Capping pay and bonuses for senior managers and executives earning more than R550 000 a year, restraining wage settlements for workers earning between R3 000 and R20 000 a month, a major rethink of black economic empowerment (BEE) and a “red-tape elimination campaign”.
These are just some of the proposals in the New Growth Path (NGP) plan announced by Minister of Economic Development Ebrahim Patel yesterday.
The NGP, heavily reliant on an effective and co-ordinated government, has as its central focus the employment creation capacity of economic growth.
“The NGP starts by identifying where job creation is possible, both within economic sectors as conventionally defined and in cross-cutting activities. It then analyses the policies and institutional developments required to take advantage of these opportunities,” states the plan’s executive summary.
The essential aim of the plan is to target the country’s limited capital and capacity at activities that maximise the creation of “decent work opportunities”. To that end the plan is aimed at using macro- and microeconomic policies to create a favourable overall environment and to support more labour-absorbing activities.
“The main indicators of success will be jobs (the number and quality created), growth (the rate, labour intensity and composition of economic growth), equity (lower-income inequality and poverty) and environmental outcomes.”
Patel acknowledged it would be a long and daunting challenge. It involved profound changes in the structure of savings, investment and production and required the government to “steadily and consistently pursue key policies and programmes for at least a decade”.
“The state must co-ordinate its efforts around core priorities rather than dispersing them across numerous efforts.”
Patel’s summary acknowledges that this will need the government to strengthen its capacity for engagement and leadership. And, with an eye to the national delivery protests, the summary notes, “It will require government to redesign delivery systems to include stakeholders meaningfully”.
The plan moves from generalities to specific proposals for action. Thus it notes “job drivers” that have been identified are “substantial public investment in infrastructure” and labour-absorbing activity in the “agricultural and mining value chains” as well as in manufacturing and services. In this regard the plan will prioritise efforts to support employment creation in infrastructure, the agricultural value chain, the mining value chain, the green economy, manufacturing sectors as well as tourism and certain high-level services.
The infrastructure push includes the establishment of an African Development Fund to invest in African infrastructure.
With regard to the mining value chain, the NGP will involve “setting up a state-owned mining company that coexists with a strong private mining sector and promotes beneficiation, as well as greater use of the mineral resource base of the country for developmental purposes, including potentially through a sovereign wealth fund”.
The plan envisages that macroeconomic policy for the foreseeable future will “be guided by a looser monetary policy and a more restrictive fiscal policy backed by microeconomic measures to contain inflationary pressures and enhance competitiveness”. .
Michael Spicer, the chief executive of Business Leadership SA, said the government recognised something must be done about unemployment and business as a whole, represented by Business Unity SA (Busa), shared this perspective.
“Consultation will start (tomorrow) and we are keen to participate. But we will emphasise the practical, the doable and the need to focus on priorities. We should start with issues on which the social parties can readily reach agreement and go on to deal with the more intractable issues,” Spicer said.
Busa’s parliamentary liaison officer, Coenraad Bezuidenhout, welcomed the NGP document.
“We particularly welcome the commitment to social dialogue in the document. We see the whole issue of the development pact within the context of this commitment to social dialogue,” said Bezuidenhout.
The development pact focused on pegging salary increases for top income earners, the moderation of wage rises for lower income earners and the moderation of price hikes.
“I am sure that social partners would be ready to interrogate sincere proposals from the government in this regard.”
He said the challenge would obviously lie in the implementation of the growth path. “For example, where the minister’s document desires to restructure land reform, we know that this will be a major challenge especially because of the relevant department’s protracted capacity problems. This is something that occurs elsewhere in government.” - Business Report
Additional reporting by Donwald Pressly and Ethel Hazelhurst