DA’s growth plan ‘fails to set a cohesive goal’

INLSA

DA finance spokesman Tim Harris lists unemployment as a key inhibiting factor to South Africas economic growth. Photo: Matthew Jordaan.

Economists say while there are some good ideas in the DA’s plan for growth and jobs, including worker equity participation in the private and public sectors, there is an absence of recognition of “the elephant in the room”, which is a lack of social cohesion around a visionary economic goal.

DA finance spokesman Tim Harris recognises missing ingredients in the South African economic growth model, which is proven by lagging growth levels even outside of the recent recessions when the country simply did not keep up with peer countries including Vietnam, Turkey and its fellow Brics member, Brazil.

At the top of Harris’s list is the workplace. “Unemployment at 27 percent is a key inhibiting factor to growth.”

He agreed with Stellenbosch’s emeritus economics professor Sampie Terreblanche that the democratic government had failed to break down the apartheid pattern of “insiders” and “outsiders”.

The only change now was that there was a new group of insiders, including a growing public sector and “a privileged” trade union class.

Terreblanche, who has released a new book Lost in Transformation, notes that South Africa now not only has a “poor problem”, but also a massive “really rich problem”, with the worst Gini coefficient in the world. It made the country ripe for social dislocation.

The DA was “silly” to believe that its policy could achieve 7 percent or 8 percent economic growth, particularly in the current global climate, although he did acknowledge that the worker equity participation models were “a start”.

Harris said while labour reform should focus on small business, and not so much on large business, there was a need for “targeted listings” of shares in state-owned corporations like Eskom and Transnet. Alexkor, Safcol and Denel should be sold outright because they were drains on the fiscus.

“Other state-owned companies should remain, but not entirely in the state hands.”

Brazil sold 51 percent of its largest airport to a private consortium, raising R70 billion, about a quarter of South Africa’s infrastructure budget.

Pan African Capital Holdings chief executive Iraj Abedian said Japan provided the best example of the worker participation model. In South Africa, it had “to come from the private sector… as the public sector is public money anyway”. The model needed to benefit workers during the highs, such as when the platinum market was strong, and protect them in the doldrums.

Harris said one way of bringing poor people into the economy was to encourage the 2.5 million stokvels into owning shares in state-owned firms. There should also be employee share ownership incentives and partially tax-free employee bonus schemes.

He acknowledged that executive pay levels were out of kilter. “Executive remuneration should be linked to a company’s performance.”

To reduce the tax burden of smaller companies, there should be a three-year reporting procedure, with a tax loss carry back system.

Abedian said it was “a fact” that South Africa had lagged behind in terms of growth. “The big elephant in the room is the fragmentation of society in terms of key stakeholders.”