be determined by its competitiveness in the new world market. This national competitiveness is built mainly on the following factors: * The political stability which enables both government and business to take those measures that strengthen the long-term competitiveness of the economy. * Society must be committed to investing in each of its members, strong or weak, so that he or she 1n turn has the means to contribute to society. This means particularly investments into housing, education and training, and in health-care. * The social partners have to work together to ensure that the longer term achievement of shared objectives, such as economic and social progress 1s not sacrificed for short-term, selfish advantages.

There is a need for a fast and peaceful political transition to create the necessary long-term stability, there is a need for a nationwide attitude ‘to invest’ and there is a need for the National Economic Forum, as a framework for consensus and confidence-building. It is not only the new global economic competition which makes the National Economic Forum so relevant but also the emergence of a new concept of the role of enterprise. Historically, the management of an enterprise has been seen as solely accountable to the shareholders of the company and the overriding objective was the maximization of ‘shareholders value’. This concept has been replaced today by the ‘stakeholder’ theory, which means that management 1s not only accountable to the shareholders but to all ‘stakeholders’. Contrary to the pure capitalist ‘shareholders’ theory, there are in the ‘market economy’ two additional partners of the firm: the clients and the suppliers. In the ‘social market economy’ two additional partners have to be added: the employees and the government on a national and local level. Responsible management today means taking decisions which over time optimally fulfil the expectations of all partners even if those expectations 1n the short-term are contradictory. In the long-term there 1s one common interest: to strengthen the prosperity of the enterprise and in such a way the prosperity of all its partners. The National Economic Forum is an expression of this stakeholder concept and a unique instrument to make the partnership happen.

KLAUS SCHWAB President of the World Geneva

Economic Forum

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The case of the National EBRAHIM

Ebrahim Patel was born in 1962 in District Six, Cape Town. He studied at the University of the Western Cape, and later at the University of Cape Town. In 1979 he headed a high school student committee for the support of strikers at a Cape Town pasta factory, Fattis and Monis. During the next few years, he was involved in anti-apartheid activities and was detained by the police on three occasions. In 1982 he was employed as a researcher at the School of Economics at the University of Cape Town, and published on socio-development and labour matters. He worked on a part-time basis with the emerging unions in Cape Town, and helped to set up a union in the university Sector, becoming its first full-time general secretary in 19835. In 1986 he joined the National Union of Textile Workers as a branch

Economic Forum

PATEL

organiser, and through a series of mergers, the union became the Southern African Clothing and Textile Workers Union (SACTWU). His union work en-

tailed collective bargaining, recruitment of workers, education, campaigning and the co-ordination of major strikes, including those in the cotton industry (1987-1988), and at Hextex (1989). He served on the first tripartite committee, set up in 1991, to put together a plan to restructure the clothing and textile industry. He is currently the deputy general secretary of the third largest union in South Africa, serves on the COSATU executive committee and tis labour chairperson of the Short Term Working Group of the National Economic Forum. He was one of the two labour representatives on the committee which drafted the NEF founding documents.

Market power and political influence In many societies the industrial power of trade unions in the market is substantially less than the influence of trade unions in political and social institutions. This lack of power is due in part to the low and declining rates of unionisation in most industnalised countries. Levels of unionisation have been affected by new patterns of work and production, changing technology, internationalised markets and the structure of welfare provision through the modern state. This, together with the weakening tradition of solidarity within the movement, has had a profound effect on the role of organised labour in the market. Trade unions have then derived their relative influence primanly through participation in national institutions tied up in politics, and through

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alliances with political parties operating in parliament. In South Africa, 1t has been the reverse. Trade unions have been more powerful in the exercise of market power through opposition from outside, rather than influence from within, the formal institutions of decision-making. Organised labour has been able to exercise its power through effective shopfloor organisation, a strong and militant membership, a talented leadership and strong links with community groups. It has been able to change wage standards through the Living Wage Campaign, affect government policy in the labour market through general strike action and alter consumer behaviour through a series of consumer boycotts against specific products. The movement was compelled to develop this capacity, for it had no institutional arrangement through which to affect policy. Black South Afncans could not vote, hence the influence of organised labour in parliament was limited. In addition, no credible social and economic institutions existed which included the key trade unions, particularly COSATU and NACTU. Yet the advantage to organised labour of legitimate institutions through which to exercise influence was clear. Instead of fighting the effects of policies, the trade union movement could shape the policies. Instead of limiting its sphere of continuous influence to the shopfloor, 1t could extend it to macro-policy formation. The growth in the power of organised workers throughout the 1980s, and the changing political framework in the country raised new possibilities for the unions — but it brought 1n its wake new challenges and dilemmas. Some of these were QO to interact with an undemocratically elected government, without legitimising the rule of that government and thus slow down the transition to democracy; O to create institutions which could resolve the internal needs of the trade unions and its members, rather than chambers merely to debate policies and exchange viewpoints, or advise government; O to find a way of combining the union power in the market with institutionalised political influence. In order to realise these possibilities, the trade unions had to rise above the factory level perspective, to which decentralised collective bargaining naturally leads. But the modern labour movement was born in the 1970s with a wide vision. From the beginning, the new trade unions had to combine their shopfloor imperatives with the political struggle against apartheid. The new conditions of political liberalisation required retaining the strong shopfloor structures rooted in immediate wage campaigns, but extending influence to the less concrete, less immediate issues of macro-policy. Critical to the emerging programmes of the unions were the issues of economic growth and job creation. In this sense, the trade union movement

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broke with the Anglo-Saxon union tradition which concentrated exclusively on redistribution issues, and on protection for its members only. They had to do this for a number of reasons. First, the extent of unemployment, and its social consequences in working-class communities, required that trade unions address not only a redistributive agenda, but that they actively promote economic growth and job creation. Second, COSATU was absorbing the lessons from the decline of trade unions elsewhere in the world — unless the movement addressed the needs of the broader society at the same time as that of its constituency, it would become isolated, deemed no more than the voice of another special interest group. Throughout the years of apartheid, organised labour articulated a broad vision of political democracy — the new requirements were in the economic sphere, to create jobs for the millions of unemployed. Third, it was accepted that international trade liberalisation would fundamentally restructure the South African economy. The new policies of the Uruguay round of Gatt, together with the removal of sanctions against South Africa would ensure that the country became fully integrated in the world economy. Left to market forces alone, it may result in profoundly damaging social consequences and very little economic growth. This threat could be tured to opportunity if organised labour developed coherent, workable economic and industrial policies, and led the restructuring of industry, rather than become a victim of such restructuring. Finally, the COSATU leadership realised that political democracy could not survive in an economic wasteland — success in forcing the end of apartheid would be undermined unless rapid and sustained economic growth took place. Organised labour could not address this broad agenda through the exercise of market power in itself — and this lent an urgency to the need for an institution through which this goal could be pursued. The economic and political context South Africa is characterised by more than the average concentration of political and economic power. The political context is shaped by apartheid and the exclusion of blacks from parliament. The political executive and military historically have been the key sources of power and decision-making. Repression and a culture of secrecy pervaded the fabric of conventional politics. In short, the power of parliament, and in reality the executive, over all parts of the life of the nation has been absolute. But the economic context in this period was not substantially different. It too was characterised by a high concentration of power: by the early 1990s, the four largest corporations on the Johannesburg Stock Exchange controlled about 80 % of the shares traded on the stock market. Industrial relations were

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still largely defined by battles over discipline at the workplace, with the trade unions seeking to establish due process and many managers protecting the prerogative of unilateralism. Trade unions had little influence over company decision-making, other than that wrested from companies through the threat of, or resorted to, industrial action. There were, also, major inequalities 1n the

skills, incomes and education levels of whites and blacks. Trade unions sought to challenge this absolute power of government and business — in the 1970s and early 1980s mainly through shopfloor campaigns, consumer boycotts and support for community calls for stayaways from work. But by the mid 1980s this changed. Organised labour took the leadership of the political struggle when political activists were detained and organisations were restricted during the state of emergency. It challenged government policy more openly. In 1988 government sought to curb trade union power through a series of amendments to the country’s Labour Relations Act. COSATU immediately launched a campaign against the proposed changes. This campaign led to a general stnke, and eventually a negotiated agreement between the unions and the major employers’ federation, Saccola, essentially to return to the previous labour dispensation. Government was forced to accept this agreement, and so — in hybrid form, and without conscious intention — the first tripartite accord in modern South African history was struck. It was formalised in the Laboria Minute concluded in September 1990. The decisive fight took place in 1991, over the issue of consumer tax. The then Minister of Finance, Barend du Plessis, had announced the changeover in the consumer tax system from a general sales tax to a value added tax (VAT). As part of this change-over, tax would henceforth be levied on basic

food previously exempt from consumer tax. At a trade union congress in June 1991, this was rejected. A month later, at its national congress, South Africa’s largest trade union federation, COSATU, called for the establishment of a national negotiations forum of labour, business and government, to deal with economic matters. Such a negotiations forum would seek to block unilateral action by government (such as the new VAT system), and to release resources to address the needs of working-class communities. COSATU put together a broad alliance against VAT, and entered into discussion with government about it. These discussions failed to resolve the issue and though government was forced to reduce the proposed rate of VAT from 12 % to 10 %, it did not concede the demand to exclude food from VAT,

nor to commit itself to the setting-up of a national economic negotiating forum. Organised labour called a two-day general strike against VAT on food,

and in support of the national negotiations forum. On 4 to 5 November 1991,

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three million workers stayed at home, which was the biggest ever strike in South African history. COSATU announced it would call a further strike unless the negotiating forum was set up and progress made to remove tax on basic foodstuffs. Government refused to consider a tripartite negotiating forum. It remained wedded to advisory bodies such as the Economic Advisory Council. The State President, Mr F W de Klerk, in fact rejected what he described as the COSATU campaign for ‘interim government by stealth’. His Minister of Finance argued that business and labour were free to set up any discussion forum among themselves if they felt it necessary. The implication was Clear — government would retain its monopoly of power over the framing of public policy. Business saw the economic cost of protracted conflict, however, and after the strike, anumber of business people privately supported the call for a national forum. A new forum is born On 22 January 1992, a meeting was held between the major business organiSations and the key trade union federations, at which business lent its qualified support to the setting-up of the forum. Business leaders appeared intent on negotiating an agreement with labour on the terms of the forum, and then jointly approaching government to call on it to enter such a forum. By the end of March 1992, substantial agreement had been reached in negotiations between business and labour, and by 1 April an informal meeting took place between the unions, business and the new Minister of Trade and Industry, Mr Derek Keys. In the meantime, government had started to interact with trade unions through a tripartite body set up in the clothing and textile industry, and through contact in the mining industry. These two developments, and the appointment of Derek Keys as Minister of Finance in May 1992, made it easier for government to edge towards the National Economic Forum (NEF). On 18 May 1992 a further meeting took place between government and the other two parties, and at this meeting government agreed in principle to involvement in the NEF, albeit on a somewhat undefined, and initially informal, basis. The launch of the NEF was delayed because of deadlock in political negotiations. After the unbanning of the ANC, PAC and SACP in February 1990, government and the ANC held a series of bilateral meetings, to discuss how best to normalise the political climate in preparation for negotiations on the political future of South Africa. By December 1991, after a series of delays and much conflict, CODESA was launched as a multi-party forum to formalise political negotiations. However, by June 1992, government and the ANC had deadlocked over the process of transition to democracy. No agree-

ment could be reached on an election date, an interim government to run the

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country in the period leading to an election and the size of the majority required at a constitution-making body to decide the contents of the constitution. The lack of progress in achieving a political settlement, together with the massacres in Boipotong and Sebokeng, led to a trade union campaign for democracy, peace and economic reconstruction. During the campaign, work on the NEF came to a standstill. The campaign finally resulted in a two-day general strike in August 1992. The contact forged between business and labour representatives in setting-up the NEF had an interesting consequence in this campaign. An unusual agreement was reached between business and labour representatives, to jointly call for a shut-down of the whole South African economy for one day, in support of the demands for democracy, peace and reconstruction! This apreement was narrowly not ratified by the business constituency, and the two-day strike then proceeded. Business representatives did however signal to government that they were prepared to support organised labour’s demands for a date for an election to be finalised, and for arrangements which did not require unduly large qualified majority voting procedures to adopt a new constitution. When government failed to respond immediately after the general stnke, COSATU called for a boycott on the payment of income tax. Government threatened to pull out of the launch of the NEF because of the tax campaign. Shortly hereafter however — no doubt due to the union campaign and the fear by government that it may lose the business constituency’s support — political negotiations were resumed. COSATU suspended the tax campaign and government re-entered the NEF. On 29 October 1992, the NEF was formally launched, marking the end of the first phase of the forum’s history: the establishment of the NEF. In the statement of intent, the parties noted the severe inequality in incomes, skills, economic power and ownership in South Afnica, and agreed to establish a ‘consensus geared co-operative body to deal with economic and related SsOcio-economic issues and the economic challenges facing the country’. The defining goal of the NEF was to address the issues of economic growth, social equity and democratic participation in decision-making. In the founding document, the aims, scope of work, participants, structure and implementation mechanisms were defined. Crucially, it was agreed that the NEF was not a body for parties to exchange views — it was geared to reaching agreement, and it was not a body to advise government — it intended agreements to be given practical effect. These two principles placed the NEF apart from previous bodies, as the first true negotiating body between the key economic powers in the society.

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Neatly sidestepping an early attempt by some in business to lock labour into discussion of long-term policy only, the parties agreed that the new body should achieve a balance between a focus on short-term challenges, including those of transition, and the formulation of a long-term economic framework. In particular, in response to labour concerns about unilateral economic restructuring by government, 1t was agreed that any major economic restructuring, particularly during the period of political transition, should have the support of all economic stakeholders. The NEF was then identified as the forum to deliberate on proposed restructuring. The participants were identified as representatives of organised business, organised labour and the governing authority of the day, with parity of representation for each of these constituents. At present, seventeen business organisations participate in the NEF. Fifty-five trade unions, with two million paid up members, who belong to the three key labour federations, are party to the forum, and are represented through their federations. The National Party government represents the governing authority of the day, but the very broad description of government was intended to allow broader representation during a period of interim government/transitional executive authority. Structures and work operation The structures of the NEF were intended to be simple: a fifteen-person managing structure (called the Process Committee) and two negotiating structures (the first called a Short-Term Working Group, dealing with matters requiring immediate attention, and a Long-Term Working Group dealing with

policy and framework issues). Indeed the document setting out the modus operandi of the NEF states that the deliberations of the working groups should be open, transparent, focus on concrete results and not be burdened with elaborate internal bureaucracies. Government broke with a long tradition of secrecy in the formulation of the national Budget, when, in December 1992, 1t briefed the NEF on the fiscal constraints and options identified by treasury officials. This was done some months before the Budget was finalised and made public. Labour and business used the opportunity to set out their respective views on the criteria to be applied when evaluating the Budget. From November 1992 to March 1993 the NEF working groups discussed their work operation. This brought to a close the second phase of the NEF: the setting-up of the structures and work methods of the Forum. By March 1993, organised labour constructed a set of detailed proposals for negotiation at the NEF, and so started the next phase: the negotiation of apreements. During this period, a number of briefings were held by government departments, to inform NEF participants of an impending privatisation

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of the state-owned abattoirs, the monetary policy of the Reserve Bank, audit controls in the public sector, and government's experience in job creation. To promote transparency, and to involve outside groups, the Forum invited submissions from the public on proposals for job creation, and received more

than 70 responses. The NEF held a public hearing session, where submissions from parties outside the NEF were brought to the attention of the NEF. The agreements

On 5 July 1993, the first plenary of the NEF was held, and the first set of agreements was tabled. These agreements covered the following: Q centralised bargaining Q job security, with sections on e acode for retrenchments e work security funds e the unemployment insurance fund ¢ targeted assistance programmes for declining industries e the public sector Q job creation, with sections dealing with e a R49 million job-creation programme l ¢ a R30 million small business development programme e labour-based construction methods e an investigation into a future public works programme e reform of customs and excise ¢ changes to the state tender board e small business institutions/policy framework e anational development corps to provide jobs for young people O Foreign direct investment, covering e the need for such investment e the prospects for and constraints 1n attracting investments « the principles applicable to foreign investment. It was further agreed to: e set up acommittee to consider public sector restructuring e discuss Export Processing Zones at the NEF pnor to government proceeding with the matter e record that the state-owned abattoirs privatisation had been halted e set up a trade policy working group e review South Afnican statistics.

1 Government announced in August 1993 that the amount would be increased to R254 million.

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The NEF has yielded important agreements. The agreement on the co-ordination of bargaining rejects the key proposition in the government's draft Normative Economic Model 1n respect of the labour market: that the dismantling of centralised bargaining is the key reform required for an efficient labour market. Instead, the parties to the NEF recorded their recognition of the value of industry level — as distinct from plant level — bargaining to respond to the challenges of industrial restructuring, and to negotiate an appropriate set of social policies (such as wages, social benefits and basic conditions of employment) for each industry. The agreements on job security extend to weakly unionised, or nonunionised sectors the nghts applicable 1n areas characterised by strong and robust industrial relations — the nght to information on retrenchments, joint

exploration of alternatives to retrenchment, fair severance pay, fair notice periods and protection for permanent workers. There are also related agreements on reforms to the Unemployment Insurance Fund, to allow the fund, more flexibly, to finance workers who are temporarily unemployed, so as to avoid the need for retrenchment. The concept of targeted assistance programmes was endorsed 1n principle, to provide the instruments to manage the downscaling of labour-significant industries which are becoming economically unviable. Work security funds to assist workers displaced by industrial restructuring, with training, retraining and active job placements, were encouraged. Government undertook to consider the job security needs of workers in proceeding with any cost-cutting measures in the public sector. The agreements on job creation are far-reaching. The NEF endorsed the concept of labour-based construction, which would seek to increase the labour content of publicly-funded civil engineering projects. In return, organised labour agreed to a system of task-based payment on such projects. A sum of R79 million (subsequently increased) was made available for job creation and small business development projects. Major reforms to the customs and excise function of government were agreed, which would reduce the irregular importation of goods on which applicable tariff duties are not paid. Changes were agreed to the composition of the Tender Board, to allow parity of representation between labour, business and government. It was further agreed, subject to international obligations, to promote local job creation through state procurement policies. To address the permanent crisis of unemployment of young people, a National Development Corps was proposed, to provide jobs for unemployed young people. The NEF would work with other groups involved in similar plans for unemployed young people. The agreement on job creation went beyond an allocation of funds to projects aimed at short-term job creation. It secured for the NEF the nght to

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allocate the agreed money to projects. It set out too, the criteria which would be applied when assessing applications for grants for job creation. A costbenefit analysis, and evaluation of community involvement and managerial Capacity in projects, were agreed. Each project would be evaluated in terms of: O the number of jobs created, and the period of such employment; OW the direct costs of the project due for grant finance, and details of Supplementary or matching funds; O the usefulness of the goods or services emanating from the project

The growth of other forums The emergence of the NEF encouraged the formation of a number of other forums. During the apartheid years, civil society was either excluded from the political decision-making process 1n the country or invited to take part on terms which gave trade unions and civic organisations very little influence. From February 1990, when government unbanned a number of political organisations, this practice became less sustainable. It created the space and opportunity for organised formations of the people to assert their nght to be involved in decision-making. In some instances, this required new institutions of decision-making, and 1n other cases, the restructuring of existing structures to include constituencies who were not previously party to them. In June 1992,

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UW the envisaged management of the projects; Q audit and controls proposed, and required for the type of project envisaged; Q sustainability of the project, beyond the funding period; QO the training component in the project, and the value of the skills acquired; QO the envisaged labour standards, and its comparison with the general norms in industry; Q the nature of community involvement; O the regional impact of job creation, in relation to underdeveloped areas and areas of high unemployment and social tension; O impact on economic growth (the multiplier effect). A major agreement was concluded on the need for foreign direct investment, and the parties committed themselves to the setting-up of a South African platform for investment. In other notable agreements, government halted the privatisation of its abattoirs, and agreed to develop trade policy through the NEF. The existence of the NEF has created the climate which allowed government to remove VAT on basic foodstuff.

