Speech by Ms.Lulama Nare on behalf of the National Economic Development and Labour Council Community

27 August 2005

 

The Programme Director, Deputy President of the Republic, Leaders of the labour movement, business and civil society organisations.

The community constituency is pleased to address this annual summit in the tenth year in which NEDLAC celebrates its anniversary. Therefore this summit has a lot to reflect on and build on the achievements of the last decade. The theme for this summit becomes appropriate in highlighting what should be the key features that must characterise the post-apartheid society. The question of growth, decent work, development and social equity-the goal/key for social dialogue are as relevant in South Africa 's context, as is the case with the world. Therefore any attempt to project NEDLAC as a body that has outlived its usefulness is daydreaming or represents a specific interest in society.

The achievements of the last ten years will be measured on the levels of employment creation, economic growth, development and reconstruction of South Africa to meet the needs of the majority of people- the black people. The Growth and Development Summit Agreements provide a minimum platform through which to change the growing levels of poverty, unemployment and lack of investments in productive sectors of our economy.

NEDLAC's existence creates an appropriate climate and environment for shared, at least, in our common approach on immediate programmatic tasks. In the GDS, we characterised our society as facing persisting duality in the midst of progress i.e. the growing levels of unemployment, poverty, HIV and AIDS and low skills levels, whilst, on the other hand- our country scored victories in political normalisation, progressive labour relations dispensation and a move towards expansionary economic outlook( huge spending on basic services etc etc)

However, what the governments ten year review cautioned us against, where the dynamics of economic exclusions continue the negatives will start overwhelming the positives. This is increasingly becoming a stark reality which we witness through civil/protests actions on service delivery. Whatever, the merits and demerits of each event, what is clear though, is that the pace of change in our country is now unsettling for the overwhelming majority of our citizens.

  Theme: Growth, Decent Work, Development and Social Equity - THE GOAL - Social Dialogue - THE KEY

1. Brief overview of the S.A policy-formulation process

  The past two years have yielded considerable achievements in a range of policy developments. One such area has been the achievements of the Umzansi account with 1.3 million account holders and 56% of whom being women. This is the outcome of the 2002 NEDLAC Financial Sector Summit which was pioneered by the community constituency. This has enabled hundreds of thousands access to banking services which in past past were denied. Secondly, a (Consumer Credit Bill) is before parliament, whose aim is, among other things, to effectively regulate micro-credit, including omashonisa and credit bureaux. The Cooperatives Bill is before Parliament for approval and gazetting. All of these processes are deliberate interventions aimed at addressing the market's exclusion, and exploitation, of poor people.

Where NEDLAC has been central in key socio-economic discussion and programme, we see better and positive outcomes flowing from there. Where it does not play a role, weaknesses are evident in the monitoring, implementation and the direction of these initiatives.

The Community Constituency will defend Nedlac as the most pre-eminent, representative socio-economic policy instrument in South Africa. This has earned us international recognition, due to it not being only tri-patite structures, but also embodies civil society. Nedlac thus presents an important attempt at deepening participation in a democratic process of policy formulation. Against this backdrop, we would like to renew our commitment to the Nedlac agenda and would like to challenge our counterparts to do likewise .

2.1The key socio-economic challenges

2.1 The unemployment / employment dynamic & the relationship between growth and employment

Unemployment growth in the S.A. labour market has been increasing at an alarming pace. Merely citing the evidence for the period 1995 to 2002, we see that employment in South Africa has increased by 17%: however in the context where for the same period 1995 to 2002, unemployment increased by 88% and numerically the growth in unemployment was almost twice as high as the growth in employment: 1.6 new jobs were created during this period but unemployment still increased by 3.4 million individuals.

How have ordinary people in South Africa been responding to this structural labour absorption problem? Simply this: as a survival mechanism of not becoming adequately absorbed into the formal sector they have resorted to creating other means of survival and livelihood in the informal sector. These activities of course range from the legal to the illegal. If we cannot address the problem of unemployment, we will see individuals across our society resorting to similar types of responses to real conditions.