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(asset creation);

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this had resulted in CODESA, a labour-business working group to set up an NEF, talks between different parties on a National Housing Forum, an industry forum to examine a short term relief plan for the clothing and textile industry, the National Peace Accord structures and the on-going negotiations between the VAT Co-ordinating Committee and government. One year later, this had grown dramatically, to a properly functioning NEF, but also the setting up, or restructunng of the: Q National Housing Forum, which deals with the provision of housing for the homeless; OQ National Manpower Commission, which deals with labour market issues; QO Local Government Negotiating Forum, which deals with the transitional arrangements to democratise local government authorities; Q) National Education and Training Forum, which deals with the restructuring of of the education system from pre-school through to university and technikon levels; Q National Consultative Forum on Drought and Rural Development, which deals with strategies for short-term drought relief, and the broader issue of rural development; Y National Electricity Forum, which deals with the provision of electricity to communities and individuals who are currently without it. Three industrial task forces were established, involving business, labour and government, to examine the restructuring of O the clothing and textile industry QO the automobile sector O the electronic sector. Similar processes were 1n place in the mining and fishing industries. New forums were emerging in areas of QO health water and sanitation Q science and technology Q telecommunication QO youth employment and development. COSATU and the Minister of Manpower had agreed on a process to deal with the restructuring of the National Training Board. Regional development forums were being set up in OY the Western Cape Q Pretoria- WitwatersrandVereeniging (PWV) QO Border-Ke1 O Eastern Cape QO Natal-Kwazulu

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QO Orange Free State Q Eastern Transvaal QO) Western Transvaal. A number of local initiatives, such as the Johannesburg Metropolitan Chamber have been set up. These forums vary greatly in their functions and powers, yet they are all charecterised by their focus on inclusivity, and empowering groups in the society who were previously excluded from local and national public decision-making structures. The growth of these forums had some direct consequences on the functioning of the NEF. It created potential or actual overlap with the initial agenda and work programme of the NEF. This required that the NEF co-ordinate its work programme with a number of these initiatives. It put great strain on the personnel, particularly of organised labour, as trade unions were drawn into a number of initiatives and had to second organisers or shop stewards to the work and meetings of different forums. It resulted in a large number of policy issues which had to be processed through trade union structures, which were not capable of managing such a vast agenda. In an internal evaluation by COSATU in August 1993, the labour federation identified a number of problems which had resulted from the development of the different forums. These problems were Q bottlenecks 1n the decision-making in the federation’s national structures; Q an overload on individuals, who retained their traditional trade union functions in addition to the new tasks; Q problems of lack of co-ordination in policy formulation; QO a weakening of the report-back arrangements to constituencies, which affected democratic decision-making and mandates; Q a documentation flood, but a dearth of communication;

Q too limited a participation by worker leaders, women and local organisers in the process; QO weakening of campaign structures. These forums arose during a transition period, and some will be phased out as government structures become legitimate after democratic elections. Others — such as the NEF — are the embryo of new ways in which decisions are to be made in the future. For labour and business and, where applicable, other community groups, to have effective participation and to manage the work agenda of these new institutions, two changes need to be made. First, the large number of forums have to be rationalised — fewer institutions, with clearer agendas and clearly spelt out powers. The most immediate overlap 1s between the NEF and the

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National Manpower Commission (NMC). A strong case can be made for the work of the two institutions to be performed by a single social and economic forum. Second, the non-governmental sector, particularly labour and community formations need to build and increase their personnel and resource capacity. This last requirement is particularly important, given the likely loss of people from these groups to a future democratic government. Assessment

The formation of the NEF, and the conclusion of its first set of agreements represents a major step forward in developing a new type of institution of economic policy formation. It has sparked debate in society over its effects, participants and power. From the left has come the criticism that the NEF will blunt the militancy of workers, that it is a forum for a union bureaucracy and that it will primarily seek to obtain commitments for wage restraint from labour. From various quarters are fears that a powerful NEF will undermine the sovereignty of parliament. Criticism from the nght contends that the institution will create rigidities in the labour market (given its degree of centralisation), give power to a labour élite and become a forum which unions can use to organise national industrial action. Within the labour movement, the organisations have started to evaluate the Forum more carefully, and to consider the best way to have sustained participation in the Forum, and to deepen the involvement of union members in the NEF. The NEF has brought real gains for its constituents and for the society. It has united the three major labour federations - COSATU, NACTU and FEDSAL — in a manner not seen previously. It has brought together the fractious business constituencies into a single coherent voice, which has allowed the trade union movement to conclude agreements with the business constituency, rather than with prominent business leaders only. The institutionalised participation by all three major stakeholders has shifted the nature of economic and social debate in South Africa. Organised labour, for one, has more systematically set out its programme for economic growth. Business and government have had to deal with the arguments of social equity, and the need to increase participation in economic decisionmaking. Organised labour is not 1n favour of institutional participation for its own sake, but has instead struggled for an NEF, 1n order to be able to reach certain types of decisions. The first set of agreements hold promise. The agreements on job security do not in themselves halt retrenchments, but they constitute a strong moral statement against job losses and retrenchment at a time when many managers have taken to staff-cutting exercises as their first response to

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economic difficulties. The agreements on job creation will allow the NEF to discover whether the collective capacity of the three stakeholders can create jobs in the short term more efficiently, with more community participation and with more durable assets emanating from the projects, than government on its own has been able to doin the past. The investigation into a future public works programme will give ademocratic government a valuable guide of how best to address basic needs and infrastructure, in a cost effective and demo-

cratic manner. The reform of customs and excise, while not in itself controversial, has shown the value of the NEF in marshalling political will among the participants, and translating this into agreement. The institutional reforms envisaged in the agreements will give in particular organised labour a permanent representation on important public or semi-public institutions such as the State Tender Board. The agreement on foreign direct investment is the first public statement of support by organised labour, for foreign investment, and effectively for an end to sanctions. It 1s also a careful statement on the value and limits of foreign investment. In addition to these, and the other formal agreements, the very existence of the NEF has impacted on policy making. In many ways, the NEF has helped to prevent unilateral action by government in a range of areas. One such area is the development of trade policy. Government has agreed to seek consensus at the NEF on South Africa’s offer to Gatt on tanff liberalisation. Given the external pressures of deadlines to finalise a submission of a South African offer on tariffs, and the internal pressures to ensure democratic participation, it 1s not certain that the NEF would be able to conclude this matter. In the opening statement of South Afmca’s Director General of Trade and Industry to the Gatt trade policy review mechanisms in Geneva, on | June 1993, government described the NEF as follows:

‘An important event in 1992 was the establishment of the National Economic Forum, consisting of representatives from government, business and organised labour. All aspects of economic policy are debated in this Forum, which has the same access to the Cabinet as a government department. Hence the debate on economy policy runs parallel to the multi-party negotiations on constitutional reform. The matters attended to by the Forum include,

of course, South Africa's trade policy. It is important that common ground be reached by the three parties on trade policy. Commitments by the parties concerned will ensure that policy adjustments will be implemented and sustained.’ The changing international framework — particularly the growth of trade between nations and the reduced regulation of capital markets and tariffs, will create a particularly difficult challenge for the NEF. The regulatory role of government has been weakened through these changes, and hence it is

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necessary for organised labour to find ways in which policy ts made through negotiation. If the market has become dominant, trade unions need to use their power as important market instruments, to advance the social goals of workers, who are an important part of the wealth creating machinery of the country. An equally important challenge for the NEF has been to co-ordinate economic negotiations with progress in political negotiations. The development of the NEF in a period of political transition has created opportunities for a new way of making policy, but it has also restricted the type of agreements which could be reached with a government which will change after democratic elections. In addition to separate liaison between parties to the NEF with political parties outside of government, the NEF invited political parties to attend its first plenary on 5 July 1993. Representatives of some political parties attended the NEF briefing sessions on the Budget, monetary policy and trade policy. The NEF Process Committee met on 2 August 1993 with the Planning Committee of the Multi Party Negotiating process at the World Trade Centre, to brief the major political parties on the work of the NEF, and discuss the role of the NEF in relation to a transitional executive council. Some on-going liason has now been agreed between the two processes. The NEF held a workshop on the fiscal implications of regionalism, at about the same time that the political parties at the Multi Party Negiotiating Process were debating the issue of regionalism. As the government composition in the NEF changes and becomes more representative, it may create new opportunities to the Forum to reach substantial agreement on longer term policy issues. Conclusion For the NEF, the challenge is to ensure implementation of agreements as rapidly as possible — as a non-statutory body, its mechanisms for implementation are uncertain. A number of the agreements require more detailed elaboration, and some agreements are facilitative — they initiate a process, without guaranteeing the outcome. The most certain way to discredit the NEF is for the parties to fail to deliver on these agreements. In the longer term, it is necessary to address the status of the NEF — to consider whether it should be a statutory body, and what its powers should be. An important role for the NEF is to help reshape collective bargaining institutions, so that they reinforce the work and goals of the NEF. In this way, a family of institutions in collective bargaining can exist, and the pattern and content of collective bargaining can reflect the challenges which gave nise to the NEF. For organised labour, the challenge is to avoid that the extension of institutional influence leads to the weakening of the industrial and social

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power of trade unions. It is only when labour 1s strong on the shopfloor, and in each industry, that its influence in the NEF can be pervasive, and that the institution can serve the needs of those who 1n the past had no voice in the halls of power — workers and the poor. A strong labour movement at work-place level is a fundamental requirement to ensure democratic participation by workers, rather than imposition of agreements by union leaders. Agreements arrived at in a democratic manner, by a strong labour movement, will have an enduring legitimacy among workers. The work of the NEF will compel the union movement to develop its resource capacity, and to restructure its internal decision-making structures so that the movement, not its prominent leaders only, participate in the forum. The success of the NEF will impact substantially on the entire industrial relations framework of South Africa. Important in this regard are the changes which need to be made at company and plant level, to democratic decisionmaking, to change the nature of relationships and to weave the NEF’s founding goals of growth, equity and participation into the fabric of factory life. It also requires changes to the bargaining structures in all industries, and of some important underlying assumptions of the industrial relations system. Finally, for a country which has tts first legitimate institution of decisionmaking, the NEF represents a new way of policy formulation. It needs the Support and backing of both the labour and business constituencies, and to obtain that, it needs to be transparent in its work, and strongly based on the practice of mandated positions. Crucially, the NEF will require the support of the major political parties which emerge from South Afnca’s democratic elections, and whose representatives at a constituent assembly will define the

character of the new democracy.

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Reflections on the National Economic Forum, and pointers for the future’ DEREK

KEYS

Derek Keys was born in Johannesburg _ international companies operating in in 1931, where he grew up and South Africa and certain large locally received his education. He acquired a owned groups. In 1986 Sanlam asked B.Comm. degree from Wits and qualihum to become the executive chairman fied as a chartered accountant. Aftera of Gencor, the second largest mining few years of post-qualification experifinance house in South Africa. In ence in auditing he joined the January 1992 Mr Keys was appointed Industrial Development Corporation to the South African cabinet as Minisand over the next eight years he played _ ter of Trade and Industry and of a part in the development of major Economic Co-ordination and in May South African industries. In 1965 he 1992 he was appointed Minister of Finbegan to operate privately as a finanance and of Trade and Industry. It was cial and management consultant, during his term of office as Minister of mainly to industrial clients. During the _ Finance that government agreed to next 21 years until 1986 he filled a establish the National Economic largely advisory role for a number of Forum.

I plan to reflect on the strengths and weaknesses of the National Economic Forum (NEF), and on the opportunities and threats which face it. Strengths The first great strength that has come out of the NEF has certainly been the increased contact it represents on an ongoing basis between the state and business and organised labour. Unless you have a forum or some sort of mechanism in terms of which that contact takes place fairly frequently, a number of issues on which people ought to be consulted and where they should have some advance notice on issues that will become critical at some future point, the various issues that should involve successful communication between different parties become much more difficult. Since this Forum started up in October

1992, I have noticed a marked

difference in the extent to which we have been able to talk to each other and | Based on a speech delivered by Derek Keys, at the SACTWU Workers Rights Conference in June 1993.

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learn from each other. This 1s a strength we have to nurture. Regardless of what the future constitutional position 1s, these three parties will always be deeply involved in the economy and the economy will function best when they are communicating best. The NEF has certainly fulfilled that purpose. The second great strength of the Forum ts that is has changed people. Everyone who has been associated with the NEF has been changed to some extent because they have had to consider other points of view from which normally they would have been insulated, on which they would not have had to give answers, where they could have put issues aside to think about them later, and so on. So, even when one 1s not in the Forum, one finds oneself thinking as though one was in the Forum, because we have all been sensitised. The Forum has acted as a change agent — something, like the sizzle in the Steak, that acts to carry the process further. The third great strength is the gradual development of a shared responsibility for the economy. As we talk together and argue together and dumbly contemplate that the economy is not doing what we want it to do, we are doing that together and starting to share responsibility for what happens with the economy. That joint responsibility does not only happen within the Forum itself. It Starts to happen inside the organisations that are represented in the Forum because they know that their views are getting through to that point, and that at that point every possible effort 1s being made to resolve their views into some kind of creative process for implementation. This sense of shared responsibility 1s noticeable inside government itself. Government does not consider itself as the arbiter of economic decisions and the sole player. It takes its responsibility as a member of the Forum extremely seriously and no decision is handled without a deep awareness of the extent to which the other stakeholders are involved and, I hope, with due regard for their views. Weaknesses The first weakness is that the Forum is not completely representative. 1 am the biggest culprit in this regard because it is the present government that is playing the role of the state in the golden triangle. As we know from the World Trade Centre, this government represents two out of the twenty-six parties represented there. It tnes to act, [hope, with aconsciousness of what the other twenty-four parties represent, but that 1s a difficult thing to do. We have to recognise that in the present negotiations in the Forum, the adequacy of the State’s representation has to be questioned. We try our best to cope with that — all three participants do. But it 1s a fact that we have to recognise. The other parties also have problems in terms of the adequacy of their

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representation. I do not want to discuss the labour movement but if you take business, for example, there are seventeen organisations represented on the business side. They have to work through five process committee members. Those seventeen business organisations are not accustomed to mandating someone to negotiate or seek consensus on their behalf. They are accustomed to having people go through all those motions and bringing all the decisions back to them so they can make up their own minds about whether they want to take a decision or not. If one visualises that rather loose association of interests which 1s typical of a free market economy, then you can see that if at the Forum we come to a decision which needs to be implemented, it 1s difficult to ensure it is going to be implemented on the business side. It 1s much easier on the state's side, though even there I must say the state 1s a very big business and it 1s not always possible to co-ordinate everything as one ought to. The second weakness is that there is a misunderstanding about what the NEF is. 1 want — I think the participants want — the Forum to be a focused place where, to put it crudely, labour, business and the state can get at each other's throats and wrestle things out and decide on matters that can be carried further. A lot of people do not see it that way. The consumer organisations, for instance, would like to be represented on a NEF. Consumer organisations do not have a part to play in reaching the important understandings that have to be reached by the present three participants. But it 1s popular to have consumer organisations represented. No doubt environmental groups would also want to be represented. We do not want people there who are not going to make deals. A consumer organisation cannot make deals on behalf of all consumers. The consumer interests ought to be protected. They ought to have their place. But not in the NEF. We have been rather low profile in terms of image, but we have to correct our image to ensure that people understand what 1s going on in the Forum and also who should be represented and who should not. The third weakness ts that we have not found a way, to my knowledge, in

which the NEF can properly interact with regional economic forums. We do not know how to deal with this weakness because we are looking at things that affect the whole economy. Development takes place regionally and we should not ignore this. Opportunities The biggest single opportunity that faces the Forum now ts to come to a view about the Normative Economic Model, the way in which it needs to be amended so that it can still achieve those practical goals that it sets itself and to start developing programmes. It1s all very well to say that this country will

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be able to grow faster if it invests much more and if more of those investments are export-directed. You also have to have a programme for those investments. What type of businesses should we be stimulating or trying to attract to this country? This requires a specific programme and it would be wrong for the government to think that it should provide that programme. We have to have all three parties involved in deciding what kind of programme we need to reach the agreed objectives. Programmes will be needed for increasing productivity, increasing education and training. They will be needed 1n the areas of labour, entrepreneurship, the state, macro-economic stability and more equitable distribution — all of these matters have to be looked at and they represent a great opportunity for the Forum. The second great opportunity that exists for the Forum is that tt has the ability to raise the level of business confidence in this country more or less overnight. When the Forum, through the talks, discussions, even the wrestling if you like, has got to a stage where it can say something in a united way, business confidence will soar. The third opportunity is the management of the high expectations which exist in this country. It 1s wonderful that we have these high expectations. Nothing could be worse than that 80 % of this country should have no expectations. Then we would be dealing with a soggy pudding. It is good that people have these expectations, but the way 1n which we collectively achieve those expectations and reconcile ourselves to the work that is needed to achieve them, is something that has to be managed and here the Forum can play a tremendous role. Threats

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Threat number one is that we neglect the underdeveloped part of our country, whether one defines that geographically, or as certain people, or as certain classes. If the NEF becomes a place where accommodation 1s reached between the élite — and in this category I include everyone who has a job — and it does not pay sufficient attention to the problems of people with no jobs and no prospect of getting jobs — and I include the issue of rural development here — if the NEF makes that mistake then it will be seriously damaged. The second threat! see is that if any of the parties in the Forum becomes distracted by political questions and takes their eye off the main ball, that will be a serious obstacle. | doubt whether the Forum will be able to withstand that divisive activity. The last threat is a very human one and this is simply that there is enormous Strain on the individuals involved. The scope of the work that the Forum 1s trying to do, and the rate at which results are expected, and the other jobs which all the participants have which

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also have to be done, result in great strain on all the individuals and also their support staff. I would like, finally, to deal with the question of whether one should protect the separation of power between parliament and a NEF, in a country’s constitution. [ have been trained over many years, with the very great assistance of the labour movement, to acknowledge the absolute supremacy of a truly representative elected body, and I would not like anything to be done which in any way interfered with the authority of that body to take the ultimate decisions in my country.

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IS THERE A FUTURE FOR THE NATIONAL ECONOMIC FORUM?: TREVOR

MANUEL

Trevor Manuel was born in 1956 in aligned to the then-banned African Kensington, Cape Town, where he National Congress (ANC). He was grew up. His mother has been a gardetained on four occasions. ment worker, and his father a During this period, he worked for a municipal worker. He studied at the community support agency, and later Peninsula Technikon, and practisedas —_ as a projects developer for the Mobil a civil engineering technician. Foundation. In the late 1970's, he helped build When the ANC was unbanned, he civic organisation in Cape Town, and was elected as deputy co-ordinator for this led to the formation of the Cape the Western Cape, and at the July Areas Housing Action Committee 1991 ANC National Conference, he (CAHAC) by the early 1980's. He left was elected to the National Executive his civil engineering job, and became Committee, and thereafter to the Secretary of CAHAC. In 1983 he was National Working Committee. He curelected as a leader of the newly formed _ rently holds the position as Head of United Democratic Front (UDF), an the ANC’s Department of Economic internal anti-apartheid movement Planning.

The NEF — an assessment Before dealing with the future of the National Economic Forum (NEF), it 1s appropriate to comment on the Forum as It exists at present because this will impact on the future. Undoubtedly, the NEF has achieved a fair amount in its short existence. Many of the prejudices and fears which had previously dominated relations between labour and employers have, to some extent, been laid to rest as representatives of the various points of the golden triangle have put their heads together in the Forum. Notwithstanding this, there remain a number of concerns which need to be considered. There are five, in particular, to be noted here. These are: .) First, the lifespan of the present government is very limited. This government has had ample opportunity to place this country on a growth and development path, but has failed. Economic policy by its very nature, has to be of longer duration to be effective. The NEF cannot agree on aspects of 1 Based on a speech delivered by Trevor Manuel at the SACTWU

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trade policy to last for the next two weeks. The discussions and decisions of the Forum will therefore impact on the economic management of a democratic state. By what wisdom do we accord to the apartheid regime the right to determine the policies of a democratic state? _) Second, there are vast differences in the access of labour, business and the government to resources. Both the government and business can draw in a number of economists to prepare their inputs. The trade union movement simply does not have access to the same kind of resources. It is safe to assume that access to resources and preparation would impact on the nature of the agreements at the Forum. In whose interest 1s this?

~) Third, there are vested interests represented in the Forum. For instance, in some sectors business and labour may be united in an inefficiencies in order to guarantee profitability and in marginal industries. Such decisions may not be Does this not accord to the government too powerful

attempt to retain present save jobs as a trade-off in the national interest. a position as an arbiter?

“J Fourth, the distance between the NEF and ordinary workers in whose interests it claims to speak, may be too great. At face value, the NEF could thus have areduced value to ordinary workers for whose day-to-day existence the esoteric NEF discussions may have little relevance. Can the unions set up an adequate communication line with the mass of their members? I Finally, there are class interests at play. The interests of an employer who retrenches a number of workers in order to maximise the profitability of the enterprise will never be the same as the worker retrenched from such an enterprise. How can the Forum hope to manage this conflict? In addition we also need to ask repeatedly whether all the relevant interests are adequately represented. Derek Keys has made the point that employed workers are almost becoming an élite. Who represents the interests of the unemployed and do they not have a voice in respect of the economy of our country? We talk of wages and clearly the trade union movement represents wage interests, or the interests of wage-earning workers, but there is the other side to wages and that 1s prices. Who in the NEF gives consideration to price — as opposed to wage — issues? We have a high inflation rate, with food price inflation being the main contributor. Wage increases considered without reference to price increases do not help because they do not improve the quality of life of those who engage in struggles for wages. It surely is to the credit of the NEF that 1s has been able to make the progress recorded despite these contradictions. There are going to be substantial changes in the short term as the one ‘triangle point’ changes from the ‘government of the day’ to the ‘governing authority’. This will happen with the establishment of the Transitional Executive Committee. We want to submit that as all parties prepare for these changes, we apply our minds to

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how these contradictions can be managed. The NEF is still experimental and its operations need to be perfected in the shortest space of time. Let us be clear, by raising these questions we are not attempting to denigrate the NEF or its importance. This is an honest attempt to reshape the NEF so that it can perform to the best advantage of this

country. The NEF and the ANC The ANC is committed to the idea of the NEF. At our National Policy Conference (held in May 1992), we adopted Economic Policy Guidelines which include the following statement: ‘The democratic state will have ultimate responsibility — in co-operation with the trade union movement, business and other organs of civil society — for co-ordinating, planning and guiding the development of the economy towards a sustainable growth pattern. Emphasis will be placed on macro-economic balance, including price stability and balance of payments equilibrium. The policy surrounds will be characterised by the principles of transparency, consistency, predictability and accountability.’ Underpinning this statement is the understanding that governments do not possess a monopoly on wisdom. If we are to get this country onto a new growth and development path, we will succeed because the relevant interests are represented and are jointly responsible for planning and implementation. The much-desired transparency will only be possible if the various actors understand the policy objectives, and this country will only attract investments if there 1s predictability. We are engaged in a struggle for democracy. Our understanding of democracy must extend beyond the mere election of representatives once every five years. Fundamental to our approach to democracy should be the creation of new methods of communication and decision-making, creating a major role for the organs of civil society. That the NEF will exist under a democracy in this country, is not in question. If anything, it will need to be strengthened taking account of the issues raised above. In addition, we will have to advance the debate on the precise nature of its power vis-a-vis a democratic state. The role of the NEF The NEF will be concerned primarily with creating the circumstances which will place this country on a new growth and development path. The combination of growth and development cannot be stressed sufficiently. We should

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remind ourselves that between 1960 and 1973, the heyday of apartheid, this country saw growth averaging 5,5 % per annum. Yet, within this period the distribution of wealth and incomes were skewed increasingly away from blacks. We cannot therefore talk of growth only. In addition, there exist a great many areas of inefficiency within the economy. These areas include policies on trade, industry, investments and labour markets. Our ability to prow this economy at all, to reintegrate this economy into the global economy, and, of course, to apportion the benefits of such growth to those disadvantaged by apartheid will be severely constrained by the existence of inefficiencies in the economy. There are many industries which are marginal, including segments of the clothing and textile sector. Hard decisions will have to be taken about these and preparation made for the necessary changes. We are faced with a stark choice — either we make the changes or multilateral institutions outside of South Afmica (like GATT, the World Bank and the IMF)

will impose these decisions upon us. Decisions thus imposed will always be resisted, with disastrous outcomes. Likewise, it cannot be one or the other actor in the South African economy which unilaterally decides to restructure and imposes this on the rest. To restructure an economy as fragile as that which democracy will inherit from apartheid will be amammoth task demanding sound management of the interplay between the various actors. This cannot be achieved without the necessary will. The fruits of democracy will only accrue if we are bold enough to establish a social accord as a partnership for growth and reconstruction between business, labour and the democratic state. There are numerous examples of such accords established across Europe immediately after World War Il. (The social accords in Germany, Sweden and Austria are examples of highly successful ventures. ) A common thread which runs through all of the European social accords, is that they were not established according to predesigned blueprints — the early years were thus marked by trial and error. These accords only worked because there was an unqualified commitment by the various actors to patriotism, reconstruction and to the success of the accord itself.

A democratic

South Afnica has the potential to take a similar route. As in Europe, the early period of the Social Accord/NEF 1s likely to be marked by trial and error. In this regard, the existence of the NEF at this point, might just afford our country the opportunity to have the period of tnal and error, the period of familiarisation between the different actors, before the

establishment of democracy. The only drawback 1s that one of the key actors, the government, is going to change very soon.

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The NEF in a democratic order Having established that the future of the NEF is not in jeopardy, we ask, how should the role of the NEF be secured under democracy? The short-cut would be to entrench its powers in the constitution. This has already been demanded and against this, there have been a range of other demands, including the government view that the constitution should dictate that a democratic state be run along the lines of a free market economy and that existing property nghts be inalienable. Central to this approach 1s the ignoring of the history of deprivation. The government argues that these be included as inviolable constitutional principles. Given this background, it appears sensible that we should not entrench the existence of the NEF in the constitution because we may have to make concessions which are in conflict with the overall democratisation of the economy. This is not in any way a departure from the position of the ANC. In fact, we should all avoid the view that the struggle will end on 27 April 1994, the provisional election date. The reality is that the struggle will continue after the election, albeit in more advantageous circumstances and by different means. The five contradictions referred to earlier can all be resolved in the short term. There can be no question of the commitment of the ANC to the NEF in the medium or long term. A government of national unity (which will be operational from the elections in 1994 probably to 1999) will be under severe pressure to place this country on a new growth path and to address the extensive accumulated neglect in living standards which has been built up by apartheid. Clearly, that government of national unity will not be able to address those difficulties on its own. The value of the NEF will be tested to its fullest during this period. In moving from the ‘test-run’ of the present, the lessons of the European experience with social accords will be instructive. There can be no predetermined blueprint; various frameworks for economic restructuring will have to be placed on the table for intensive discussion and debate. Much energy will have to be put into the effort in order to change the mindsets. Vested interests are dominant in the economic sphere, and the arena is marked by sharp conflict between business and labour. A partnership will have to be constructed. It will only function if it is supported by a singleness of purpose for a stable future for our country, without ignoring the past, or the existence of the conflicts in industrial relations. Nobody should pretend that this will be easy. The situation would, no doubt, be enhanced by the existence of alegitimate democratic, albeit coalition, government whose bona fides are not questioned by the representatives of business and labour. The long-term success of the NEF will depend upon the ability to manage all of the contradictions and concerns during this difficult period of a government

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of national unity. There is no choice, we must get the economy of this country on a new growth and development path. The venture will be new to all South Afmicans. New channels of communication will have to be established to ensure that the NEF has meaning in the daily lives of all our country’s people. The initiative will have to properly resourced to allow it to draw the maximum and the best from each of its constituents. The ANC 1s confident that major successes will be recorded as we tackle the future with one objective in mind, namely to ensure that the benefits of democracy accrue to all South Africans in the form of a higher quality of life.

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THE ROLE OF THE NATIONAL ECONOMIC FORUM: Deepening Democracy and Empowering Civil Society JAYENDRA

Jayendra Naidoo was born in 1960 in Durban. He studied at the University of Durban-Westville, and became involved in community and student struggles during this period. In 1982 he joined the trade union movement as an organiser, working for the National Union of Distributive and Allied Workers, and later for the SA Commercial, Catering and Allied Workers Union (SACCAWU). His union involvement included the co-ordination of major strikes, including those at Spar (1985), Pick ’n Pay (1986) and OK Bazaars (1986-7). In

NAIDOO

addition, he was responsible for shop steward and organiser training in SACCA WU. He served on the ANC and COSATU team which negotiated the terms of the National Peace Accord, and now serves on the peace Secretariat. In January 1992 he was appointed National Negotiations Co-ordinator of COSATU, and was one of the two labour representatives on the committee which drafted the NEF founding documents. He ts the labour co-ordinator on the NEF.

Institution-building 1s the latest buzz-word in the country nght now. Labour supports and participates in the processes of institution-building going on. Before we look more closely at these institutions and the National Economic Forum (NEF) in particular, let us however take one step back and look at the reasons and objectives of institution-building. Participation in national institutions and the NEF 1s only one of many avenues available for labour to achieve influence and power in the workers’ interests. We have in the past, and will continue in the future, to consider and

choose our strategies according to our goals and the political framework. Goals and strategies Our struggle and goals are of both a political and economic nature. They are of course intertwined. Formal political democracy is worth little without improving the living conditions and the resources of the majority of the people. Economic reconstruction depends upon the political power to decide | Based on a speech delivered by Jayendra Naidoo at the SACTWU

28

Workers Rights Conference, June 1993.

THE

ROLE

OF

THE

NEF

upon its distribution and usage. For labour, participation is about decision-making, and formulating policies which affect the lives of workers, their families and people broadly in the community. The kind of participation we have must however, depends upon what we envisage the role of the trade union movement to be. Crucially, it is a question of what we think is the best way of getting results. Are results achieved through institutions or through mobilisation in the streets, or perhaps a combination of both? Until now political and economic decisions have been taken by a minority of the people, in dark comers, with no transparency or access for the majority.

Decisions were made which advanced the interests of the minority at the expense of, and with deep prejudice to, the majority. Our response to that has been to resist these illegitimate decisions and the repressive way they have been implemented. COSATU has played a strong political role in the recent past. The ANC was banned, community activists were underground. It was left to the union movement to lead the political struggle. We had thousands of shop-stewards, large membership, strong internal democracy, a professional organisation and wide-spread community support. Now after years of struggle and sacrifice, we are beginning to see the benefits and potential of a democratic South Africa. A new environment and climate 1s being created in which we must consider new strategies to achieve our goals. Old institutions must be transformed and new ones created. Many people who will be holding the keys to future political power in this country are asking us in the union movement: * You know chaps, you did avery good job and we are proud of you. But what do you think you are going to be doing in the future? Just talking about wages and working conditions?’ and we say ‘No, we want to be in CODESA,’ and they say, “CODESA? We do not really need you there’. So what is the future role of labour in South Africa? The trade union movement until now has chosen to play a broad political role in the society which shapes the way in which things are done and the path we tread. We want to continue playing a political role in the country and not confine our interest to simply wages and working conditions on the shopfloor. We want to play a role that shapes the way 1n which society works, resources in society are distributed and wealth is created and shared. There are two places in which the future 1s being shaped right now. One arena is the World Trade Centre where the constitution itself 1s being hammered out. We are indirectly represented there through our Alliance partners. The other arena is the negotiating forums — the NEF and regional economic forums, as well as peace structures, and the forums for housing, electricity

29

THE

ROLE

OF

THE

NEF

and water. In these two places and processes, agreements will emerge which will determine the way in which the country is going to be run in the future. In our continued struggle to advance the interests of workers and their families on a continuous basis in the future, these national institutions and forums will have our long-term attention. New instruments for a new future; the NEF We fought for the establishment of the NEF because we wanted a say in the present and future economic system to the benefit of our members. We want decent living conditions for the people. Millions of our people want practical measures to redress the legacy of generations of apartheid. Crime and v1olence follow poverty, unemployment and illiteracy. In establishing the NEF, we created the basis for the kind of participation we want in the longer term under a democratic order. We entered the NEF with the primary objective of delivery. At the same time, we wanted to create institutions through which our democratic participatory mghts would be entrenched in the future. The future government will face enormous obstacles in attempting to reconstruct this country. There will be obstacles not only from the nght wing, but also from the sheer massive task that the government will have to face in meeting peoples huge expectations and delivering the goods. The only way in which the government can give legitimacy to the decisions to be taken is to share the responsibility with the major players and the representatives of civil society. Civil society must be involved in the taking of decisions and implementation of them. Furthermore, civil society represents the people most affected by the decisions and 1s therefore not only entitled to decisionmaking rights, but is also the closest to the competence and the experience needed to take the night decisions. A key question still to be confronted 1s how the role of civil society 1s to be entrenched in the future day-to-day politics. Constitutions make provisions for an executive power of cabinet, judiciary and the parliamentary legislature which makes laws. Still, it usually opens little room for civil society except for the nght of individuals to vote. Whether entrenched in the constitution, provided for in legislation, by legal precedence or guaranteed by political powers, there should be a compulsion on the government to engage civil society in the process of decision-making. The immediate composition of the NEF is imperfect, particularly in respect of the exclusion of the ANC. Ideally, the ANC should be represented in the government delegation, as no doubt it will be in the future. At present, there is no sense in bringing all the parties at the World Trade Centre into the

30

THE

ROLE

NEF, and there is no way that only in without throwing the door wide capacity of the NEF to deliver, as for longer-term economic policy option at present than to continue attempt to speed up the political committee and elections.

OF

THE

NEF

the ANC or a few parties could be brought open. This impacts negatively both on the well as on the nature of the NEF as a base making. For this reason, there is no other with the NEF as presently structured and process towards a transitional executive

New instruments: new challenges and problems A parliamentary democracy on its own has not been the goal that we have fought for. We have not fought only for the nght once in five years to go down the road, enter the ballot box, place an X and then wait another five years to see what decisions were taken and what their outcomes were. The culture we have built up through our mass campaigns 1s one which says that 1f we are not part of decisions, then the decisions are taken on the wrong basis and the outcome and implementation is not going to work. Participatory democracy has been and still is our slogan, whether it is for rents, education or for political democracy. What we need to do 1s to create a participatory democracy side-by-side with the parliamentary democracy and to make sure that the two complement each other. We want a form of democracy that is far broader than that offered by parliament; a democracy in which civil society is directly involved, represented by organisations such as trade unions and civic movements. Without our involvement, there 1s no way that any government can reach decisions that can create meaningful reconstruction and maintain its legitimacy. The country 1s confronted with a situation which could rupture our political gains before we have reached them. Economic problems and escalating violence must bring all parties to take the responsibility of building a peaceful, stable democracy in which the living conditions of the people at large will deservedly reap the fruits of what they have sowed. Labour has no option but to take part, and to play a key role, in efforts to reconstruct South Africa. Our understanding of responsibility and reconstruction is however based upon the needs of the people: the need for jobs, a living wage, decent housing, health and education. The basis for this is a growing economy, good working conditions and a qualified, efficient work-force. We have learnt many lessons through the NEF. Our experiences of business and business organisations represented in the NEF has made us ask whether business in this country has the capacity to participate meaningfully in structures aiming to deliver the goods to the people. The mind set of business, the practices of business in the past and the élitist interests that big business represents have made it hard in many cases to come to agreements

3]

THE

ROLE

OF

THE

NEF

that actually change our reality. This is especially the case when it comes to retrenchments. Business often also does not speak with the same voice and follow up agreements that are reached. Another problem which is facing all of us 1s that there are now too many forums. We cannot do an effective job in thousands of forums. We do not have the people for that, nor the ability of our constitutional structures to Sustain a mandating process in so many forums. We must reconsider the institutional framework we want to participate in and look closer at the consolidation and centralisation of existing forums. The NEF and the National Manpower Commission should for example be consolidated into one forum. A consequence of our participation in so many bodies has been a growing gap between leadership and members, a failure to communicate and an inability to mobilise on the basis of democratic mandates. These institutions must deliver. At the same time, we must maintain the strong internal democracy COSATU was built upon, which secured our strong opposition against the politics and economics of apartheid and which in the long term will secure the position of the strong militant trade union movement fighting for the workers

of tomorrow.

If we

do

not

manage

to meet

COSATU’s long-term influence will be seriously reduced.

these

conditions,

MARKET POWER, GOVERNMENT AND THE NATIONAL ECONOMIC FORUM: BOBBY

GODSELL

Bobby Godsell is Executive Director, Industrial Relations and Public Affairs of Anglo American Corporation. He was born in 1952 in Boksburg and grew up in Durban where he attended Grosvenor Boys’ High School. He holds the degrees of BA, with maJors in Sociology and Philosophy, from the University of Natal, and MA, in Liberal Ethics, from the University of Cape Town. He also spent a year doing post-graduate studies in Sociology and Philosophy at Leiden University in The Netherlands. Mr Godsell joined the Corporation in 1974 in the office of the Employment Practices Consultant. This office was

the forerunner of the Industrial Relations Department which he headed from 1980. He was appointed group industrial relations consultant in 1986. In 1988 he took up his present posttion in which he has responsibility for the Public Affairs Division which includes the Department of Corporate Communications and the Group Industrial Relations Department. He was appointed director on I June 1989. Mr Godsell has served as president of the Chamber of Mines, and is a member of SACCOLA (South African Employers’ Consultative Committee on Labour Affairs).

South Africa’s choices It is rarely in the history of a country that a fundamental moment of choice arises. It 1s true that there are two organising principles that have manifested themselves in the history of mankind, from the dawn of history. The one is a

society governed by force and the other is a society governed by freedom. That is the choice that faces South Africa in the weeks and months and years that lie ahead. In spite of our past it is not true that the end of one tyranny guarantees the establishment of freedom. The choice that South Africans face, the way in which we structure a new society and a new politics and a new economy, will determine whether we can move from coercion to consent. The way we make economic policy is going to be an important part of exercising that choice. I want to deal with three issues: the market place, democracy and the National Economic Forum (NEF). 1 Based on a speech delivered by Bobby Godsell at the SACTWU Workers Rights Conference, June 1993.

33

MARKET

POWER,

GOVERNMENT

AND

THE

NEF

The market I want to argue that the market place represents a zone of freedom in respect of economic goods. It is a place where ordinary individuals can use what they have, their labour, money, goods and other things of value, to get what they want.

The organising principle of the market place has to be consent and not coercion. Apart from being a zone of economic freedom, the contemporary comparative evidence of our century 1s that the market place is a relatively good allocator of economic resources. At any rate it is a better allocator of economic resources than central planning departments, or indeed governments 1n general. This is not so much because individuals necessarily possess superior wisdom about how to allocate economic resources, but that it 1s a lot easier for individuals to change their minds and change course. People often put onto the market place goods for which there is no demand. It 1s easier for them to back out of that than when one has a national economic plan that allocates production and allocates resources in a particular way. Perhaps it is easier for individuals to admit they make mistakes than it is for politicians. Government and politics Politics is about who and how a society is governed, who decides what 1s allowed and, perhaps more interestingly, who decides what is not allowed. That 1s the essence of law. Finally and crucially, who pays for the state and who benefits from the state’s activities. That is of course what the tax system is about. In essence politics is about the regulation of public behaviour and the allocation of public goods. Democracy for me 1s the politics of consent, where all of the above choices are exercised with, by and for the people. In large complex societies this is done through a process of representative government, where people regularly choose their representatives, through elections between contending candidates and parties. But democracy involves a lot more than merely the ritual and routine choosing of representatives to serve in representative councils and institutions. It must involve people in the processes of formulating policy. It involves free public media. It involves independent courts. It involves a range of institutions that participate in shaping the way that the society 1s organised. Implications for the NEF Against that background what of the NEF? First, the NEF does stand in the tradition of the market place. It is a place where at the moment three parties have come to trade ideas and interests, each party with their own well-de-

34

MARKET

POWER,

GOVERNMENT

AND

THE

NEF

veloped agenda, to seek areas of agreement that will mutually benefit and jointly serve the agendas of the parties. In this way, the NEF is a very key part of the process of democratising our society. The NEF 1s already and could well become in the new South Africa a place where not only politicians and the government of the day, but all key economic actors are held accountable; where they have to make their policy proposals explicit, their agendas open and argue clearly to the nation what the goals of their economic policy are and who are the likely beneficiaries and, very importantly, where the consequences of different policies can be measured and debated. Secondly, whether the NEF should be entrenched in the constitution depends very much on the degree of detail of constitutional entrenchment, now, during the transition and afterwards. What I would hope 1s that bodies like the NEF will become entrenched in the practice of our politics in South Africa. Civil society has a tendency to make politicians nervous. It is interesting that Minister Keys raised questions about the representative nature of business in the Forum, and by fairly direct implication, Trevor Manuel raised questions about the gap between labour representatives and the mass movement in the Forum. I do not think that those observations are accidental or incidental. To an extent they reflect some degree of nervousness about whether the natural constituencies, or traditional constituencies of the two political entities of which Mr Manuel and Mr Keys form a part, are not getting a little uppity, if they are not finding avenues for original expression. In a real democracy characterised by real freedom, there 1s not a single site of wisdom. There ts not a final moment of truth. What there 1s is a dialogue between people, an open explicit trading of ideas and Strategies. That brings us to a rather difficult question. Should the NEF be an advisory body or something more? If what is meant by this 1s should the NEF be able to challenge the sovereignty of an elected democratic assembly of the people, obviously no, it cannot do that. Its own power and legitimacy must be less than that of the national assembly of a future democratic South Africa. But if what is meant is whether a future government should pay as little attention to the NEF as the present government has paid to many advisory bodies 1n the forty years that it has been in power, then the answer is a very emphatic no. Of course the government of the day must be the final arbiter of the public good. But for it to play that role constructively it can only arbitrate at the end, or towards the end, of a very active dialogue and debate about how to get growth and equity and participation in the South African economy. It 1s important that we should defend the space for organised entities such as business and labour to have their own platform and their own opportunity to

35

MARKET

POWER,

GOVERNMENT

AND

THE

NEF

advance their own interests and their own sense of the national interest, and

to do so fairly robustly and not merely at the whim of the rulers of the day. Conclusion In conclusion, civil society can play a vital role actually to enhance, not perhaps the standing and popularity of a particular government or of a particular minister, but the standing and legitimacy and confidence and hope that ordinary people can have in the very process of government itself. That is the context in which we hope that the NEF will endure under any name and with whatever changes perhaps (to pick up the problems of representivity raised by both Minister Keys and Mr Manuel), so that the NEF will continue to be a vital part of both democracy and the market place in a future South Africa.

36

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ECONOMIC THE

NEW

CHALLENGES SOUTH

FACING

AFRICA

The role of the National Economic Forum in addressing them DEREK

KEYS

Derek Keys was born in Johannesburg _ international companies operating in in 1931, where he grew up and reSouth Africa and certain large locally ceived his education. He acquired a owned groups.In 1986 Sanlam asked B.Comm. degree from Wits and qualihim to become the executive chairman fied as a chartered accountant.After a of Gencor, the second largest mining few years of post-qualification experifinance house in South Africa. In ence in auditing he joined the January 1992 Mr Keys was appointed Industrial Development Corporation to the South African cabinet as Minisand over the next eight years he played __ ter of Trade and Industry and of @ part in the development of major Economic Co-ordination and in May South African industries. In 1965 he 1992 he was appointed Minister of began to operate privately as a finanFinance and of Trade and Industry. It cial and management consultant, was during his term of office as Mintsmainly to industrial clients.During the ter of Finance that government agreed next 21 years until 1986 he filled a to establish the National Economic largely advisory role for a number of Forum.

It is now eighteen months since President De Klerk gave me the task of guiding government in its role in the economy. My interpretation of that task has not 1n any respect been constrained by any political influences — whether of expediency or dogma — nor by any particular economic ideology. I have been given a free hand to do the best job that I could. We can all agree that the results so far have been disappointing and the responsibility for that is mine alone. But I still have the responsibility to do better in future. From the start this is a responsibility that I have been Keen to share: because I patently command neither the insight nor the resources to handle it alone, and because no solution that has not been arnived at through an open process of participation of all the important stakeholders has any prospect of success. We have to do what is needed together, and what we need to do, and what we want to do, has to be matenially different to what we have done in the past. We need to invent and then create an economy that answers | Address by Derek Keys on behalf of government, to the first NEF plenary, 5 July 1993.