Similarly, current levels of economic growth (just over 3%) have not seen the creation of sustainable jobs, but have been accompanied by large-scale job losses and casualisation. Official statistics show that employment growth has seriously lagged behind output growth since 1995. This has been the result of a larger dependency on capital-intensive modes of production during this period.

Hence, unless the future growth potential of the economy is associated with a larger growth in employment, problems of unemployment and underemployment will continue. This constitutes one of the central challenges and conditions for South Africa 's sustainable development path.

Low-quality jobs, such as casual and temporary work, are prevalent in key economic sectors and form a very large ghetto of the South African labour market. For example, employment growth in the Wholesale and Retail sector has been mainly in casual and part-time work whilst retrenchments in full-time 'quality' jobs are still taking place. Part-time jobs have increased from 15 to 20% of total jobs in this sector between 1998 and 2002. Similarly, the nature of work in the Tourism and Hospitality sector has been mainly casual and part-time.

These jobs are disproportionately held by young people and particularly women in rural areas, African and Coloured. 'Low quality' jobs are in practical terms a concealment of unemployment in the sense that workers and young workers in particular, are forced into a trade-off between a job (regardless of its vulnerable and insecure nature) and no job. These jobs are often tenuous and insecure, suggesting even greater vulnerability to job loss.

Access to jobs that are appropriately remunerated and provide decent work is not only an important means of improving living standards; it is also a means of exercising skills, creativity, making productive contributions to society and enjoying self-respect, dignity and empowerment.

Against this background, the Community argues that being employed does not necessarily mean decent work. Decent and more work in the form of quality jobs is critical to the attainment of security and sustainable livelihoods for all men and women.

2.2 The impact of learnerships on the inclusion of new entrants into the labour market

Arising from the unemployment problem, if one imposes an age distribution on the employment-unemployment dynamic in South Africa , we will find that the scourge in unemployment is borne more severely by those who constitute part of the youth labour market. These are individuals between the age of 15 and 34 years. In each case the unemployment levels for each age cohort was much higher than existed for the general population. For the 15 to 24 year age cohort the unemployment rate in 2002 was 70%. For the 25 to 34 year age cohort it was 46% in 2002. Translated in another way we can say that while the 15 to 24 year old cohort of youth make up 33% of the population of working age, they only constitute 10% of the employed. The non-youth bias of the labour market can be seen in another way. While the non-youth are 40% of the working age population, they constitute 57% of all employed individuals in the workforce.

Learnerships have been designed as the principal vehicle to assist young people to enter the labour market. What has been the achievement thus far? If you read the NSDS Implementation report for the period April 2003 to March 2004, it indicates that the target for a minimum of 80 000 under the age of 30 having entered learnerships will be met is very good. The Community constituency has absolutely no doubt that the implementation report for the final year of the NSDS first phase will confirm that the 80 000 figure has been reached.

However, if we delve more deeply into the evidence, we will see that our innocent conception of the above NSDS indicator may have inadvertently tricked us into failure. And that is because, the real measure of the indicator's success is the number of individuals who successfully completed learnerships. The evidence shows that the number of individuals completing learnerships is significantly lower, ranging from one-tenth to one-fifth of those initially registered.

If we review some of the data that was circulated concerning this phenomenon it embodies some interesting features. Firstly, despite being targeted for individuals who were under the age of 30 years, the record actually showed that at the beginning of 2004, 62% of 18(1) learners and 81% of 18(2) learners were older than 30 years. Among the employed learners (18.1 learnerships) who successfully completed a learnership, two-thirds (67%) were generated from only two SETAs: the Finance SETA and the Hospitality and Tourism SETA.

More startling, have been the employment equity results to date. Whilst we have gained significant progress over the past five years in rationalising gender imbalances in the work place, we faired dismally over the same period in equalising employment opportunities for disabled people. For example, data from the last NSDS implementation report shows that a meagre 1.35% from the total 4% minimum equity target for disabled people has been achieved by April 2004.