37

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AFRICA

more closely to the needs of our community. The National Economic Forum (NEF) is crucial to this process: I see it as our main mechanism for achieving this objective. If the parties had come to the Forum, intent on using it to continue and expand the policies of the bygone era, that 1s if government had come with the aim of an even bigger government machine and a correspondingly small business sector, or if business had come with the aim of less and less effective competition for bigger and bigger businesses, or if labour had come seeking to entrench adversarial and rent-seeking practices, then the initiative that created the Forum would have been idle. We would have been wasting our time. The Forum’s value depends vitally on our joint and several abilities to look at the economic problem with open minds and fresh insights. How are we to do this? I think all of us are sincerely struggling with the answer to this question. We have done what we could to assist the process by: First: Getting those economists 1n public service to produce a synthesis of the advice which they have to offer to us. This is the Normative Economic Model. Second: Publishing this synthesis. Third: Encouraging those not in public service to find weak spots in the synthesis, and to state where they disagree. The process up to this point has worked about as well as one could have expected, and the criticisms are being duly noted. We are close to the point at which we should incorporate their gist in the synthesis, and produce an amended version of it which commands the support of all parties. And when we have? The NEF then faces its most critical task — the construction of detailed specific programmes for the myriad of tasks involved in shucking our old carapace so that we can grow our beautiful new dynamic and living skin. By my count there are some twenty-five of these programmes; for convenience they can be grouped into five overall categories and I will do so in order to talk about them in an organised way. As I do so you will find that a number of them already exist — in embryo or sometimes rather well developed — and the Forum itself is already giving attention to some of the more important outstanding ones. Of the five groups the first four will occasion absolutely no surprise. They are: _ Programmes for macro-economic stability + Programmes for labour Programmes for entrepreneurs

38

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THE

NEW

SOUTH

AFRICA

O Programmes for government ) Programmes for improved distnibution The fifth group was and is inherent in the synthesis published, but it is already clear to me from the contnbutions made that it will have to receive increased emphasis. One of the truths that we are coming to recognise (when I say ‘we’ here I do not mean government but rather all parties worldwide concerned with the fundamental problems of national development) is that the ‘trickle-down’ effects from growth, even quite high growth, in the formal sector are not enough in themselves to have a material effect on seriously underdeveloped situations. These have to be the subject of special concentrated attention to ensure that the vicious circle of deprivation and inability to contribute is not simply passed on from generation to generation, but interrupted so as to create a way out of this deathly morass. Let us quickly review the content of these different groups of programmes. Macro-economic stability

This 1s the area in which we have had the most practice, with programmes largely under the management of the Reserve Bank. The programmes have been running for several years, pretty well ever since Dr Chris Stals became Governor of the Reserve Bank. They have been reasonably successful. They relate to controlling the money supply and bank credit, and to getting the government’s deficit funded in a non-inflationary way, which they managed to do even last year, when we had the biggest budget deficit ever. These programmes also aim at ensuring that real interest rates are positive — in other words, that they are slightly higher than the rate of inflation — and at the contro! of the inflation rate as such, in which regard we have had a reasonable amount of success in the past year. Furthermore, the programmes also relate to the exchange rate in that they ensure that the exchange markets are orderly and that the exchange rate bears some relation to the difference between our inflation rate and that of our partners. Finally, they involve the general management of the balance of payments. While one is establishing and pursuing programmes (and this applies across the board in all groups) immediate issues keep on arising where one has to act to fit in with the course of events. There is one such issue at present in this group, namely the conclusion of an agreement with the banks involved in our Overseas debt standstill arrangements. Government will be making a presentation to the Forum shortly on this subject.

39

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CHALLENGES

FACING

THE

NEW

SOUTH

AFRICA

Programmes for labour We are all aware that we cannot achieve a more satisfactory rate of growth unless we make giant strides 1n respect of productivity in the workplace. This is not simply a question of the work ethic, although the work ethic is of course important. The contribution which management has to make, 1s equally as important as the contribution which labour has to make, but labour also has to play its part. It has to be ready, willing and able to co-operate, to settle for flexible work practices and to collaborate with management in the pursuit of productivity. The great success which the Japanese have had with their green circles relates to the fact that management and workers sit down first thing 1n the morning to plan the day’s work with a common aim, which 1s to achieve the highest possible level of productivity. We have to make that jump and for this we need a programme which will require the co-operation of both labour and management. The next programme which we need if we are to compete successfully worldwide, is a programme of wage moderation. Getting the highest possible wages on the assumption that the economy can be taken for as much as can be forced out of it with strikes and other actions 1s a thing of the past. As far as labour and its wage claims are concerned, we have to move into a new era in which reasonable judgement 1s applied. This will of course require a great deal of statesmanship on the part of labour leaders and a great deal of bargaining skill and a general willingness to strike deals on the part of business. Either or both of these programmes need to contain facets which will change what the model calls adversarial industrial relations. We have to get labour and management back to a situation in which they expect to negotiate in a spirit of partnership in order to find the right level of wages in order that the businesses and therefore the economy, can grow. Of course business has to offer much in return for a different attitude on the part of labour, but these things are not unreasonable. Labour does not want the earth. It does not want to cripple business. It wants more education and training. It wants a career path from the lowest level in any business. This does not mean everybody has to become the managing director, but labour wants to know that there 1s a path which a brilliant individual can follow from the level of sweeper which will eventually bring him to the top of that business. We have to open up for planning of personnel advancement in order to make sure that this can happen. We have to make sure that our training methods are better, and we have to provide for the retraining of workers whose former work opportunities no longer exist. One cannot run a capitalist economy on the assumption that every

40

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ECONONIC

CHALLENGES

FACING

THE

NEW

SOUTH

AFRICA

business that exists will continue to exist and that there will be no retrenchments. This 1s not the way a market economy works. One has to operate on the basis that certain businesses which have missed their opportunities are going to die and will be replaced by other businesses that are created, and one has to minimise the human cost of these transitions. In the longer term, we have to solve the problem of the too great distances between workers and their work. In the case of this group of programmes we also have an immediate issue for the Forum’s attention in the shape of the pressing need at present for job-creation initiatives. In my Budget presentation in March I provided a modest amount for work of this nature and mentioned 1n this connection the role of the Forum and that of the responsible line department — the Department of Manpower. | also urged the question of integration of NGO activities with those of the line departments responsible for activity in each area. Manpower’s budget vote is R326 million: its stated aim is ‘to impartially order and promote the nghts and interests of all individuals and groups in the labour field to their best advantage within the framework of government policy’. The Minister 1s present here today and his officials are active in the Forum. I want to assure all present here today that a worthwhile job-creation programme put together on the integrated basis I have described will have a powerful claim for increased financial support from government. In my opinion the Forum itself is not the manager of such a programme, but it must be one of its principal architects. Entrepreneurship We cannot make this economy grow without much more investment. I think everybody recognises this by now. We do not get investment simply by deciding we need more. We do not get growth-yielding investment by having the state make the decisions. We get more investment only by creating the opportunities for profit-making on the part of entrepreneurs. The kind of investment we need, particularly with more direction towards the export markets, 1s more manufacturing. Going from our present totally pedestrian condition to something exciting means that we have to look to the world market. If we are going to have that higher level of investment, it will have to be financed. We need a programme which will marshall the necessary capital resources, and these will have to include foreign capital to a fair extent. The model shows that if we want to get this rate of investment up rapidly, it will exceed our own financing Capacities, and that we shall need something like 3% of GDP, which, at the

moment, would be something like $3 billion a year in the middle period 1995,

4]

THE

ECONONIC

CHALLENGES

FACING

THE

NEW

SOUTH

AFRICA

Programmes for labour We are all aware that we cannot achieve a more satisfactory rate of growth unless we make giant strides in respect of productivity in the workplace. This is not simply a question of the work ethic, although the work ethic is of course important. The contribution which management has to make, 1s equally as important as the contribution which labour has to make, but labour also has to play its part. It has to be ready, willing and able to co-operate, to settle for flexible work practices and to collaborate with management in the pursuit of productivity. The great success which the Japanese have had with their green circles relates to the fact that management and workers sit down first thing 1n the morning to plan the day’s work with a common aim, which 1s to achieve the highest possible level of productivity. We have to make that jump and for this we need a programme which will require the co-operation of both labour and management. The next programme which we need if we are to compete successfully worldwide, is a programme of wage moderation. Getting the highest possible wages on the assumption that the economy can be taken for as much as can be forced out of it with strikes and other actions 1s a thing of the past. As far as labour and its wage claims are concerned, we have to move into a new era in which reasonable judgement ts applied. This will of course require a great deal of statesmanship on the part of labour leaders and a great deal of bargaining skill and a general willingness to strike deals on the part of business. Either or both of these programmes need to contain facets which will change what the model calls adversarial industrial relations. We have to get labour and management back to a situation in which they expect to negotiate in a spirit of partnership in order to find the right level of wages 1n order that the businesses and therefore the economy, can grow. Of course business has to offer much 1n return for a different attitude on the part of labour, but these things are not unreasonable. Labour does not want the earth. It does not want to cripple business. It wants more education and training. It wants a career path from the lowest level in any business. This does not mean everybody has to become the managing director, but labour wants to know that there 1s a path which a brilliant individual can follow from the level of sweeper which will eventually bring him to the top of that business. We have to open up for planning of personnel advancement in order to make sure that this can happen. We have to make sure that our training methods are better, and we have to provide for the retraining of workers whose former work opportunities no longer exist. One cannot run a capitalist economy on the assumption that every

40

THE

ECONONIC

CHALLENGES

FACING

THE

NEW

SOUTH

AFRICA

business that exists will continue to exist and that there will be no retrenchments. This is not the way a market economy works. One has to operate on the basis that certain businesses which have missed their opportunities are going to die and will be replaced by other businesses that are created, and one has to minimise the human cost of these transitions. In the longer term, we have to solve the problem of the too great distances between workers and their work. In the case of this group of programmes we also have an immediate issue for the Forum’s attention in the shape of the pressing need at present for job-creation initiatives. In my Budget presentation in March I provided a modest amount for work of this nature and mentioned in this connection the role of the Forum and that of the responsible line department — the Department of Manpower. I also urged the question of integration of NGO activities with those of the line departments responsible for activity in each area. Manpower’s budget vote ts R326 million: its stated aim is ‘to impartially order and promote the nghts and interests of all individuals and groups in the labour field to their best advantage within the framework of government policy’. The Minister 1s present here today and his officials are active in the Forum. I want to assure all present here today that a worthwhile job-creation programme put together on the integrated basis I have described will have a powerful claim for increased financial support from government. In my opinion the Forum itself is not the manager of such a programme, but it must be one of its principal architects. Entrepreneurship We cannot make this economy grow without much more investment. I think everybody recognises this by now. We do not get investment simply by deciding we need more. We do not get growth-yielding investment by having the state make the decisions. We get more investment only by creating the opportunities for profit-making on the part of entrepreneurs. The kind of investment we need, particularly with more direction towards the export markets, 1s more manufacturing. Going from our present totally pedestrian condition to something exciting means that we have to look to the world market. If we are going to have that higher level of investment, it will have to be financed. We need a programme which will marshall the necessary capital resources, and these will have to include foreign capital to a fair extent. The model shows that if we want to get this rate of investment up rapidly, it will exceed our own financing Capacities, and that we shall need something like 3% of GDP, which, at the moment, would be something like $3 billion a year in the middle period 1995,

4]

THE

ECONONIC

CHALLENGES

FACING

THE

NEW

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if we work according to the chronology in the model. We need a large inflow of foreign capital. As we all know, there are plenty of competitors for that capital. We shall have to devise a programme which will draw that capital in if we are going to obtain the finance we need for the investments we need. The document on foreign capital released by the Long-Term Working Group 1s of great significance and could be a vital guide in constructing an appropriate programme in this regard. We need to integrate this economy into the world economy. Of course, we have kept trading with the world and we have kept buying from the world, but we have missed out on a lot of things. We are one of the few countries in the world that does not have a treaty of association with the European market. I was there a year ago to try to get the preliminary negotiations started to take care of this, and they asked me to come back when I could bring a more representative delegation. The Forum's role here will be essential. We have to do this. We have to integrate ourselves into the Bretton Woods institutions, the World Bank and the IMF. They are ready to do it, but they are also waiting for a signal that we, as a country, have not been able to send them yet. Here again the Forum will be involved. Of course, we need also to take a longer-term view of the development of entrepreneurs. We cannot just use the existing ones. We have to create new entrepreneurs. We have to have a programme for assisting the development of small entrepreneurs. We have to raise the level of competition to which our entrepreneurs are exposed. Part of the way of doing this 1s to lower the tariffs and to have a simpler tariff structure. The immediate issue which will shortly be laid before the Forum in this regard concems our participation in the Uruguay Round of taniff reductions being orchestrated by GATT. If we want to get the benefits of this process in our export markets (and we have seen that this is a critical component of sustainable growth) then we must be a participating member of this process. The Department of Trade and Industry, the Board of Tariffs and Trade and the Industrial Development Corporation have been working flat-out to develop an amended offer to our GATT partners which will allow for the development envisaged by the Normative Economic Model. A few weeks ago Dr Stef Naude met representatives of forty of our main trading partners and secured permission for us to submit the amended offer before the end of August. He also laid the groundwork for the sort of extended period of adjustment which this economy will need. In the course of the next few weeks the results of all this labour will be laid before the Forum for its verdict. Programmes for government These programmes relate to the way 1n which government behaves. Govern-

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ment has to lower its claim on the resources of this country. I realise how much pain this causes. I want to point out that the other parties that I have been referring to also have to go through programmes which cause pain. Think of wage moderation and tarnff reduction. We have to neutralise the extent to which that higher level of spending is absorbing valuable savings. We cannot finance the level of manufacturing investment that we need if government is going to keep on absorbing a large percentage of GDP through excessive consumption expenditure. It is only when we have managed to remove dissaving that we will be able to look at further reductions 1n tax rates. There is no way in which we can run current expenditure on the country’s savings and lower tax rates. We have to fix the one problem first before we will be able to give attention to the other. As we do this, we will be able to allocate more resources to infrastructural spending. In spite of the fact that the rate of government spending has been increasing as much as it has, we have been skimping on many aspects of infrastructural spending. This is true as far as roads and a number of other areas are concerned. We have not been skimping on social spending, but as far as social spending 1s concerned, we need a programme for greater efficiency in respect of the directions in which it goes and the effectiveness of the delivery mechanisms. None of this is my own; it is all in the model. That completes the fourth group of programmes. Programmes for more equitable distribution This final area means, of course, more of the resources of the economy going to areas like low-cost housing and rural development, and making more opportunities available to people from all quarters and at all levels. Only if we make a deliberate allocation of resources in this direction will we be able to manage the expectations gap. People often refer to the expectations gap as being something which represents a great problem. It may be a problem, but it 1s also a wonderful spur. If we had a country in which 80 % of the people had no expectations we would have a permanently soggy economy. It is a great blessing that the less privileged part of our population has a great desire to possess more of the world’s material goods. However, in order to manage that — because we cannot satisfy it immediately — we will have to allocate more of our resources in that direction and produce a scenario, even if it is one that extends over a very lengthy period, in which people can have some faith, and which gives them reason for hope. This will only be true of a set of programmes in whose contribution they have played a part. As a closing suggestion I would therefore like to propose that the Long-Term Working Group of the NEF turn its attention specifically to the expectations gap and how it should be managed. In many ways success 1n this

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field will determine our success overall. Having come to value our partners in the NEF, I am confident that we will continue to make solid progress together to the benefit of all.

AGREEMENTS CONCLUDED AT THE NATIONAL ECONOMIC FORUM: A Labour Assessment JAY NAIDOO

Jay Naidoo was born in Durban in 1954. He studied at the University of Durban-Westville, and was active in the struggles of the student movement. He left the university in 1977 and taught workers and nurses, who were writing their matric examinations. He became a union organiser with the Federation of South African Trade Unions (FOSATU) in 1979, and was elected as general secretary of the Sweet Food and Allied Workers Union in 1983, which union later became a COSATU affiliate as the Food and Allied Workers Union (FAWU).

In 1985, following four years of negotiation between various unions and federations, the Congress of South African Trade Unions (COSATU) was formed, and FOSATU dissolved. Jay Naidoo was elected as the General Secretary of COSATU at its launch, and has been re-elected in that position three times. During his period of office, COSATU became the country’s biggest trade union federation, and had strong membership growth even during the economic recession of the late 1980's.

South Africa’s transition Today our country stands at the crossroads. After decades of brutal apartheid rule we are really entering the last mile of our journey to a non-racial democracy. The agreement on an election date reached at the World Trade Centre on 2 July 1993 paved the way for a rapid political transition to democracy. The onslaught of the anti-democratic forces of the ultra-right must be seen as a desperate attempt to pre-empt this massive and inevitable surge forward to peace and democracy. Similarly attempts to undermine the integrity of the negotiation process by those parties blocking progress who insist on an undemocratic process for drafting the constitution are also unacceptable to the overwhelming majority of South Africans. The date of 27 April 1994 1s cast in stone. It has focused the minds and energies of our people and given us the confidence that at last we are taking |! Address by Jay Naidoo on behalf of organised labour, to the first plenary, 5 July 1993.

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a decisive step away from the nightmare of racism and apartheid. Simultaneously we are poised here to take a decisive step away from the poverty, unemployment, homelessness and conflict of the past. Democracy for us must mean more than the right to vote every five years. Democracy must be the end of the dehumanising legacy of apartheid. Democracy must mean: Q jobs at a living wage for millions of unemployed. Q decent houses for millions of homeless. Q a proper education and training for millions of unskilled and deskilled black people. Q an effective health care system that permanently eliminates the ravages of malnutrition, kwashiorkor, tuberculosis and many other preventable diseases that today murder innocent children in their beds. Democracy must mean liberation for millions of disadvantaged black people denied all access in the past to the wealth we have produced because of apartheid. Building blocks for the future The establishment of the National Economic Forum (NEF) was a major breakthrough for creating legitimate, inclusive, multilateral structures for the negotiation of economic policy initiatives. However its true test will be to deliver the goods to our people in a way that substantively mmproves their quality of life. The agreements presented here today demonstrate the key role played by the democratic trade union movement. No player is going to unilaterally impose a blueprint on shaping a new future for our country. The simple adage ‘we either swim together or sink together’ is relevant. While we recognise the importance of compromise in the negotiations process, there are critical realities we need to recognise: O First, centralised bargaining ts the crucial building block of any joint effort to restructure industry to operate on a more efficient basis, with a growing and job-creating economy with significant export penetration. As we move towards a broader social programme of economic reconstruction, a successful economy must be based on a skilled workforce, appropriate technology, marketing and flexible production, rather than on slave wages. Therefore any attempt to undermine the current centralised bargaining structures or to actively block progress 1n sections where these do not exist can only perpetuate the conflict and adversarialism of the past. All agreement on the socio-economic reconstruction of South Africa hinges on the agreement on centralised bargaining. 4 Second, the acceptance of fundamental trade union rights. These are the

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right to organise, the nght to bargain, the nght to strike, and the right to closed-shop agreements, as inseparable from our struggle for democracy. QO Third, the creation of powerful tripartite and multilateral institutions at a labour market and economic level is necessary to create the essential consensus needed for the reconstruction of the South African economy. We welcome the creation of a strong central government. We believe that its programmes will have to be underpinned by broader negotiations with key economic and social partners from trade union and business to civic, student, women and other mass-based formations of civil society. The agreements reached in the NEF and the ongoing work in the restructured National Manpower Commission are important foundations for our rapid movement towards becoming a dynamic economic powerhouse in Africa. The restructuring of the world economy is leading to integrated economic entities in Europe, North America and the Pacific Rim. Africa must not become the begging bowl of the world. Conclusion We have in spite of the inequalities and distortions a relatively developed economic infrastructure. Most importantly we have our people — motivated, energetic, militant and politicised. Let us organise, unite and mobilise our people behind a programme of socio-economic reconstruction that has real meaning for them, for all our people in the subcontinent. Let us end the massive wave of retrenchments and talk about the investment, both domestic

and international, needed to stimulate job creation on a short-term public works programme and create permanent sustainable jobs. Let us ensure we ruthlessly root out the corruption and arrogance of our civil service and ensure that employment is related to the provision of efficient and effective services to all our people. Let us ensure we move away from the militarisation and war psychosis of apartheid to redistributing towards building houses, schools and medical clinics. There 1s no need to maintain an army that has in the past waged war on our people. We are confident of the future. We are reaching across the gulfs, division

and fears of the past to say ‘Let us work together on a programme of Socio-economic reconstruction that recognises the nights of all parties, recognises the need to repair the fabric of society disrupted by decades of apartheid rule and our confidence will become the guiding lodestar of anew non-racial, non-sexist united, peaceful and democratic South Africa’. I thank on behalf of the democratic trade union movement the negotiators who put in countless hours to produce this fine document. It is up to the major constituencies to go back and implement these agreements.

47

THE NATIONAL ECONOMIC FORUM AND THE FUTURE, A Business Perspective DAVID

Dave Brink was born in Springs, Transvaal, in 1939. He studied at the University of Witwatersrand where he obtained an M.Sc degree in Mining Engineering. In 1965 he completed a Certificate in Business Administration at the London School of Economics. He joined Anglo American Corporation in 1962 and rose to section manager, Western Deep Levels. In 1970 he joined Murray and Roberts, where, over the next few years he held

BRINK

a number of different posts. Since 1986, he has been the Chief Executive of the Murray & Roberts —_ Group, a major construction, engineering and manufacturing enterprise which concentrates on the fixed investment sector. Dave Brink chairs the Business Forum, which brings together the seventeen business organisations represented on the NEF, and serves on the NEF Process Committee.

Introduction This plenary meeting has been provided with comprehensive information about the founding, work and achievement of the National Economic Forum (NEF), its two working groups, and its process committee. I will, therefore, make limited remarks about the present status of the Forum from a business perspective and then focus more on its potential and the challenges facing it in the future. The South African economy has been battered by changes 1n the world economic order. This has been exacerbated by a ‘self inflicted’ slowing down of the economy over a generation because of inappropriate political ideologies which caused alienation of the people within the wealth creation machinery of the country, and of customers, financiers and other stakeholders both locally and abroad. The need for the NEF

The NEF was set up to address the problems confronting the economy with the intention of it fulfilling its purpose during, and probably after, the period of political transition in South Africa. The fundamental motivation of the | Address by David Brink to the first NEF plenary. 5 July 1993.

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parties to the Forum has been to find a recipe to forge a new economic order in South Africa which will achieve sufficient sustainable economic growth with increasing efficiency and equity and, in parallel, to find and agree a desirable pattern for redistribution of wealth in a way that does not conflict with the growth imperative. The very nature of the tripartite Forum 1s collective and by definition, no single party can dominate the agenda, nor can any party prescribe the decisions to be taken. The parties are obliged to develop a mutual vision and a common programme of action which will meet the approval of the constituencies of the parties. The first six months and the future During the first months of the existence of this Forum leading up to this plenary session, it has been dominated by concerns of an immediate- or short-term nature. Fire-fighting to find solutions to problems in the ailing economy have predominated, particularly in the work of the Short-Term Working Group. One might well descnbe the Forum as having been in ‘defensive mode’. This 1s easily understood when seen against the background of the reform and transitional process taking place in our land. As a result of the above, most of business’s input to date has been re-active in nature to labour’s proposals and 1n the case of the Normative Economic Model, to the proposals of government. If South Africa 1s to succeed in achieving a level of economic growth which will satisfy the aspirations of its people, the need for economically active people and institutions in South Africa to act with a common purpose is clear. An accelerating degree of co-operation and sometimes compromise will be needed in future and the parties will have to proceed in a co-ordinated,

determined manner towards the achievement of agreed economic goals. In future, the NEF will have to move its attention progressively away from fire-fighting and the consideration of short-term interventions and direct its focus more toward nation-building and long-term wealth creation. Such redirected focus will require a far greater level of input to the Forum from the wealth creation machinery within the country, namely the people involved in private sector business, who will have to make available in full measure their experience, insights, creativity, and entrepreneurial leadership. The LongTerm Working Group (LTWG) of the NEF, with its focus on longer-term macro-economic and development policy issues has already enjoyed strong inputs and support from business. It has given detailed consideration to government's proposed Normative Economic Model, has developed a com-

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prehensive jointly agreed work programme, has much work in progress and indeed has a number of matters agreed. To fulfil its increasing role into the future, business will have to continue to refine its organised structure to ensure that it represents properly its very diverse constituents. As can be seen from the papers before you, the Business Forum, which makes up the business component of the tripartite NEF, has seventeen member organisations, many of them extremely large and influential, representing a wide spectrum of diverse interests. This is a heterogeneous group representing different sectors, industries, markets and constituencies. When the Business Forum mandates a position it has to seek an agreement which its diverse constituents supports, which is capable of practical implementation and which will be sustainable. It is important for this plenary audience to realise that the Business Forum has up to date not come lightly to any of its agreed positions; that the mandating procedures are difficult compared to those of both labour and government, and the other parties should respect the fact that although sometimes laborious, the mandating process of business means that decisions made by the NEF carry wide-ranging commitment. It 1s perhaps remarkable under the circumstances that the Business Forum has so far enjoyed unanimous support from its members on all positions taken by it. It can safely be said that all of the parties to the NEF realise that there will be no quick fix to the South African economy, nor even would instant gains necessarily be desirable since they would certainly be transient. The NEF and its constituents will therefore have to have the courage to do the hard work of creating anew economic future that will give the nation and its people a firm economic foundation. Leadership will have to be strong and bring great wisdom to bear, and here I talk not only of the elected leaders of government and labour, but business leaders as well. Lessons from elsewhere Helmut Maucher, Chairman and CEO of Nestlé world wide, expressed the view earlier this year that the new economic order in the world will require business to accept a new era of what he calls “transparent capitalism’, and he reinforces this with the contention that egotism contributes neither in government nor in business. Suppression of egos in the consensus building process of this Forum 1s certainly vital for success. In this regard, the NEF 1s already playing an important role and will continue 1n future to bring about a far greater degree of democratisation in economic policy formation and implementation. In many ways this will tend to make life more difficult for business leaders particularly, all of whom will need to continue to be fleet-footed and decisive

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in promoting and achieving effective wealth creation. Enhanced team work will undoubtedly be necessary and more extensive sharing of information will be needed for greater transparency per se and to provide all of the parties to the process with sufficient information to ensure sensible policy formation and decision making. In general — a great deal of patience, diligence and good old fashioned hard work will be required from everyone. As the NEF goes about its work in the months ahead, a host of important issues will be brought onto the agenda. The question of education and worker training will probably have to be returned to the very top of the economic and political agenda. Other urgent matters will include the need for encouraging the development of small and medium enterprises (SMEs) to promote job opportunities, the agreement of coherent technology policies to enhance competitiveness, and agreeing and supporting policies surrounding the supply and distribution of electricity and other essential services. Akio Morita, the Chairman of the Sony Group, told the World Economic Forum in Davos, Switzerland, in February this year, that the shining economic tower of the 1980s was built on the false and shaky foundation of speculation and avarice and that the collapse of this Alice-in- Wonderland economy has brought the world to realise the importance of re-establishing the core primacy of value added industnes in a modern economy. It 1s therefore up to business enterprises, particularly manufacturers, by dint of hard work and creativity to add value to raw materials and bring truly innovative and attractive products to the world market, thereby creating a growing, positive spiral of market demand and industrial employment. South Afncans can certainly take a leaf out of Mr Morita’s book in the process of taking our place as one of the emerging economic miracles of the world. | am certain that we all embrace that challenge.

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A discussion session on the National

Economic Forum

This discussion session took place at the SACTWU conference on Worker Rights in a Democratic South Africa. It followed the presentation of speeches by Derek Keys, Trevor Manuel, Jayendra Naidoo and Bobby Godsell, substantially similar to the articles in this book.’ The question session has been edited to retain the style and gist of questions from delegates and answers from the speakers. QUESTION: [ am interested to know what are the achievements of the National Economic Forum (NEF) during its lifespan, particularly looking at the rate of retrenchments that are taking place and also concerns by organised labour around the unilateral restructuring of industry. Tshidiso Moshao (SA RAILWAY & HARBOURS WORKERS UNION)

JAYENDRA NAIDOO: Bobby has ceded his right to me on the first question. You see there is progress in the NEF already! Let me just report briefly where some of the negotiations in the Short-Term and Long-Term Working Groups are at the moment. On the 5th July 1993 there will be a plenary at which formal reports will be tabled and if the progress that 1s currently being shown is a reflection then there will be agreements particularly from the Short-Term Working Group around job security and job creation, and some points from the Long-Term Working Group. At the moment there are thirteen proposals being dealt with around job security and job creation, in the Short-Term Working Group. It looks like agreement in principle at least will be possible on eleven points and that includes also the question of centralised bargaining where we hope that there will be some progress made, and the question of retrenchments where there are negotiations about a job security agreement. In the Long-Term Working Group there is agreement about processes like a study of statistics and an enquiry into trade policy which will produce some results later. So I think one has the 5th July as a date by which one can assess concretely the extent of achievement. There have been already in a smaller way some achievements made, and some problems dealt with. For example, recently the government wanted to I See chapters 2-5.

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privatise ABACOR, which is the state-owned abattoirs and through a process in the NEF it was agreed that ABACOR will not be privatised and that was stopped. Now FAWU 1s about to enter into discussions with the government on how to restructure the way in which the abattoirs owned by the state are run. So I say there are some interesting signs of progress. There have been some small achievements made. On the whole they have been quite modest. They have not changed the world. They have not saved a hundred thousand jobs, they have not created any new jobs yet. I think that 1s basically where the NEF stands. DEREK KEYS: I think I should just confine my answer associated with directly. I can say with total certainty have been the VAT zero ratings on certain food items 1993, without the Forum. And that without the Forum further privatisation would have gone ahead.

to things that I was that there would not announced in March a certain amount of

QUESTION: Trevor Manuel has mentioned that the lifespan of the present government is limited, and he went further and asked by what rights do we accord the present apartheid government the right to set policies that will unpact on the future management of the economy. Is it not a contradiction to ask this type of question, since the ANC is engaging the very apartheid government at the political level, and whatever policies they make will definitely impact on the future South Africa. The second question is: Comrade Jayendra Naidoo said the trade union movement wants to play a broad role in shaping society. Does Comrade Manuel agree with that and if he does, when does he see the trade union movement playing that role, now or in the future? Freddy Magugu (SA CLOTHING AND TEXTILE WORKERS UNION) TREVOR MANUEL: The answer to the first question is a kind of a yes and no. In respect of the political future of the country to some extent the negotiations at the World Trade Centre lay the basis, but at the end of the day the constitution will be drawn up by duly elected representatives sitting in the constituent assembly. And it is that which will determine the constitutional future of the country. The only framework that will be set would be in constitutional principles. I think that that is qualitatively different from the future economic policy of the country. Whereas there is an understanding that the present political dispensation will not last, there is not necessarily the same understanding about the economic policy, that in the future the positions of privilege etc.

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will have to change 1n order to make way for more equity 1n the economy, so it is a bit of a yes and a no. But largely, at this particular moment I refer to the kinds of decisions that go beyond the merely holding operation, if they go beyond trying to prevent privatisation or job losses now. My concerns are especially about the LongTerm Working Group, about processes that will in fact undermine the nature of democracy and the power of the democratic state over the economy. On your second question about trade unions and their shaping the society, whether it is now or in the future, I believe that it is a rhetorical question. I think the trade union movement has already made a very substantial contribution to shaping society in this country. More 1s the pity that the membership of trade unions 1s shrinking 1n this country because jobs are being shed at such arate. Without a doubt the trade union movement will continue to be a very important force in South Africa and we are saying that their participation in a social accord under democracy in South Africa will be of paramount importance. QUESTION: Trevor, | want to take you up on your answer. I think it ts quite correct to say that the constitution making body or assembly is going to make the final decision. Suppose let’s put the question much more crisply, what ts the ANC’s policy going to be in the constituent assembly about the trade unions’ role in the formulation of macro-economic policy? That is what we want to know. Halton Cheadle (COSATU LEGAL ADVISOR)

TREVOR MANUEL: I think that however much the trade union leadership may be concerned with national issues, 1n the final instance trade unions are about the interests of their members, and therefore their capacity to influence macro-economic policy is constrained. If you hand all of that over to the trade union movement, I think you will be making a very big mistake. That 1s not to suggest the trade unions do not have an input to make in respect of the arrangement of macro-economic issues. The realities are already being communicated in the Forum now. Trade union inputs on issues like tariff policies, issues of trade, are somewhat removed from the immediate interests of the workers on the factory floor but they are important inputs because they bring it all together. But the coherence of macro-economic policy in fact goes way beyond that and I believe that fundamentally it is the responsibility of government.

QUESTION: [ am concerned at the emphasis of the panel on the tssue of the sovereignty of parliament. If we are going to deepen democracy

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in society in the way that Jayendra Naidoo was talking about, and have a participatory democracy, how else will we get it if not through making more of these forums and institutions, not only at central level but at regional and at local level as well? Phillip Dexter (NATIONAL EDUCATION, HEALTH AND ALLIED WORKERS UNION) TREVOR MANUEL: I think participatory democracy must be participatory democracy. It must not be a voice for trade union leaders as opposed to the bulk of the membership, assuming that mandates exist. There is no perfect formula. There is going to be an ongoing battle. By recognising the growing gap between representatives of unions in the Forum and the same goes for the representatives of business and probably representatives of governments as well, and the bulk of membership, you are saying that there are gaps that must be filled. One of the contradictions or one of my closing comments was to call for better lines of communication, and that is in the direction of participatory democracy. But at the end of the day you cannot have anarchy where you have ten thousand bodies in any one country taking decisions that may be in conflict of each other. The government has a role. And you cannot take that away from government. What is important 1s who sits in government and the interests that those who sit in government represent, how they link up with the organs of civil society. And we are saying that we have to redefine democracy 1n this country. It 1s part of the struggle. Hence the point that the struggle does not end on the 27th Apmnl 1994 when we have elections in this country. It 1s an ongoing battle. We need to seek deeper meaning to democracy in this country. QUESTION: Trevor Manuel commented that ultimately trade unions are very focused on their members and they cannot have a balanced view because of that interest. Do political parties do any better? Do not they also skew things in favour of their support base ? John Copelyn (SA CLOTHING AND TEXTILE WORKERS UNION) TREVOR MANUEL: SACTWU exists for workers in the clothing and textile industry. That is the primary objective for the existence of this union. Beyond that other issues will come on board, but you have got to have something in

the centre and that is why we have government. And the key 1s whether government takes an antagonistic view towards the existence of trade unions or whether you co-ordinate that. ] also want to say that I do not believe that after an election, COSATU

should become the sweetheart union. You will only have a vibrant and

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participatory democracy if you can in fact have constructive tensions within society. But those do not go away after an election merely because of the existence of the tripartite alliance. JAYENDRA NAIDOO: I would like to just add something here. It 1s obvious from the discussion that we have just had, some of the responses that Comrade Trevor has given, that we are going to have constructive tensions and many discussions in future and that is mght because the trade union movement is independent and government has got a different role to play. But I cannot think of any single place where government would take decisions which do not have an impact on workers. Take for example clothing and textiles. Tanff policy affects very vitally whether you are at work or whether you are retrenched, whether there are imports from Taiwan and you cannot sell South African made goods. Even more distant things that look very far away, like Reserve Bank policies relating to money supply, which affect inflation, have an effect on workers because inflation affects how much you can buy, it affects the way we conduct wage negotiations. So there is arelationship. The question 1s what 1s the relationship between the things that government does and the way in which trade unions are involved in them. Now there are some societies where government would like to do everything. Malawi is an example, where President Banda wants to do everything. But I do not think we are striving for that. In Malaysia there are also examples where the most appropriate role for trade unions is that they are quietly put somewhere out of the way and employers and the state decide what sort of wages should be given and it depresses wage standards, it drives down trade union rights. But I do not think we have fought for that as well. There are also examples in the world where trade unions as one half of that which creates wealth and production in the country is fully involved in the way tn which that wealth 1s produced. What we have to do ts to fashion our institutions so that there 1s a clear way in which government operates, but there 1s full participation by labour. There 1s no possibility in this country of meeting the challenges while excluding labour. There were attempts in Africa after the liberation struggle by the political party to exclude organised workers from decision-making. Well it has not worked, 1t has not helped those countries to develop. Looking at our neighbours like Namibia or Zimbabwe or Zambia, I think we should not make that mistake in South Africa. I think it 1s the responsibility of the trade union movement not to allow that to be made as well. BOBBY GODSELL: I have to say I sit here with a little bit of a sense of deja vu.

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I have heard these debates before from previous politicians and I do not know if Mr Manuel is arming to be Minister of Manpower, but I think if he went

and looked at some old Hansards he would find somewhat familiar quotes. I do not say that to score a point, because I think one has got to try to deepen this debate a little bit. What is not 1n question ts the input of labour, and I would hope business, into policy making. What is also not in question is the critical role of democratic elected institutions, being the final determinant of state policy. I mean to be very concrete and the one thing that does disturb me 1n what Trevor has said, if I understood him correctly, is that he is concerned about some aspects of the Long-Term Working Group of the NEF because this could lay down and prescribe to a democratic government of the future. I would like to hear from him what particular things he is concerned about in the Long-Term Working Group. Let us take one very particular example of trade and tariff policies. My understanding 1s that the Long-Term Working Group has proposed some terms of reference for a study to be made of trade and tariffs. I think there 1s an acceptance, and quite a wide-ranging one, in the NEF that unless South Africa’s industries become export competitive they should die and they will die, and they will die because they cannot export and they will also die because they are actually robbing South African consumers of equivalent cheap goods that could be imported. The issue there 1s not whether to make the industries export competitive, world competitive industries, the question is how and again with the sense of déja vu , and when I say déja@ vu , it is important you know, history has a horrible way of repeating itself. In industry we have lived with a particular gentleman, Dr Laurence McCrystal who has been restructuring South African industries for them. He is the former chairman of the Board of Trade and Industries. He has come up with a number of plans, nice well worked out, dense, long and detailed plans to restructure the automobile industry for example. He is the particular author I think of Phase 6 of that industry’s restructuring program. I would argue that where governments do not engage vested interested in their society 1n an open transparent debate about their vested interest — let me put this slightly differently — 1 would think that unless labour and employers in the clothing and textile industry are intensively involved in designing the trade and tariff policy for their industry that policy is very unlikely to result in social harmony or indeed in a world competitive industry. So I think beyond the debate of who has absolute power, what we are looking for 1s a way, a structured and meaningful way in which the economic stakeholders can engage the political representatives tn a way that the entire nation will benefit. I think that means a body that has a substantial capacity

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to influence the way that policy is made, not a typical Anglo-Saxon advisory body. CHAIRMAN:

I want

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Laurence

McCrystal,

appropriate to this industry, clothing and textiles. He is also the author of the Structural Adjustment Programme for the clothing and textile industry. The plan was imposed by government in 1988 and took effect in 1989. It has, in our view, led to the loss of many thousands of jobs directly in consequence of that plan. Now the same Dr Mc Crystal, as a spokesman for COFESA, has announced that his organisation intends to campaign to dismantle the industrial council system. Here we have someone who was powerful in government — and he inflicted major damage on the most labour-intensive sector of South African manufacturing — who is now determined to break down the industnal council system which provides very minimal protection for social standards and wages in the workplace. QUESTION: Yes Comrade it looks like we have got a march to plan to somebody’s office! I want to know from the panel what their respective views are in respect of equity and participation in a democratic South Africa, as two very umportant worker rights and what are the kinds of protection in respect of those two rights that the panellists can suggest? John Eagles (SA CLOTHING AND TEXTILE WORKERS UNION)

JAYENDRA NAIDOO: It is difficult 1f one poses the question 1n an abstract way, but the COSATU prospective is best summed up 1n the idea of the reconstruction accord. We want to create vehicles, or institutions through which we can deliver to the needs of our people and reach agreement. For this we need to have a major programme that addresses the legacy of apartheid, through housing, education, a social security net, to be able to create employment and education and training. Those are the cnitical areas in the reconstruction program. So I think one has to look at the reconstruction programme and take that further. TREVOR MANUEL: I want to endorse what Jayendra says about equity and participation. Perhaps where I am coming from I take the view that the Struggle continues way beyond the elections. And you are not going to entrench anything by having very fanciful Bills of Rights or constitutions. It is the interaction of social forces, how you play the interaction out, how you support it with well thought through programs. The reconstruction programme 1s in fact clearly the alliance’s view of the best way to achieve this.

FACING

THE

WORKERS

QUESTION: I think the debate is not really getting clear. I hope that the answer will be given more clearly on the same issue and I think we are repeating the same questions because the answer is not clear. Comrade Trevor Manuel has accepted that the unions have played an important role and should continue to play a role in future, but that role has got some limits. The moment you put too much limits on the trade union movement you cannot put limits on which government will be in place tomorrow, so you have put a limit now which would affect people now and tomorrow. So can you tell us, what are the limits because it seems as tf you are worried about the limits, how far the unions should go. Jabu Gwala (SA CLOTHING AND TEXTILE WORKERS UNION)

JAYENDRA NAIDOO: There is correctly a limit to the extent to which we can participate in a meaningful way, there ts a limit to the extent to which we have the experience on issues. So government will play a role at a number of levels where the trade union movement perhaps will not play a role. But I think the point is correct that in the way in which policies are formulated on a whole host of things, must require genuine consultation with the trade union movement. And as Bobby Godsell was saying and I agree with this point, not consultation in the form of saying what ts your opinion and then we will decide something else, but with the view to reaching agreement, the way the NEF 1s structured at the moment. We have to determine 1n practice what are those limits. We are learning now what are also the limits and the extent to which we can make a meaningful contribution. TREVOR MANUEL: It 1s a matter of struggle and I do not believe that the trade union’s function changes after the elections. Struggle on the factory floor and its relation to broader struggle in society is something that will definitely continue. That is what you cannot place limits on. You are looking at a very dynamic process beyond this point. We are saying that if anything, something like the NEF needs to be transformed into a social accord of sorts, it needs to be given more teeth. There is no dispute on the fact, you are not looking at some advisory committee sitting somewhere with government deciding. One of the points I tried to make in the input is that the precise nature of the relationship between an NEF and democratic state 1s something that will go through many changes and it has to be thought through. You cannot sit in a forum like this and predetermine what it will be and hope that it will work in that kind of way. There is going to be a fair amount of experiment in determining this relationship. We need to engage the struggle in such a way that we can secure the

59

FACING

THE

WORKERS

to influence the way that policy is made, not a typical Anglo-Saxon advisory body. CHAIRMAN: I want to make a comment about Dr Laurence McCrystal, appropriate to this industry, clothing and textiles. He is also the author of the Structural Adjustment Programme for the clothing and textile industry. The plan was imposed by government in 1988 and took effect in 1989. It has, in our view, led to the loss of many thousands of jobs directly in consequence of that plan. Now the same Dr Mc Crystal, as a spokesman for COFESA, has announced that his organisation intends to campaign to dismantle the industrial council system. Here we have someone who was powerful in government — and he inflicted major damage on the most labour-intensive sector of South African manufacturing — who is now determined to break down the industnal council system which provides very minimal protection for social standards and wages in the workplace. QUESTION: Yes Comrade it looks like we have got a march to plan to somebody’s office! I want to know from the panel what their respective views are in respect of equity and participation in a democratic South Africa, as two very unportant worker rights and what are the kinds of protection in respect of those two rights that the panellists can suggest? John Eagles (SA CLOTHING AND TEXTILE WORKERS UNION)

JAYENDRA NAIDOO: It 1s difficult if one poses the question in an abstract way, but the COSATU prospective is best summed up in the 1dea of the reconstruction accord. We want to create vehicles, or institutions through which we can deliver to the needs of our people and reach agreement. For this we need to have a major programme that addresses the legacy of apartheid, through housing, education, a social security net, to be able to create employment and education and training. Those are the critical areas in the reconstruction program. So I think one has to look at the reconstruction programme and take that further. TREVOR MANUEL: I want to endorse what Jayendra says about equity and participation. Perhaps where I am coming from I take the view that the struggle continues way beyond the elections. And you are not going to entrench anything by having very fanciful Bills of Rights or constitutions. It is the interaction of social forces, how you play the interaction out, how you support it with well thought through programs. The reconstruction programme Is in fact clearly the alliances view of the best way to achieve this.