The Community constituency identifies the tenuous relationship between skills development and employment equity as the inevitable corollary of the tepid progress achieved. Theoretically, although the employment equity targets are meant to cut across all the NSDS objectives, there has been a discernable discord and uneven record of achievements between these two elements.

Hence, we are calling for a more concrete articulation and integration between skills development and employment equity in both the NSDS and Nedlac processes.

2.3. The relationship between Growth and Development

According to the 2003 UNDP South Africa Human Development Report, "The ultimate aim of economic growth and development is to improve the standard of living of the population".

In other words, economic growth should never be a pursuit in and of itself, but it should be pursued to improve the standard of living of all the people of South Africa .

We also need to understand that the concepts of growth, development and inequality are tightly bound together.

The Minister of Finance delivered a very insightful speech on the 4 th August at the launch of a G20 Summit on economic Growth. In it he referred to a growing consensus internationally that high levels of inequality tend to slow down economic growth.

This is so for a number of reasons, primarily though, high levels of inequality and poverty undermine levels of human development in terms of education, health and skills development. Lower levels of human development in turn negatively affect levels of productivity. Low levels of education translate into a skills deficit which impacts negatively on the ability of businesses to expand their technology. Low levels of nutrition early on in life affect people's health throughout their lives, and makes for a more vulnerable workforce with high levels of absenteeism, which in turn affects levels of productivity, and hence the potential for economic growth.

Due to the legislated inequalities that existed under apartheid, there are millions of South African citizens in whom little or no investment has been made, whether in education, skills or health. While political freedom was won for everybody in 1994, unless we consciously direct resources to people who have been marginalized from human investment, we are consigning them and their communities to ongoing exclusion from the fruits of any economic growth that occurs.

Evidence shows that poorer people tend to spend more of their income on locally produced goods, rather than on expensive luxury imports. This demand in turn stimulates local economic activity and has a positive knock on effect on job creation and leads to positive spirals of investment. However when the spending power of the poor is so limited, we lose a golden opportunity to address both levels of human development and economic growth, with disposable income being lost to non productive investment, both locally and abroad, as well as increasing imports as the rich buy expensive luxury goods which widens out trade deficit, putting pressure on the currency which in turn negatively affects our export-oriented economy.

In conclusion, what mainstream economists and policy makers are now beginning to understand however is that the awful effects of such continued marginalization does not only impact on those at the margins, but acts as a break for mainstream development. We are shackled in this together, and the formal economy will not be able to prosper as long as the informal economy - those deemed superfluous by the formal economy - prospers too.

This shows that we need to be very deliberate in choosing developmental, pro-poor policies if we wish to reach the desired 6% economic growth rate.

2.4 Poverty eradication and human development

Addressing the high and growing levels of poverty has always been high on the social agenda of government. Hopefully the linkages between the social and economic policies and processes of prioritization are beginning to solidify for policy makers.

What we have seen in South Africa recently is that despite many commitments to the eradication of poverty, we have not witnessed the emergence of a comprehensive poverty eradication strategy that cuts across departments and functions. We do not have an overarching Poverty Eradication Department; instead, in acknowledgement of the deep-seated nature of poverty in this country, each department has its own poverty eradication programmes. This has however led to a lack of fit between many of the interventions. One indicator of this is that according to the government's programme of action in 2004, there were at least 6 different poverty lines in use in diverse government departments. This means that there can be no successful multiplier effect of the various poverty eradication programmes. We are pleased to see government identifying the second economy for special attention, it is in this context that we call on government and business to support the forthcoming sustainable livelihoods conference.

One illustration of the self-defeating effects of non complimentary state poverty eradication programmes is that of Disability Grants for poor people on ART.

For people who are on treatment, access to nutrition is vital. For many millions of poor people living in households with insufficient access to income, being able to access nutrition is extremely difficult. The Disability Grant is made available in most regions to HIV positive people that have a CD4 count of below 200. This grant enables them to buy the food that ensures the effective absorption of the ART. However once the ART starts to take effect, people's CD4 count increases. The effect of that is when their temporary disability grant terminates; they are not able to access any further grants. They are also unable to continue treatment in the absence of suitable nutrition, and so the investment by the state in providing treatment has no long term returns, people become sick from the treatment and are no longer able to live healthy and productive lives.