FACING

THE

WORKERS

QUESTION: | think the debate is not really getting clear. I hope that the answer will be given more clearly on the same issue and I think we are repeating the same questions because the answer ts not clear. Comrade Trevor Manuel has accepted that the unions have played an important role and should continue to play a role in future, but that role has got some limits. The moment you put too much limits on the trade union movement you cannot put limits on which government will be in place tomorrow, so you have put a limit now which would affect people now and tomorrow. So can you tell us, what are the limits because it seems as if you are worried about the limits, how far the unions should go. Jabu Gwala (SA CLOTHING AND TEXTILE WORKERS UNION)

JAYENDRA NAIDOoo: There is correctly a limit to the extent to which we can participate in a meaningful way, there is a limit to the extent to which we have the experience on issues. So government will play a role at a number of levels where the trade union movement perhaps will not play a role. But I think the point 1s correct that in the way in which policies are formulated on a whole host of things, must require genuine consultation with the trade union movement. And as Bobby Godsell was saying and I agree with this point, not consultation 1n the form of saying what 1s your opinion and then we will decide something else, but with the view to reaching agreement, the way the NEF is structured at the moment. We have to determine in practice what are those limits. We are learning now what are also the limits and the extent to which we can make a meaningful contribution. TREVOR MANUEL: It is a matter of struggle and J do not believe that the trade union’s function changes after the elections. Struggle on the factory floor and its relation to broader struggle in society is something that will definitely continue. That is what you cannot place limits on. You are looking at a very dynamic process beyond this point. We are saying that if anything, something like the NEF needs to be transformed into a social accord of sorts, it needs to be given more teeth. There 1s no dispute on the fact, you are not looking at some advisory committee sitting somewhere with government deciding. One of the points I tried to make in the input 1s that the precise nature of the relationship between an NEF and democratic state is something that will go through many changes and it has to be thought through. You cannot sit in a forum like this and predetermine what it will be and hope that it will work in that kind of way. There is going to be a fair amount of experiment in determining this relationship. We need to engage the struggle in such a way that we can secure the

S9

FACING

THE

WORKERS

maximum advantage for the majority of South Africans. And that must be Our perspective on the Forum, on the role of trade unions and the interaction between trade unions and employers on all manner of things. A future government must be more attuned and more concerned about the issues of the majority of South Africans, unlike the present government. QUESTION: The comment was made by Comrade Trevor Manuel that unless we develop our own plan for the economy and a growth pattern which can create jobs and deliver the goods to our people, we can end up in a Situation where a programme is prescribed to us by the IMF and the World Bank. We have seen what these programmes have done in Africa. They have not in any sense developed those economies, or delivered directly to the economic needs of those people in those countries. In fact they have made the rich, richer and the poor, poorer. What is currently happening on that level as far as the ANC, COSATU and business is concerned, and what lessons can we learn from the umplementation of other programmes on the continent? Randall Howard (TRANSPORT & GENERAL WORKERS UNION)

JAYENDRA NAIDOO: The way in which COSATU ought to approach this issue is that the various things that have to be done, will either be done on the basis of resources generated in the country or on the basis of borrowing. There 1s a limit to what you can borrow. The Zambians have found it out, the Zimbabweans have found it out. It 1s like anybody, if every month you are always borrowing R200, at some stage somebody is going to come, a bank is going to come and say if you cannot pay your debt we are going to take your furniture away and that is what the IMF and World Bank are about. They lend you money for various functions, but 1f you cannot pay them back you are going to have a problem. The solution lies in developing policies that are mindful of the limits to which one can borrow and that at the same time are able to attract investment to things like housing and electrification. Whether it is that our provident fund monies, and pension fund monies need to be redirected for those purposes, or whether it is another alternative, but

that is the way in which we need to look at how to deliver the goods to the people. TREVOR MANUEL: To elaborate on the point that Jayendra made, the reality 1s that the World Bank and the IMF are there. And you can pretend that they are not there, but they are there and their presence 1s felt even if you want to lend on capital markets elsewhere.

60

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THE

WORKERS

And so the issue 1s how you manage the relationship between this country and the World Bank and the IMF. It 1s not about trying to avoid them. It 1s trying to avoid getting into a lending programme with the World Bank and the IMF that will result in structural adjustment tn this country. Those programmes are imposed from above without considering the issues of equity and rights. And so if we are not mindful of those pitfalls we end up within them. What we need to understand is what those inefficiencies are within this economy and we have to correct them. We have to own the changes. We have to bring about those changes 1n a way that maximally advantages the majority of South Africans, and that sets us apart from the approach of the World Bank and the IMF. But between now and then tt would be in the interest of this country to understand those institutions, their workings, and their dynamics. Get people in there, build up a rotation system to ensure that you know what the vibe is over there. And utilise that information to the best advantage of this country. If we do not, given the nature of the expectations and the ease with which we can borrow money as a young democracy, this country will end up with a structural adjustment program. We have seen in Zimbabwe important gains made in the first ten years in respect of education and health rolled back effectively by a structural adjustment programme. The pitfalls are there for South Africa. We need to understand what they are and manage a programme against those pitfalls in the overall interest of our country.

61

APPENDIX

NATIONAL

1

ECONOMIC

FOUNDING

FORUM

DOCUMENTS

National Economic Forum Growth, Equity and Participation The road to the new South Africa

The participants in the National Economic Forum (NEF) acknowledge the importance of sustainable economic growth, and the requirement to address social and development needs, to the success of the wider process of political transformation in South Africa. It is acknowledged that improved economic performance cannot be separated from the matter of economic structure and external economic relationships. Particularly important in this regard are the distortions caused by large scale unemployment and severe inequality in incomes, skills, economic power and ownership in the country. In recognition of the above challenges facing South Africa, we believe that major economic stakeholders need to develop co-operative mechanisms for addressing these challenges. These include: ) the generation of high and sustainable economic growth; O social and development needs; Y improving the productive utilisation of all South Africa’s resources — human and capital; O the linkage between internal economic developments and changes 1n the global economy, including changes in the southern African region; distortions, imbalances and inequality in the economy; 4) improving the participation of all major stakeholders in economic decision-making; and 4 stability. It is for this reason that we now establish a National Economic Forum consisting principally of organised labour, organised business and the governing authority of the day. The NEF 1s intended to operate as a consensus geared co-operative body to deal with economic and related socio-economic issues and the economic challenges facing the country.

APPENDIX

1:

NATIONAL

NEF

FOUNDING

ECONOMIC

DOCUMENTS

FORUM

I. Introduction In recognition of the economic challenges facing South Africa, we believe that major economic stakeholders need to develop co-operative mechanisms for addressing South Africa’s economic challenges. Organised labour, organised business and the governing authority have a central role in developing strategies geared towards the generation of sustained economic growth, the addressing of distortions in the economy, stability and the addressing of social needs. These areas need to be addressed as a matter of urgency if the political transition 1s to succeed. It is for this reason that we acknowledge the need to establish a National Economic Forum. We are also mindful of the clause in the Laboria Minute of 14 September 1990, which reads: ‘all of the parties record their willingness to discuss in an appropriate forum, the impact of labour relations issues on the economy’. Taken together with other developments, it is now necessary to expand the debate to ensure that broad economic and social issues are adequately addressed. 2. Aims and objectives of the NEF 2.1 Co-operative Body of Major Economic Stakeholders The NEF should be a consensus geared co-operative body to deal with economic and related socio-economic issues. The NEF should aim to provide a mechanism through which economic stakeholders can address the economic challenges facing the country. It would in the first instance be a body operative for the transitional period. The NEF will seek to support the transition to democracy. 2.2 Economic Structure, Socio-economic Needs and a

Framework

The NEF should focus on both economic structure and distortions therein,

as well as socio-economic needs. The NEF should achieve a balance between

a focus on short-term challenges, including those of the transition, and the formulation of a long-term economic framework. The NEF should attempt to reach short-term decisions which are sustainable in the medium-term to long-term.

2.3 Economic Restructuring Any major economic restructuring undertaken, particularly during the period of transition, should have the support of all economic stakeholders. The NEF must therefore deliberate on any major proposed restructuring. Each party nonetheless retains its freedom of action in its own sphere of responsibilities.

63

APPENDIX

3. 3.1

|:

NEF

FOUNDING

DOCUMENTS

Scope Any party to the NEF ts entitled to table any issue for discussion. The NEF would then establish procedures to decide which issues should receive the attention of the Forum, and which issues would be better dealt with elsewhere.

3.2 The NEF will seek to work co-operatively with the legislative and executive framework of the day. 3.3 The NEF should aim to reach practical and effective consensus on issues tabled through reason and debate. Provision should also be made to record dissenting views. It must be accepted that consensus will not be possible on all issues. In such event, there shall be no resort to arbitration. 3.4 Relationship to Other Bodies It is not the intention of the NEF to replace other negotiating, advisory or consultative forums which exist or are being conceptualised at national, regional, industrial or sectoral level. There would however be a need for co-ordination in order to develop acoherent integrated approach to economic growth and development. 4. 4.1

Participants The principal participants in the NEF should be representatives of organised business, organised labour and the goveming authority of the day. The principle of parity of the sizes of delegations should be applied. Mechanisms will need to be found to relate to key political and economic players. 4.2 The NEF must be fully representative of organised labour, organised business and the governing authority. Criteria will need to be formulated to determine participation in the NEF and the level of that participation. Any party who believes that it meets the criteria set out will be invited to seek membership. 4.3 In terms of participation, a distinction needs to be drawn between a process committee, plenary sessions and working groups. Provision must be made for specialist and technical input.

5. Structure 5.1 The NEF will meet in plenary from time to time to receive report-backs and to ensure the transparency of the process. 5.2 The Process Committee will define the mandates of working groups and receive progress reports from working groups. 5.3 Working groups will carry out the work programme of the NEF. 5.4 The plenary sessions should be chaired by an appointed chairperson/s, acceptable to all parties. Chairpersons of the Process Committee and working groups should be drawn from the principal parties on the basis of the need for inclusion and continulty.

O4

APPENDIX

1:

NEF

FOUNDING

DOCUMENTS

5.5 A permanent secretariat — overseen by and accountable to a process committee — will need to be established and should combine participants from the principal parties. Relationship to transitional arrangements We enter this process mindful of the fact that unless rapid progress 1s made in the political arena, the NEF process could rapidly face insurmountable obstacles and fail. 6.2 We accept that some co-ordination between political and economic change will be necessary. Process, time frames and mechanisms to give practical effect to consensus areas 7.1 Rules of conduct will ensure that the NEF can operate in a spint which will allow it to achieve its aims.

7.2 A statement of intent for the NEF prefaces this document. 7.3

Once

established,

the NEF

should

aim

to reach

practical

and

effective

consensus on issues tabled, where this is possible. 7.4 The mandating needs of all participating parties need to be respected, without allowing mandating procedures to unduly retard the pace of work of the NEF. 7.5 Unless media statements are jointly agreed, any party/individual who speaks to the press should do so on their own behalf, and not on behalf of the NEF. 29 October 1992

65

APPENDIX

|:

NEF

FOUNDING

DOCUMENTS

NATIONAL ECONOMIC FORUM STRUCTURES AND MODUS OPERANDI I. Overall structure The NEF will have a plenary, a process committee, working groups and a secretariat. 2. Plenary 2.1 Plenary role The NEF will meet in plenary from time to time to receive progress reports from working groups and to ensure the transparency of the process. The Process Committee will decide on the dates for plenary sessions. 2.2 Plenary representation 2.2.1 Principal participants * Business, labour and government delegations should be entitled to equal numbers of delegates. * Delegations should be comprised of senior representatives from each party as well as operational people. * Plenaries should not be too large. 2.2.2 Observers

* The participation of observers in plenaries still needs to be considered. 2.3 In order to: rapidly progress the activity of the NEF 4 allow for the fluidity of the political transition process ) make adjustments to procedures and structures 1n the light of experience, there will be a review of progress after six months. The Process Committee will meet and set up the Working Groups and determine their terms of reference. In due course, the Process Committee

will convene a plenary in order to

report back and agree on further progress.

3. Process committee 3.1 Role The Process group will be responsible for co-ordinating and driving the work of the NEF. It will define the mandates of working groups and receive progress reports from working groups. 3.2 Composition The Process Committee will consist of up to three persons each from business, labour and government. In addition, the business, labour and government co-ordinators from each of

66

APPENDIX

|:

NEF

FOUNDING

DOCUMENTS

the two working groups will sit on the process committee.

The maximum size of the process committee will therefore be fifteen. Working groups Two working groups There will be two working groups in this first phase of the NEF —- a Short-Term Working Group and a Long-Term Working Group. 4.2 Modus Operandi of Working Groups 4.2.1 Terms of reference for working groups will be determined by the process committee. 4.2.2 Based on these terms of reference, working groups will determine their research and working agendas. 4.2.3 Working groups will meet as often as is necessary to meet mandates

and terms of reference. 4.2.4 The deliberation of the NEF working groups should be open, transparent, focus on concrete results and not be burdened with elaborate internal bureaucracies. 4.2.5 Working groups will generally meet in their own plenary, although it is acknowledged that sub-group meetings will be necessary at times. 4.2.6 It is acknowledged that a close linkage exists between short-term and longer-term issues, requiring the Process Committee to co-ordinate the deliberations of the two working groups. 4.2.7 Working groups should, where relevant, liaise with and seek to facilitate and assist other forums that have been formed. This would include regional forums, subject to mutual agreement. However, it is not the intention to replace such forums. 4.3 Composition of Working Groups Structures should be kept as simple as possible, with the process committee and secretariat handling administration and co-ordination. Accordingly, working groups shall comprise the following: 4.3.1 Principal participants Business, labour and government shall be entitled to an equal number of representatives each, of manageable size. Each party should ensure that a core representation 1s maintained. 4.3.2 Over and above 4.3.1 each party shall be entitled to include a limited number of resource persons depending on the issues and their needs. 4.4 Short-Term Working Group The Short-Term Working Group will focus on issues requiring immediate attention and will attempt to reach decisions on concrete actions as soon as possible.

6/

APPENDIX

1:

NEF

FOUNDING

DOCUMENTS

4.5 Long-Term Working Group 4.5.1 The Long-Term Working Group will deal with policy and framework in order to: *

identify policy positions

* co-ordinate available information * identify common perspectives * identify areas of substantial difference. 4.5.2 The first report from this group should on the basis of 4.5.1 provide a policy map with potential areas of common perspective and problem areas. This will facilitate more detailed discussion. 5. Secretariat The Process Committee will consider the issue of secretariat to the NEF —a role currently fulfilled by the Consultative Business Movement in an interim Capacity. 6. Other participants Noting that there are organisations who do not fall within the categories of business, labour or government, and who have applied to participate in the NEF, the following 1s proposed: 1 As a broad guideline such organisations should be admitted to the NEF if they represent a constituency directly and continuously affected by macro-economic policy, are representative and a national body. -! The Process Committee will draw up guidelines for assessing applications. 7.

such

Funding The Process Committee will consider the matter of funding required for the NEF.

29 October 1992

68

APPENDIX

SHORT-TERM

5

WORKING

2

GROUP

REPORT

Report of the National Economic Forum Short-Term Working Group to the July 1993 National Economic Forum Plenary

Introduction The Short-Term Working Group (STWG) 1s one of the three standing structures

of the National Economic Forum (NEF). It was set up to focus on Issues requiring immediate attention and to attempt to reach decisions on concrete actions in the shortest possible time. The parties to the NEF agreed in October 1992, that the NEF should achieve a balance between a focus on short-term challenges, including those during the transition and the formulation of a long-term economic framework. The Forum should attempt to reach short-term decisions and solutions which are sustainable in the medium- to long-term. In practice, organised labour, business and government have spent a large part of their time and resources in the NEF on issues requiring immediate attention, and this report sets out the progress of the STWG.

Oooovododdotw

Issues addressed At the first STWG meeting on 23 November 1992 the following issues were identified as the work programme for the STWG: 4 Job creation and retrenchments. Trade and tariff policy. Public sector restructuring. Training and human resource development. Industrial restructuring. VAT and taxation. Food prices and drought. Small and medium enterprises. Retirement and provident funds. ) Labour market institutions. The STWG agreed to focus on a specific number of immediate issues, these being job creation and retrenchments, trade and tariff policy, public sector restructuring and small and medium enterprises. Substantial agreements have been made in

the area of job creation and retrenchments, and some agreements have been made in the areas of trade and tariff policy, public sector restructuring and small and

69

APPENDIX

2:

SHORT-TERM

WORKING

GROUP

REPORT

medium enterprises as shown 1n sections one, two and three below.

Method of work In addressing the issues outlined above the following meetings were held: eight STWG

meetings, three negotiating committee

meetings,

a series of bilateral

meetings between labour and business and between labour and government and a number of convenor meetings. Over and above the formal NEF meetings, the STWG has attempted to work in as open, informed and transparent a manner as possible. This has been done in a number of ways: “I Receiving

written

submissions

from

institutions,

NGOs,

forums

and

members of the general public. * Over seventy submissions were received on the issue of job creation. Holding workshops and establishing task force investigations with stakeholders outside the NEF. * The Unemployment Insurance Fund Board 1s involved with the NEF in a joint investigation into possible adaptations of the UIF. UL) Expert presentations from individuals and organisations outside the NEF to the STWG on a variety of topics. * Sixteen presentations were made to the STWG on the area of job creation. ) The establishment of task groups. * Task groups were established on the causes and extent of retrenchments, public sector restructuring and small business development. Throughout the STWG’'s work, regular mandates were sought and received from the participants constituencies. In developing a more focused approach to the agenda outlined above, business, government and labour put forward proposals on job creation 1n order to develop a common set of STWG proposals that begin to address the crisis of unemployment in South Africa. The next section outlines the wide range of areas of agreement that have been reached by the STWG over the last three months and cover: 4 Substantive agreements. -! Principled agreements. 4 Facilitative agreements. These areas of agreement focus specifically on job creation and retrenchments, trade and tariff policy, public sector restructuring and small and medium enterprises. In addressing the areas, agreement was reached on each of the following issues as set out in sections one, two and three: J The co-ordination of bargaining. “Job security and work security funds.

70

odo 0 Ooooooodod0d0dod

APPENDIX

2:

SHORT-TERM

WORKING

GROUP

REPORT

Unemployment Insurance Fund. Targeted assistance programmes. Cost-cutting measures in the public sector. Labour-based construction. Special job creation and small business development programmes. Public works programme. Customs and Excise. State tenders. Small business development. National development corps. ABACOR. Public sector restructuring. Export processing zones.

SHORT-TERM

WORKING

GROUP

AGREEMENTS

I. Agreement on the co-ordination of bargaining 1.1 The economic and social challenges facing South Africa require a new framework of relationships between organised labour and organised business. This new framework needs to adequately address the agreed objectives of economic growth, equity and participation. Areas of interaction which will be affected are the issues over which, and the levels at which, bargaining

between trade unions and employers take place. 1.2 Bargaining in South Africa currently occurs at a number of different levels. The issues over which the parties bargain range from industrial relations to economic and industrial policy. The following levels of bargaining are the primary ones which are utilised: QO macro, economy wide level (NEF, NMC)

QO industry level (industrial councils, national bargaining outside the council system, industry restructuring task forces, etc.). Q plant level. From their experience in a number of industries the parties at the NEF have also recognised the value of industry level bargaining to address the economic challenges facing particular industries, and to develop a consensual social policy framework for industries. 1.3 Centralised bargaining is one of the tiers of our collective bargaining system and as a matter of policy the parties agree not to undermine this arrangement. The parties to the NEF further agree that they will not as a matter of policy oppose the establishment of new centralised bargaining arrangements. 1.4 The parties record their preference for a voluntarist approach to establishing

71

APPENDIX

2:

SHORT-TERM

WORKING

GROUP

REPORT

and shaping bargaining institutions. Voluntarism remains important to the extent that it is able to foster workable and equitable bargaining arrangements. Voluntarism in this context does not preclude centrally bargained agreements being extended to non-parties. 1.5 Parties see the value of encouraging a rigorous discussion of appropriate bargaining levels in line with the above, and will seek as a matter of priority to facilitate meetings between business and labour in different industries to workshop these concepts. 2. Agreement on job security 2.1 Job security and work security funds 2.1.1 The objectives of the NEF are to achieve economic growth, equity and participation. To achieve this it is agreed that job creation is cnitical. This issue 1s being addressed directly and indirectly in both the LTWG and STWG. It 1s also in the interests of a growing and stable economy that serious attempts should be made to avoid retrenchments. 2.1.2 However, action needs to be taken now in two critical areas. These are current retrenchments and the effects of restructuring that our economy will have to go through. 2.1.3 The parties to the NEF record that to ensure transparent and protective measures for workers in relation to retrenchment the following principles have been agreed: * Full disclosure of all relevant information by employers in respect of the proposal to retrench, alternatives to retrenchment and selection criteria for proposed retrenchments; *

The parties jointly considering alternatives to retrenchments and ways to minimise job losses;

* Fair notice period to retrenched workers; *

Fair severance packages;

* It 1s in the interests of a growing and stable economy, to protect permanent jobs as far as possible. The above constitute basic and minimum principles and do not: QO} Undermine existing or future more favourable agreements that improve upon these principles; O Confer nor obstruct the parties right to challenge decisions to retrench. 2.1.4 To address the social consequence of retrenchment and restructuring, the industries so affected should consider the establishment of Work Secunity Funds with the objectives of: * Providing funding for workers during training and retraining periods:

72

APPENDIX

2:

SHORT-TERM

WORKING

GROUP

REPORT

*

2.2

setting-up a data base of retrenched workers in the industry concerned, with skill levels and experience recorded, and to collect information on vacancies, in order to match retrenched workers with vacancies. The restructuring of the Unemployment Insurance Fund 2.2.1 The parties agree that it 1s desirable to restructure the UIF in order to:

* Provide benefits to workers who are temporarily laid off or put on extended short time. This will ensure an effective alternative to retrenchment, in instances where cyclical fluctuations lead to shortterm job redundancies.

* Assist more actively with industry retraining programmes, through helping to finance eamings of workers on industry-approved training over and above the provision in the Work Security Funds. * Ensure compulsory state funding of the UIF, in addition to the current compulsory contributions from employees and employers. 2.2.2 To give practical effect to the above goals the parties agree: * To set up a committee of three persons from the NEF and three persons from the UIF Board to investigate, on an urgent basis, the implications of implementing the above. The committee will have access, and make reference to NEF constituency studies on this matter. * To forward the findings of the investigation to the parties to the NEF. * To enter into negotiations with the intention of reaching agreement. 2.3 Targeted assistance programmes 2.3.1 Targeted assistance programmes should be developed for declining industnies and communities so affected, to manage the down-scaling of specific enterprises or mines. This would apply in instances where an entire community is dependent on a single enterprise or mine, or where a large employer of labour or a labour-intensive sector 1s involved and where accordingly the economic impact of job losses would be damaging to an entire region or economic sector. During the down-scaling period, alternative economic activities could be explored, and retraining of workers could be effected. 2.3.2 The details of such targeted assistance programmes would need to be carefully formulated and applied according to specific criteria, and accordingly it is agreed that an NEF task group be established to work out the proposed details and criteria of such a programme. The parties will thereafter enter into negotiations with the purpose of reaching agreement. 2.4 Cost-cutting measures in the public sector and their unpact on Job security The NEF agrees on an urgent basis to find ways of addressing job

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security in the public sector in the context of restructuring. 3. Agreements on Job creation 3.1 Labour-based construction 3.1.1 The NEF agrees with the principle of labour-based work methods for civil engineering projects undertaken with public funds, along the lines spelt out in the finalised ‘Framework Agreement for Public Works using Labour-Intensive Construction Systems’ (signed on 22 June 1993) negotiated between organised labour and the civil engineering industry. 3.1.2 It is agreed to give priority to such projects 1n line with the critena of the NEF’s Job-Creation Programme (see 3.2). 3.1.3 To ensure the rapid implementation of the agreed labour-based work methods, it 1s agreed that government on an urgent basis facilitate meetings between the trade unions and civil engineering industry and the following government departments, and that reports on the outcome of such meetings be tabled at the NEF:

* The Department of Manpower, on ways of preventing the undermining of labour standards. * The Department of Transport, on changes required to contract documentation and specifications. * The Department of State Expenditure, on changes to tender regulations required.

* The Department of Water Affairs. * The Department of Public Works. 3.2 Funding and co-ordination of Special Job-Creation and Small Business Development projects It is agreed that a national Job-Creation Programme and Small Business Development Programme be set up, under the direction of the NEF. 3.2.1 Purpose of the Programmes The purpose of the Job-Creation Programme is to allocate funds to viable job-creating projects in the provision and maintenance of urban and rural infrastructure such as roads, housing, electrification, sewerage, water supply and schools, and the enhancing of skills such as training programmes for unemployed persons in skills required in the formal economy, and literacy training. The purpose of the Small Business Development Programme 1s to develop small business enterprises 1n particular geographic areas, and to assist NGOs involved in small business development. 3.2.2 Sources of Funds for the Programmes The Job-Creation Programme's sources of funds are:

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* R45 million allocated in the 1993/94 budget to the NEF for the stated purpose. * An amount of R4 million from the funds allocated for the training of unemployed persons, will be earmarked by the Department of Manpower for training of persons who will be utilised on the Job-Creation Programme. Such training will be conducted by the Regional Training Centres. *

In addition to the above, efforts will also be made to finance the

training out of funds already allocated to the Regional Training Centres.

The Small Business Development Programme's sources of funds are: * R20 million for the development of small business enterprises in specific geographic areas. * R10 million to assist NGOs involved in small business development. 3.2.3 Management of the Programmes * The NEF will not in itself undertake any of the approved projects — its role is to consider the viability and usefulness of different job-creation and small business development projects, and to select projects and allocate funds for such agreed projects. *

Accounting Officer: In the instance where monies are made available through the budget vote of a specific government department, the accounting officer shall be the Director General of that department. In the instance of monies being obtained from non-government sources, the NEF shall appoint the accounting officer.

* Project appraisal: A technical committee of six people for each of these programmes will be established by the NEF with the task of appraising proposed projects and monitoring implementation, with the DBSA acting as a professional secretariat. 3.2.4 Report on Job-Creation Programmes The DBSA should prepare a report on an urgent basis, setting out all planned and proposed short-term public works and training programmes of the different issue-based forums, government departments and regional forums in South Africa. Such report should contain the following details in respect of each project: * The sponsoring forum or group. * A short description of the project. * The number of jobs envisaged, and the period of such employment. * The direct costs of the project, to be borne by the Programme, and details of supplementary or matching funds available. * The usefulness of the goods or services emanating from the project

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(asset creation).

The envisaged management of the project.

Audit and controls proposed, and required, for a project of the type envisaged. Sustainability of the project, beyond the funding period. The training component in the project, and the value of the skills acquired. The envisaged labour standards in the project, and its comparison with general norms in industry. The nature of community involvement.

The regional impact of the job-creation project, in relation to undeveloped areas and areas of high unemployment and social tension. Its impact on economic growth (multiplier effect). 3.2.5 Small Business Development Programme The NEF Technical Committee shall on an urgent basis develop a set of criteria to be applied in assessing applications for assistance under the programme. The professional secretariat shall provide a report setting out the applications for assistance for each of the two components of this programme together with details in respect of compliance with such criteria. *

3.3 An investigation into a medium-term public works programme 3.3.1 A more ambitious programme of public works, which addresses on a wide scale the provision and maintenance of infrastructure to communities historically deprived of these, is needed. The scale of such a

programme, the funding required for it, and the need to maximise its impact on social service delivery and job creation, requires that a rigorous pre-investment investigation 1s undertaken. 3.3.2 The NEF shall set up a committee of seven persons nominated by government, business and labour to finalise the following matters: * Terms of reference for a study. Structures necessary for initiating and managing such an investigation.

Extent of funding required for such an investigation. The committee shall have reference to work already done on this issue by a number of organisations and shall co-ordinate such pre-invest-

K

ment investigation.

3.3.3 It is agreed that the funds budgeted on the vote of the Department of Finance shall be made available for the agreed pre-investment work,

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and this work should be undertaken as a matter of urgency. 3.4 The short -term restructuring of the customs and excise function in South Africa 3.4.1 The parties note the deficiencies in South Afnica’s customs and excise infrastructure, which has led to a large quantity of manufactured articles being fraudulently brought into the country without being subject to the applicable tariffs. This has resulted in a number of jobs being lost in local industries. These leakages have been caused in part by staffing and infrastructural deficiencies and fraudulent behaviour. The parties thus affirm their commitment to prevent fraud through reforming customs and excise arrangements. These reforms should be made with due consideration to South Afmica’s international trade obligations and the cost effectiveness of new systems. 3.4.2 The following restructuring 1s accordingly agreed: ote Improving the technical resources at ports of entry. ste

The setting-up of manned border posts with the BLNS countries and having dedicated places of entry for goods. Speeding up computerisation of all ports of entry and providing information on a timely basis. Establishing the norm of a minimum of 5 % of all consignments being checked and specifically applying this target to each employment sensitive sector. Increasing the number of inspectorate posts. Increasing the quantum and flexibility of remuneration packages for technically skilled customs staff. Rotating customs staff between different posts. Utilising private sector technical assistance for customs related activities. Publicising the identities of companies guilty of fraudulent customs and clearance transactions. Improving and publicising the award system for information on customs fraud. Including labour-intensive sectors of manufacturing in the invoice analysis audit. Providing an effective control over exports of goods subject to incentives.

3.4.3 It is agreed to develop proposals to solve the problem of the irregular importation through the TBVC and BLNS states, of a range of items including second-hand clothes, tyres and engine blocks.

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3.5 The public tender system 3.5.1 The NEF endorses the principle that state procurement policy, as far as 1s possible, and within reasonable financial boundaries, ought to promote the purchase by the public sector of locally manufactured articles with a high local content, in order to maximise local job creation. 3.5.2 To give effect to this commitment, the following steps are agreed: * The Minister of State Expenditure will restructure the State Tender Board, on the advice of the NEF, in the following way: * That representation be structured thus: e 25 % state representatives e 25 % technical experts (drawn from the public and private sector) e 25 % business representatives e 25 % labour representatives. *

In terms of the above structure of representation, such restructuring will take place as vacancies emerge on the State Tender Board.

* The level of price preference for locally manufactured goods be reviewed, with a view to increasing the purchasing of locally manufactured articles in the labour-intensive sector of the economy.

* To consider how public procurement can be utilised to assist industries undergoing a restructuring process agreed at tripartite level, towards the goal of greater international competitiveness. *

A task group of the NEF be set up, with officials from the Department of Finance, Trade and Industry, the unions and business, to review the procurement policy taking the above two points into consideration, as well as to examine the wider issue of a possible future system of state procurement. 3.6 Small business development

3.6.1 It is agreed that the NEF will formulate a national policy framework for small and medium business development. 3.6.2 It is agreed that where public funds are utilised by small business development organisations, such organisations ought to have representatives of all major economic stakeholders in their decision making body. Accordingly, the NEF will interact with existing institutions in order to implement this principle and will finalise this matter by the end of August 1993. 3.7 A National Development Corps 3.7.1 The NEF recommends that a National Development Corps (NDC) be established which would provide a voluntary programme for young people with the following objectives: * Training

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* Community service * Development work. 3.7.2 The NEF shall initiate formal contact with the National Peace Secretariat and other initiatives and groupings to develop an integrated approach and programme that is in line with 3.7.1 above. Other agreements In addition to the agreements listed above, the STWG has also agreed the following: 4.]

The privatisation of ABACOR The NEF persuaded the government not to proceed with the privatisation of ABACOR.

4.2 Export processing zones

It was agreed, prior to finalisation of a policy on Export Processing Zones, to place this matter on the agenda of the NEF. 4.3 Public sector restructuring It was agreed that a committee of the NEF would be established to consider the parties proposals on public sector restructuring.

Ongoing work programme The issues listed below will form the ongoing work of the STWG. They are: QO All the areas of agreement listed previously where task forces and technical investigations have been established and ongoing work has been identified.

OO

Ooo0oddo0ddaooO

The outstanding aspects of the original work programme will be reviewed. These are: Training and human resource development. Industrial restructuring. Food prices and drought. Retirement and provident funds. Labour market institutions. VAT and taxation.

Trade and tanff policy. The Regional Industnal Development Programme and its relationship to job creation. Other issues raised by parties to the NEF.

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Conclusion In conclusion, we believe that the agreements reached between organised labour, organised business and government in the ST WG constitute a major advance in addressing critical and immediate challenges and the needs of South Africa’s people, and through both substantive agreement and institutional reform, it helps the NEF established.

to achieve the goals for which it was

7. Participants in the NEF STWG Business: Labour: D Ncube (convenor)

E Patel (convenor)

N Barmardt M Leaf

M Buthelez1 M Golding

J Mabuza R Savage N Segal H van der Merwe B van Rensburg W Vance F Viruly

D Graham M Gxanyana S Manie J Naidoo T Oliphant D van der Merwe A Venter

80

Government: J Kastner (convenor) D Haasbroek J Jacobs D Krogh S Naude P Pienaar F van Eeden E van Rensburg I van Zyl

APPENDIX

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Report of the National Economic Forum Long-Term Working Group to the 5 July 1993 National Economic Forum Plenary I. Introduction In keeping with the statement of intent of the National Economic Forum (NEF), the Long-Term Working Group (LTWG) recognises the importance of sustainable economic growth, and the requirement to address social and development needs, to the success of the wider process of political transformation in South Afnica. The LTWG believes that improved economic performance cannot be separated from the matter of economic structure and external economic relationships. Particularly important in this regard are the distortions caused by large scale unemployment and severe inequality in incomes, skills, economic power and ownership in the country. In recognition of the above challenges facing South Affica, we believe that major economic stakeholders need to develop co-operative mechanisms for addressing these challenges. These include: QO) the generation of high and sustainable economic growth; O social and developmental needs; Y improving the productive utilisation of all South Affica’s resources — human and capital; ) the linkage between internal economic developments and changes in the global economy, including changes in the southern African region; Q) distortions, imbalances and inequality in the economy Q improving the participation of all major stakeholders in economic decision-making; and UW stability. The NEF LTWG therefore has as its focus longer-term macro-economic and development policy issues. In its first phase, the LTWG concerned itself with a preliminary assessment of business, labour and government views, 1n the process of developing a jointly agreed work programme. This included an initial consideration of the government’s Normative Economic Model (NEM) as one important contribution to debate. The first phase culminated in the formulation of an initial work programme for the LTWG - the current focus of attention. This report details the work programme, outlining agreements already reached, as well as work-in-progress.

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2. LITWG work programme 2.1 Background On 26 Apmil 1993, the LTWG agreed on an initial work programme which would focus on four critical areas: OY Investment Gap “ Finance Gap O Foreign Trade Gap 4) Labour markets, employment creation and productivity. In each of the four areas, the intention 1s to address the current situation and identify the gap between this situation and what might be needed for the achievement of sustained growth, employment creation and socio-economic upliftment. The scope of investigation has been initially limited to manageable proportions, in order to facilitate early delivery. The work programme of the LTWG will nonetheless evolve over time with other critical issues being tabled for discussion and investigation. It is also accepted that the issues, whilst examined separately, are interdependent and the broader macro-economic ambit is considered in the course of investigation. 2.2 Investment gap LTWG investigation of investment issues is underpinned by recognition of the need for higher levels of investment and the necessity to focus on both public sector and private sector investment, separately and in relation to each other in this regard. It 1s acknowledged that there 1s a need for a correct balance to be achieved between private and public sector investment. 2.2.1 Public sector investment in relation to private sector investment Initial LT WG investigation 1s focusing on the level and nature of public sector investment that would be compatible with increased private sector investment. Specifically: * The impact of general government expenditure, particularly capital expenditure, on private sector investment. * The role of public and quasi-public sector institutions in facilitating private sector investment. The LTWG will be meeting with the IDC, SBDC and DBSA to deal specifically with their effectiveness in facilitating/promoting private sector investment, and their evaluation procedures 1n this regard. It 1s intended that the scope of investigation in this area will also be extended to a consideration of corporations operating in the TBVC states and self-governing territories. 2.2.2 Determinants of private sector investment The range of factors determining private sector investment 1s broad and these matters are being addressed in the LTWG. At present, work 1s being done on developing a statement on one key factor — the impact of political circumstances on investor confidence and private sector

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investment decisions.

2.3 Finance Gap 2.3.1 Mobilisation and allocation of savings Work is progressing into an examination of the role of financial institutions and instruments 1n both the mobilisation and allocation of savings. The examination includes a focus on existing institutions and instruments as well as consideration of the establishment of alternatives. Specific areas of focus include: * The generation of savings from low-income sectors. * The mobilising and allocating of funds for socio-economic infrastructure. * The potential for new financial institutions/instruments to facilitate the attraction of venture capital. * The availability of finance for small and medium enterprise investment. * Consideration of steps to encourage broader-based share ownership. 2.3.2 Personal savings and taxation affecting individuals The LTWG will be examining the effect of the level and structure of taxation on personal savings. 2.3.3 Agreed framework 1n relation to foreign direct investment Within the area relating to finance it has been possible to identify points of agreement that taken together constitute a framework within which to locate foreign direct investment (FDI).

What this could offer is two important starting points: * A generally agreed policy framework toward FDI which is of value to both the domestic and foreign investor communities. * Aneffective work programme to develop more detailed approaches to FDI on a tripartite basis. To achieve this, the parties to the NEF will interact with other organiSations and initiatives to develop a South Afnican platform. There is general agreement amongst analysts that foreign direct investment contributes to economic development, especially in a world of intensified global inter-dependence, though its effect on the quality of life of the population as a whole, and especially the very poor, is crucially dependent on the domestic policy environment. In view of this, a tripartite approach to FDI inevitably involves a balancing of the interests of the parties to the process. The document being released today (Addendum 1), 1s a synthesis of the input documents of labour, business and government. These input documents reflected the policy approach of the parties to FDI. In the document, a brief synopsis of the different policy approaches is given for each of a number of issues relevant to FDI, and differences noted where they are relatively substantial. Agreed statements are then

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recorded. The document covers the following areas: QO The need for inward FDI A current assessment of the prospects for inward FDI O Regional dimensions to FDI Q The approach to incentives QO Principles applicable to outward FDI In each of these sections, agreed statements are: (1)

The need for inward FDI

O) The first step towards encouraging foreign investment is the creation of an economic climate which encourages and stimulates domestic investment. Q South Afncan policy-makers should make a special effort to attract the kind of FDI that will strengthen the country’s growth potential and competitiveness in the long term. Policies should not be unduly motivated by short-term balance of payments considerations. Y South Africa must create attractive conditions for Trans-National Corporations (TNCs) with technologies relevant to our

(11)

growth strategy to invest in this country. Y Policy in South Africa should be designed to encourage technologically advanced TNCs to train South Afncans to use new technologies, and also to transfer technologies in other ways. Similarly, these policies should encourage TNCs to locate some of their R & D activities in South Africa. A-current assessment of the prospects for inward FDI This section contains agreed statements on policy priorities to address negative and positive factors relating to prospects for inward FDI. The chief policy priorities to counteract the negatives are: *

a stable, democratic political settlement;

*

consistent, credible economic policies, rooted in a broad national consensus;

*

a firm commitment to policies that will improve multi-factor productivity. This will include active labour market policies such as training and retraining;

*

the conveyance of aclear message to foreign investors that South Africa will welcome foreign investment in terms of the framework set out in the document. The transitional political penod will be an ideal opportunity for marketing South Africa; 4 to build on positive factors, the physical infrastructure, prudent financial policies, the consumer market and the country’s export potential should be nurtured and developed to encourage

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new foreign investment. Regional dimensions to FDI O South Africa should strive to strengthen its claims as a home for the regional bases of TNCs. O South Africa should seek regional co-operation with a view to Stabilisation of other economies in the region and the strengthening of the regional market as a whole. It will be necessary to consider the harmonisation of policies towards foreign investment as an integral part of the process of

regional co-operation, and to formulate these in a manner which recognises the development needs of all countmies in the region. (iv)

The approach to incentives

South African policy-makers should not distinguish between foreign and domestic enterprises with respect to tax rates. Instead, the objective should be the equal application of reasonably low corporate tax rates which remain stable. South Afmcan policy-makers should not distinguish between foreign and domestic enterprises with respect to labour legislation. South Africa’s labour legislation and labour standards should be equally applicable to foreign and domestic enterprises. During the transitional period, South Afnca must provide foreign investors with assurances on: security of investment, foreign exchange policy, and the minimisation of bureaucratic obstacles to foreign investment. The broad range of incentives developed in terms of a coherent industrial restructuring programme should be made available to foreign and local investors. Trade policy must be designed to obtain the best possible access to foreign markets in order to attract export-oriented foreign, as well as domestic investors. Government policy should concern itself primarily with economic growth and political stability which will underwnte the domestic market, rather than sacrifice tax revenues that could be used for expenditures on the social and economic infrastructure. Appropriately prioritised expenditure of this nature would, of course, contribute to economic growth and political stability. 2.3.4 Government dissaving The LTWG 1s addressing the question of how the current level of government dissaving can be reduced to an acceptable level. The related question of what would constitute an acceptable level is also O

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being addressed. 2.4 Foreign trade gap 2.4.1 Task force on foreign trade policy The NEF has agreed to urgently establish a task force on foreign trade policy. The task force will address all aspects of trade policy (including tanff policy, phasing/sequencing programmes and criteria, institutional roles and export incentives). The NEF has furthermore agreed on the terms of reference for the Trade Policy task force, aspects of which include: (1) The work of the task force on foreign trade policy should be divided into two phases. In the first phase, the focus should be on trade issues rather narrowly defined, while in the second the integral relationship

Oo O

between trade policy and policies for industrial development should be examined explicitly. (11) Some of the specific first phase trade issues to be examined with a view to developing agreed policy proposals include: QO The simplification of the existing tariff system. Increasing real incentives for exporting. The sequencing of tanff reductions. The development of a set of strong and systematic anti-dumping measures. I The development of new trade relationships with SACU and other neighbouring economies. Y The training and retraining requirements for relevant public sector departments. I The co-ordination of the work of the three existing industry task-forces with respect to trade policy matters. For full details of the terms of reference, refer to Addendum 2.

2.5 Labour markets, job creation and productivity A wide range of issues will be addressed in this area, where appropriate in association with other institutions, such as the National Manpower Commission (NMC). Issues currently being addressed are the following: 2.5.1 Training The LTWG has received a substantial report from the National Training Board (NIB) regarding its task force established to develop a national training strategy. The task force is committed to presenting a discussion paper to the NTB and the Minister of Manpower by 25 November 1993. The LT WG 1s satisfied that, in light of the progress of the NTB task force, it 1s not necessary to take any further steps on the training item in its work programme at this stage. It will continue to liaise closely with the NTB.

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2.5.2 Promotion of job creation Acknowledging the work of the STWG in this area, the LTWG will consider the macro-economic implications of job-creation programmes.

2.5.3 Productivity The NEF has interacted with the National Productivity Institute and intends conducting an examination of productivity issues and measures for improving productivity in the South African economy. The work programme is to address the issue of labour productivity in the wider context of labour market institutions, as well as factors affecting productivity of capital and multi-factor productivity. 2.6 Production and use of statistics in South Africa Following detailed inputs from both labour and government, the NEF has agreed to establish a task force on the Production and Use of Statistics in South Afmica. September 30, 1993 is the deadline for submission of its findings/recommendations. The terms of reference for the task force are outlined in Addendum 3. 2.7 Technical committee on economic models A technical committee of the LTWG has been established to consider econometric models underpinning policy perspectives of NEF constituencies and also to assist the LTWG by: QO Underpinning its work programme with macro-economic analysis. QO Providing a basis for determining the macro-economic consistency and efficacy of proposed policy measures. 2.8 Linking short-term and long-term unperatives In the execution of the respective work programmes of the STWG and LTWG, a constant effort 1s made to ensure linkage, particularly from the perspective that actions taken in the short term, need to be consistent with long-term imperatives. 3.