Some might ask why, if someone is on treatment, they are not able to provide for their own needs?

The cruel truth is that for many people seeking jobs, given the huge surplus of available labour, many are forced to undertake HIV testing, and once their positive results are known, they are refused jobs. While we might legitimately be outraged at this flaunting of the law and people's constitutional rights, this is the reality for many poor people in South Africa .

So how do we address the need to support human development?

State spending on health and education is a very important way of building human assets. Section 27 of the Constitution of South Africaguarantees to everybody the right to access social security, and social assistance for those unable to support themselves and their families. The state's roll out of the child support grant to children under the age of 14 has, correctly, been welcomed.

  There are however millions of poor people between the ages of 14 and 60 (65 for men) who are not employed and do not qualify for grants. What is required is a far more comprehensive social protection system to address both the long term human development requirements, and the short term needs of poor and working class people in South Africafor whom poverty is a daily pervasive and destructive reality.

The introduction of a universal basic income grant would effectively provide for the basic needs of these people. Recent research done for the department of social development by the Economic Policy and Research Institute found that social grants are developmental and that they are also able to strengthen poor people's buying power. Given that social grants are paid for by taxes, they are redistributive and are so able to address inequality in this country, promoting social unity and cohesion.

Social grants have been hailed by the state as representing the most effective poverty eradication programme of government; to increase the coverage through a basic income grant, we would be able to address levels of poverty and destitution in this country at a higher rate and for better return than through any other method.

Social spending effectively needs to be acknowledged as being productive investment, rather than soft spending.

It is clear that we have greater fiscal capacity to extend social spending already - and if we desist in annual tax cuts for those who are fortunate enough to have to pay tax, then we will continue to grow this space.

South Africa has enthusiastically endorsed the Millennium Development Goals, which among other things; mean that we have to reduce the level of people living in poverty by half by 2014.

As Community Constituency we strongly urge government to develop a comprehensive poverty eradication and human development strategy, in consultation with all the partners in NEDLAC, to ensure that we do not fail meeting the goals, but more importantly to ensure that we do not fail the needs and aspirations of poor people living in South Africa .

3. The importance of Social Dialogue

In June 2002, at the 90 th Session of the International Labour Conference, the International Labour Organization (the ILO) adopted a resolution "Concerning tripartism and social dialogue". In support of the ILO's firm commitment to social dialogue, the resolution states:

"the social partners (have an essential role in) in stable economic and social development, democratization and participative development and in examining and reinforcing the role of international cooperation for poverty eradication, promotion of full employment and decent work, which ensure social cohesion of countries, and

..social dialogue and tripartism are modern and dynamic processes that have unique capacity and great potential to contribute to progress in many difficult and challenging situations and issues, including those related to globalization, regional integration and transition".

The establishment of NEDLAC in February 1995 was a clear statement against the "unilateral decision-making" of the Apartheid regime, responding to the calls from all sectors of society for decisions to be taken in a more inclusive and transparent manner.

As it states on the website of NEDLAC itself:

"(NEDLAC) emerges out of a recognition of the importance of seeking consensus on major economic, social and development policies to ensure their success, and out of an awareness, as President Mandela remarked at its launch, "that our democratic gains will be shallow and persistently threatened if they do not find expression in food and shelter, in well-paying jobs, and rising living standards"."

It is also virtually unique in social dialogue internationally that recognition was given to the need to expand the social partners from the traditional 3, namely labour, government and business, to include the Community Constituency, and it is as such that we stand here today.

What for us as the Community Constituency is clear, as we have already said, there can be no Chinese wall between social and economic policies: it is in recognizing this interdependence of the two that we will begin to overcome the devastating legacy of apartheid on poor and marginalized people and at the same time guarantee a higher rate of economic growth that will ensure the long term sustainability of our course.