Participants inthe NEF LTWG

Government

Business

Labour

D Krogh (convenor)

R Parsons (convenor)

A Erwin (convenor)

E Calitz J Dreyer D Graaff J Jacobs F van Eeden

R Bethlehem J Buys N Czypionka RP Gouws K Jenkins H Langenhoven K Mabusela I Robinson M Spicer P H Swart

P Heymans D Lewis V Pillay J Sender H van Niewenhuizen J Wilimiec

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1

AGREED FRAMEWORK IN RELATION FOREIGN DIRECT INVESTMENT

TO

1. Introduction As indicated in the report of the Long-Term Working Group to the plenary of the NEF, that group 1s now involved in a work programme that deals with four main areas. Within the area relating to finance it has been possible to identify points of agreement that taken together constitute a framework within which to locate foreign direct investment (FDI). (See note at end of Addendum 1.)

What this could offer is two important starting points: ) a generally agreed policy framework toward FDI which is of value to both the domestic and foreign investor communities; QO aneffective work programme to develop more detailed approaches to FDI on a tripartite basis. To achieve this, the parties to the NEF will interact with other organisations and initiatives to develop a South African platform. There 1s general agreement amongst analysts that foreign investment contributes to economic development, especially in a world of intensified global interdependence, though its effect on the quality of life of the population as a whole, and especially the very poor, is crucially dependent on the domestic policy environment. In view of this, a tripartite approach to FDI inevitably involves a balancing of the interests of the parties to the process. This paper is a synthesis of the input documents of labour, business and government. These input documents reflected the policy approach of the parties to FDI. In what follows, a brief synopsis of the different policy approaches is given for each of a number of issues relevant to FDI, and differences noted where they are relatively substantial. Agreed statements are then recorded.

2. The need for inward FDI 2.1 Investment capital All analysts agree that gross domestic fixed investment has been extremely low for at least a decade, though there are differences in emphasis with respect to cause and effect. For example, the labour submission attaches little importance to an overall lack of funds, citing a surplus of domestic savings over investment in recent years. Others would argue that for some years domestic policies have perforce been applied in such a way as to generate a surplus of savings over investment to ensure that adequate domestic capital 1s available to repay foreign debt. Similarly, the labour submission notes that foreign investors do not necessarily bring in a great deal of investment capital, often raising a large proportion

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of their needs 1n the host country. What is of fundamental importance 1s that we encourage a high level of domestic saving; the role of FDI is important for the reasons set out in this document, but it 1s supplementary rather than prime. Whatever differences exist, they need not detract from the conclusion that a main reason for low levels of investment in South Africa 1s that potential investors, domestic and foreign, lack confidence in the domestic economy. Moreover, in situations of political uncertainty foreign investors look to potential domestic investors for the signal to invest. ) Therefore the first step towards encouraging foreign investment is the creation of an economic climate which encourages and stimulates domestic investment. 2.2 Balance of payments Another perspective on the above arguments with respect to the balance between domestic savings and domestic investment is provided by focusing on the balance of payments. South Africa’s continued substantial dependence on imported capital goods becomes particularly evident during periods of growth in investment, and foreign exchange is required to fund such purchases. In past growth phases, increased imports typically resulted in a deficit on the current account of the balance of payments which was initially funded by net foreign capital inflows (including foreign borrowing), but eventually led to the need to constrain growth. As noted earlier, in more recent times the need to finance a net outflow on the capital account has led to a more severe and unusual growth constraint. The alleviation or removal of this constraint will require structural changes of both quantitative and qualitative dimensions in our trade patterns. However, net FDI could play an important role in allowing a transition. Another important related consideration 1s that, to the extent that a country enjoys relatively high inflows of FDI (bearing in mind that these are primarily private sector inflows, directly related to fixed investments and largely in the form of equity — see note at end of this addendum), this would reduce the need for indirect loan finance and thus diminish the danger of a foreign debt trap. Of course, this observation ts not applicable to South Africa while the country has the financial rand mechanism in its current form. However, it 1s widely recognised that the quality of FDI 1s crucially relevant to host developing countries, and policies should not be over-motivated by foreign exchange needs in quantity terms. FDI should be of a nature which supports structural adjustment, and its initial alleviation of balance of payments Strains is a secondary benefit. QO South African policy-makers should make a special effort to attract the kind of FDI that will strengthen the country’s growth potential and competitiveness 1n the long term. Policies should not be unduly motivated by short-term balance of payments considerations.

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2.3 Technology Probably the key reason for encouraging higher levels of FDI is that trans-national corporations (TNCs) are the dominant bearers of commercially useful technology. Technology, capital investment and productivity growth are very closely linked and now, even more than in the past, technology is seen as a principal driver of the growth process. However, the acquisition and mastering of commercially useful technology is a complex process. Although some technologies may simply be purchased from abroad, more often it 1s not a publicly available good to be purchased by the highest bidder. TNCs control much of this technology, and are often unwilling to licence the fruits of their research and development. For this reason, South Afnca must create attractive conditions for TNCs with technologies relevant to our growth strategy to invest in this country. One concern in this respect is that some development experts argue that TNCs located 1n developing countries usually transmit the results of innovation, and not the innovative process itself, and that a strong foreign presence with advanced technology can prevent local competitors from developing their own capabilities. Some developing economies have relatively little capacity to absorb technologies, while the evidence suggests that those developing countries with pro-active programmes to develop domestic technological capacity can strengthen their technological capacity through developing appropriate domestic institutions and encouraging appropriate TNC investment. Therefore policy in South Africa should be designed to encourage technologically advanced TNCs to train South Africans to use new technologies, and also to transfer technologies in other ways. Similarly, these policies should encourage TNCs to locate some of their research and development activities in South Africa. 2.4 Access to foreign markets One of the most crucial elements of a long-term growth strategy for South Africa is the expansion of exports, particularly the export of higher value added products. The urgent need for structural adjustment in this direction is predicated on the declining relative value of our traditional raw material exports, and their poor longer-term prospects. The link between foreign investment and exports 1s twofold. The first is obvious: South Africa needs the funds and technology that foreign investors can provide in order to be able to make more exportable products. The American experience of recent years serves as an example of the important role of transnational corporations in international trade. In 1988, 80 % of US trade

was undertaken by TNCs. The second link is more subtle, and perhaps more crucial. A rapidly rising proportion of world trade now takes place within companies — as ‘intra-firm trade’. For example, half of US trade and a third of Japanese and Bnitish trade is

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intra-TNC. TNCs also tend to have a higher export propensity than domestic firms in the same sector.

2.5 Competition for domestic oligopolies An important reason for encouraging FDI is to provide enhanced competition for domestic firms. Indeed, global re-integration of the South African economy, in the context of a set of coherent and effective domestic policies embracing trade and industrial policies, exchange control policies and competition policy, would constitute a powerful re-invigoration of competitive forces in this country. Some of these policy dimensions will be dealt with specifically by the LTWG of the NEF as its work programme advances. 3. A current assessment of the prospects for inward FDI From the early 1980s the share of world FDI flows going to developing countries as a group declined, and turned negative between 1985 and 1990. Africa’s share within that total declined even faster. In South Afmica’s case, flows actually turned negative in the late 1980s, having diminished to particularly low levels by world standards well before that. The biggest proportion of world FDI flows is between the developed nations. Increased competition for FDI has recently emanated from developments within eastern and central Europe, while amongst developing countries those in the south-east Asian areas have been most successful in attracting FDI. Heightened competition for global FDI flows makes it all the more imperative for South Africa to adopt policies which most appropriately attract FDI. An environment of sustained, rapid growth in domestic output and investment 1s perhaps the most important single factor in attracting FDI. This position clearly does not apply at present. The reasons usually cited as keeping foreign firms away from South Africa are: political instability and violence, exchange controls, highly concentrated domestic markets, the uncertainty about possible economic policies of a future government, and low productivity in South Africa associated with high unit costs. The chief policy priorities to counteract the negatives are therefore: * a stable, democratic political settlement; * consistent, credible economic policies, rooted in a broad national consensus; * a firm commitment to policies that will improve multi-factor productivity. This will include active labour market policies such as training and retraining; * the conveyance of a clear message to foreign investors that South Africa will welcome foreign investment in terms of the framework set out in this document. The transitional political period will be an ideal opportunity for marketing South Africa. These

issues will have to be addressed

91

before we can build on certain

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advantages we may have in locating ourselves near the front of the developing

country queue for foreign investment. These advantages include the country's sound financial structures, low level of external debt, the excellent physical infrastructure 1n relation to production, and the size and potential of the consumer market as a basis for increased exports. O Therefore, the physical infrastructure, prudent financial policies, the consumer market and the country’s export potential, should be nurtured and developed to encourage new foreign investment. 4. Regional dimensions to FDI FDI has several characteristics which are important for a recovery of investment in the medium term. The international diffusion of innovative activity and of standardised technologies, combined with the regionalisation of markets, point to southern Africa’s potential to attract TNC activity. TNCs are, more than ever before, developing worldwide strategies on a regional basis, and are devolving more important activities to regional operations. Southern Africa would be the kind of region to attract the serious attention of TNCs with an eye for the local market, and to potential exports further afield. Or, South Afnca could become part of ‘regional core networks’ for TNCs based in Europe. Regional core networks are ‘rationally integrated, independently sustainable networks of overseas investments centred on a triad member’. It is noticeable that Japanese firms investigating investment possibilities in South Affica today, often conduct their investigations out of their European offices. The diffusion and reduced cost of communications has decreased the economic distance between countries, making new kinds of overseas activities more feasible than before. W Therefore, South Africa should strive to strengthen its claims as a home for the regional bases of TNCs. The way that southern African economic integration is approached, and the way trade relations between the region and the rest of the world, starting with the EC, are restructured, could have an important bearing on the regional prospects for FDI, and the regional rewards from the FDI. This 1s particularly important in a world where the competition for investment funds is tougher than ever before. OY Therefore, South Africa should seek regional co-operation with a view to the stabilisation of other economies in the region and the strengthening of the regional market as a whole. A linked issue of importance to South Africa is how the countnes of the southem African region will address the issue of foreign investment policy. Clearly, the removal of trade barriers between South Africa and its neighbours (broadly defined), could help attract foreign investors to South Afnca. However, it is equally likely that South Africa's partners in such a trade preference area or

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common market would attempt to attract foreign investors to take advantage of access to the South African market. Policies by individual countries in the region should be formulated in a manner which 1s sensitive to the development needs of the region as a whole. As the largest market tn the region, South Africa will have to be particularly sensitive to the development needs of smaller countries in its own longer-term interests. Q For this reason, it will be necessary to consider the harmonisation of policies towards foreign investment as an integral part of the process of regional co-operation, and to formulate these in a manner which recognises the development needs of all countries in the region. Without harmonisation, the countries of the region will inevitably compete against each other by offering increasingly generous incentives to foreign investors, which may be to the detriment of the region as a whole. Clearly, South Afnca should consult its neighbours at the earliest possible opportunity about foreign investment policies. 5. The approach to incentives The guiding principle on incentives 1s that there should be equal treatment for all potential investors, domestic or foreign. The principle of equal national treatment is considered to be fundamentally important. Within South Africa, foreign and domestic investors should be subject to the same tax regime, labour legislation, and labour standards, etc. Special incentives applicable only to potential foreign investors should not be implemented. There is a general consensus that South Africa should not introduce special tax incentives (eg tax holidays) to attract FDI. Nor should attempts be made to attract foreign investment by offering special exemption from domestic labour legislation. It is widely accepted that such incentives only influence TNC locational decisions when the different locations under consideration are roughly equal in terms of other criteria. Moreover, special concessions may attract forms of FDI which have less of a commitment to the host country and its broader development aims (see earlier reference to quality considerations with respect to FDI). On the question of taxes, it is equally widely accepted that corporate tax rates must both be reasonably low by international standards and stable over time in order to attract foreign investors (quite apart from the impact on domestic business entities).

QO South Afnican policy-makers should not distinguish between foreign and domestic enterprises with respect to tax rates. Instead, the objective should be equal application of reasonably low corporate tax rates which remain stable. Y South African policy-makers should not distinguish between foreign and

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domestic enterprises with respect to labour legislation. South Africa’s labour legislation and labour standards should be equally applicable to foreign and domestic enterprises. For developing countries, it is now widely argued, assurances on security of investment, and on access to foreign exchange, are more efficient ways of attracting foreign investment than the more radical form of tax and other incentives applied by some countmes. Consistent with the principle of equal treatment, it is also beneficial to reduce administrative and regulatory barriers of foreign investment. There is also the need for legislation on the governance of intellectual property nghts to conform to international standards. Q Therefore, during the transitional period, South Afmca must provide foreign investors with assurances on: secunty of investment, foreign exchange policy, and the minimisation of bureaucratic obstacles to foreign investment. Policy formulation should also not discriminate against domestic firms in other ways. The most obvious example here ts in the realm of export incentives. Export-oriented foreign investors, rather than those oriented towards the local market, are particularly sensitive to the availability of such incentives. However, provided a neutral position has been adopted between domestic and foreign firms, this 1s quite acceptable. 4 The broad range of incentives developed in terms of a coherent industnal restructuring programme should be made available to foreign and local investors. Trade policy must be designed to obtain the best possible access to foreign

markets in order to attract export-oriented foreign, as well as domestic investors. It is not incentives in themselves that are problematic, but incentives that are simply designed to increase the quantity of foreign investment, and which are not located within a broader industrial strategy. For firms that are interested in the home (and regional) market, the most important factors are the size and rate of growth of the domestic and regional markets and political and economic stability and predictability. QO) Government policy should concern itself primarily with economic growth and political stability which will underwnite the domestic market, rather than sacrifice tax revenues that could be used for expenditure on the social and economic infrastructure. Appropniately pnontised expenditure of this nature would, of course, contribute to economic growth and political stability.

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6. Principles applicable to outward FDI While it is essential to create the conditions which will ensure that investment within South Africa remains a primary focus of domestic enterprises, it is equally necessary to recognise that those arguments which apply to the advantages of inward FDI might apply to outward FDI. Companies based in South Africa may need to consider foreign investments to facilitate acquisition of new technologies, ensure access to foreign markets (bearing in mind tendencies towards intra-firm trade), ensure cost-competitive access to trade credits and other forms of finance in the case of banking institutions, etc. In a nutshell, if inward FDI 1s beneficial to the foreign host countmies, there is no reason to believe that outward FDI 1s intrinsically detrimental to South Affrica. Of course, the debate on these issues in South Afnica is subject to mis-interpretation in some quarters. In particular, foreign investments by domestic . enterprises are sometimes classified as flight capital. Clearly the question of capital flight is a problem, but needs to be addressed as such, and each case of FDI by South African based entities should be judged on its own merits and in relation to agreed, transparent foreign exchange criteria. This matter will have to be addressed by the LTWG of the NEF as it progresses with its work programme. NOTE: There is no standardised international definition of FDI beyond that of the IMF which descnbes it as investment that is made to acqutre a lasting interest in an enterprise operating in an economy other than that of the investor. This distinguishes FDI from indirect loan finance. For South Africa the Reserve Bank takes this to mean a minimum equity stake of 25 % (except where effective management control can be demonstrated at less than 25 %). The FDI figure predominantly involves equity finance from abroad, but it includes, inter alia, enterprise retained earnings and locally raised long-term loan finance.

Johannesburg, June 30, 1993

ADDENDUM TERMS

2

OF REFERENCE FOR THE TASK ON FOREIGN TRADE POLICY

FORCE

The NEF agrees that as part of the process of addressing issues related to the foreign trade gap, the LTWG will urgently establish a task force to address all aspects of trade policy (including tariff policy, phasing/sequencing programmes and criteria, institutional roles and export incentives). The terms of reference of the task force are as follows: 1. The work of the task force on foreign trade policy should be divided into two phases. In the first phase, the focus should be on trade issues rather narrowly defined, while in the second the integral relationship between trade policy and

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policies for industrial development should be examined explicitly. 2. The specific first phase trade issues to be examined with a view to developing agreed policy proposals include: (1) The simplification of the existing tanff system (consider overlap with the STWG). (11) Increasing real incentives for exporting: * Duty Drawback Schemes (scope and implementation problems). * Costs and benefits of GEIS and proposals for reformulation. *

Incentives for the export of services.

oe

Negotiating positions concerning South Affrica’s status as a ‘developing’ country and the acquisition of preferential access to OECD, and especially EEC markets.

(111) The sequencing of tariff reductions:

* Proposals to GATT for the general, economy-wide sequencing of taniff reductions. * Proposals for industry-specific sequencing of changes in the levels of tariffs. (iv) The

development

of a set of strong

and

systematic

anti-dumping

measures, including the imposition of countervailing tariffs and other measures within the framework of GATT’s Article 19. (v) The development of new trade relationships with SACU and other neighbouring economies (consider overlap with STWG). (vi) The training and retraining requirements of DTI, Department of Customs and Excise and other public sector staff (consider overlap with STWG).

(vii) The co-ordination of the work of the three existing task-forces (ie the Auto, Electronics and Clothing task-forces) with respect to trade policy matters.

ADDENDUM

3

LTWG PROPOSAL FOR THE ESTABLISHMENT OF AN NEF COMMITTEE ON THE PRODUCTION AND USE OF STATISTICS IN SOUTH AFRICA 1 Acknowledging the scope for improving the production and use of statistics in South Afnca, the LTWG has agreed to propose the establishment of an NEF committee to examine the statistical process. 2The proposed terms of reference for the committee are: 2.1 To identify South Africa’s major statistical shortcomings and methods for

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addressing these, within a framework of affordability and the needs of a changing South Africa. 2.2 To interact with institutions responsible for the use and production of Statistics, including the Statistical Council. 2.3 To examine the structure of the Statistical Council. 2.4 The committee shall have the power to co-opt and consult parties/individuals to assist in its workings.

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PARTICIPATING THE

NATIONAL

4

ORGANISATIONS ECONOMIC

IN

FORUM

National Economic Forum (NEF) principals determine the composition of their own delegations. The groups currently represented on the NEF are: Labour COSATU representing the following affiliates: Construction and Allied Workers Union (CAWU) Chemical Workers Industral Union (CWIU) Food and Allied Workers Union (FAWU) National Education, Health and Allied Workers Union (NEHAWU) National Union of Metal Workers of South Afnca (NUMSA) National Union of Mineworkers (NUM)

Post and Telecommunications Workers Association (POTWA)

Paper, Printing, Wood and Allied Workers Union (PPWAWU) South African Domestic Workers Union (SADWU)

South Afncan Municipal Workers Union (SAMWU) South African Commercial, Catering and Allied Workers Union

(SACCAWU) Southern African Clothing and Textile Workers Union (SACTWU)

South African Railway and Harbours Workers Union (SARHWU) Transport and General Workers Union (TGWU)

FEDSAL representing the following affiliates: AECI Staff Association Artisan Staff Association (ASA)

Eskom Employees Association (EEA) Hospital Personnel Association of SA (HOSPERSA) Industrial Salaried Staff Association (ISSA) Motor Industry Staff Association (MISA)

NEDCOR Staff Society (NEDSTAFF) Post and Telkom Association of SA Public Service Artisan and Allied Workers Association

SA SA SA SA

Association of Municipal Employees (SAAME) Broadcasting Staff Association (SABSA) Footplate Staff Association (SAFSA) ~ Hairdressers Employees Industrial Union (SAHEIU)

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SA Society of Bank Officials (SASBO) SALSTAFF Unisa Administrative and Professional Staff Union (UNAVU) Underground Officials Association (UOA)

NACTU representing the following affiliates: Black Trade Union of Transnet Limited (BLATU)

Black University Workers Association (BUWA) Brushes and Cleaners Workers Union (BCWU) Building Construction and Allied Workers Union (BCAWU) Banking, Insurance, Finance Assurance Workers Union (BIFAWU)

Federated Mining Union (FMU) Food and Beverage Workers Union (FBWU) Hotel Liquor Catering and Allied Workers Union (HOTELICA) National Union of Farmworkers (NUF)

National Union of Furniture Workers (NUFAWU) National Union of Public Service Workers (NUPSW) National Union of Wine, Spirits, Food and Allied Workers

Natal Liquor and Catering Trade Union (NATALICA) Media Workers Association of SA (MWASA) Metal Workers Union of SA (MEWUSA) South African Chemical Workers Union (SACWU)

South African Laundry, Dry Cleaning and Dyeing Workers Union Federated Municipality, Health and Allied Workers Union

Steel, Engineering and Allied Workers Union (SEAWUSA) Transport and Allied Workers Union (TAWU) Transport and Omnibus Workers Union (TOWUV) United African Motor and Allied Workers Union (UAMAWU) Vukani Guards and Allied Workers Union (VUKANT) South Afmcan Health and Allied Workers Union (SAHAWU)

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NEF

Business Business organises its input into the NEF through the Business Forum. Current members of the Business Forum are: Afrikaanse Handelsinstituut (AHI) Building Industnes Federation South Africa (BIFSA) Chamber of Mines Council of Southem African Bankers (COSAB) Federated Hospitality Association of South Africa (FEDHASA) Foundation for African Business and Consumer Services (FABCOS) Institute of Retirement Funds Islamic Business Chamber National African Federated Chamber of Commerce and Industry (NAFCOC)

South Afncan Agricultural Union (SAAU) South African Association of Consulting Engineers (SAACE) South African Chamber of Business (SACOB)

South African Employers Consultative Committee on Labour Affairs (SACCOLA) South African Federation of Civil Engineering Contractors (SAFCEC) South African Property Owners Association (SAPOA) Steel Engineering Industries Federation of South Africa (SEIFSA) The Life Offices Association of South Africa (LOA)

Government South African government, through representatives primarily from: Department of Finance Department of Trade and Industry Customs and Excise SA Reserve Bank Central Economic Advisory Services Department of Manpower Board of Trade and Tariffs Development Bank of South Africa (DBSA)

100