Report on Nedlac activities by Nedlac executive director Jayendra Naidoo

Deputy president, distinguished participants and guests, friends and comrades.

Two years and three months ago we gathered at this venue to launch Nedlac. During thisperiod, many long hours have been spent on Nedlac activities by leaders andrepresentatives of government, organised business, the organised community constituency,and organised labour.

This summit provides us with an opportunity to reflect on what has been achieved and toconsider how best to take the process forward.

Much learning, debate and agreement-making has occurred. While there is still a longroad ahead, there is no doubt that significant progress has been made.

Through intense activity during the past year, Nedlac has built a solid foundation forthe future. We are evolving a comprehensive system of cooperative governance in SouthAfrica.

Building on the political and economic negotiating processes which began in 1990 - inparticular the National Economic Forum and the National Manpower Commission - a uniqueSouth African model of social dialogue has been developed.

We are creating an open and dynamic system of social dialogue and consensus-seeking. Itis built on a platform of democratic rights and freedoms which enables organisationsrepresenting various sections of civil society to engage freely with each other and withgovernment, and to engage in a way which strengthens their organisational capacity and theparticipation of their members and supporters.

This is reflected by the fact that the range of Nedlac activities has broadened beyondits core agreement-making role. Nedlac also serves as a mechanism for informationexchange, informal problem-solving, research and investigation, joint campaigns, pilotprojects, constituency capacity-building, national policy dispute resolution, and otherfunctions.

During the second year of Nedlac's existence, the number of formal agreements and reports completed has trebled compared to the first 15 months. This indicates a significantly higher level of activity. However, the value of the Nedlac process cannot be measured simply by the number of agreements reached. The process also influences and strengthens policy-making and implementation in a variety of subtle ways.

Nedlac has made an impact on the transformation of the labour market, trade andindustry policies, development policies and the building of important new institutions insociety.

By strengthening democratic governance and transparency of decision-making, Nedlac alsolimits the scope for self-serving lobbying by narrow interests. This kind of lobbyingdominated and distorted policy and implementation processes under apartheid, contributingto social and economic crisis. Through cooperative governance, new policies and changesmade are more considered, carefully balanced and more durable in the long-term.

However, this approach is complicated and, inevitably, time-consuming. Underpinning theNedlac concept is the firm conviction that time and energy spent in achieving greaterconsensus will be more than recouped in the relative ease of implementation which follows.Combining so many interests and issues makes for a greater level of complexity that ismore difficult to manage, and in which full and unqualified consensus is unlikely. That wehave largely succeeded thus far is due to the fact that there are very skilled andexperienced negotiators in all constituencies who are participating in the Nedlac process.

Over the past year, delivery has improved across the board in the country as a whole. As the review of social and economic developments shows, South Africa's performance has improved significantly. However, much more still needs to be done. Nedlac's contribution to this improved scenario is significant.

The main agreement reached during Nedlac's first year was on the Labour Relations Act (LRA). The new LRA establishes acoherent industrial relations system which promotes collective bargaining and cooperativerelations between unions and employers. During the past year, the Labour Market Chambertook forward the process of implementing the Act. This included "nuts-and-bolts"work relating to the establishment of the Commission for Conciliation, Mediation andArbitration (CCMA); agreeing on the labour relations amendment bill, which involvedtechnical and substantive changes; agreeing schedules to the LRA on transitionalarrangements and other matters; advising the President on the appointment of judges to theLabour Court and Labour Appeal Court; nominating members to the rules board of labourcourts; nominating members for and agreeing regulations concerning the essential servicescommittee, and some other matters.

To mark the implementation of the Act, the first-ever multipartite public rally wasorganised on 11 November 1996. In addition, Nedlac facilitated a substantial programme ofeducation on the new LRA for the benefit of workers and small businesses.

The Labour Market Chamber also produced agreements on other important pieces of labourlegislation. An amendment to the Insolvency Act wasagreed, which will result in workers' claims against an insolvent employer receivinghigher preference than before. Amendments to the Compensation for Occupational Injuries and Diseases Act were also agreed. Consensus was alsoreached on the ratification of ILO convention 175, which deals with the rights ofpart-time workers. This was the sixth ILO convention agreed since Nedlac's launch.

During the past year, considerable effort was invested in negotiations on employmentstandards. Altogether 11 tripartite negotiating sessions were held in 1996, which informedthe drafting of a bill. Since the basic conditions of employment bill was tabled in Nedlacin April this year, further negotiations have taken place. Currently an impasse exists onsome fundamental issues. Further talks will be convened once any party has a new mandateto table for consideration.

In the arena of trade, Nedlac has been closely involved with initiatives to enhanceSouth Africa's access to other markets and to establish new trade relations. Through theTrade and Industry Chamber, ongoing work takes place on the trade negotiations with theEuropean Union. Work has also begun on matters relating to the southern African region andthe Indian Ocean Rim.

In the context of increasing trade liberalisation, an important framework agreement wasconcluded on the social clause which commits government, business and labour to amultifaceted strategy to promote the universal ratification and observance of the core ILOstandards. As a consequence, labour and business representatives have been included in thegovernment delegation to the World Trade Organisation and other multilateral forums.

A substantial contribution has been made to the development of a new industrial policy.This has been assisted by the positive impact of two policy sessions of the Trade andIndustry Chamber.

Agreement was reached on the implementation of a new tax incentive scheme withqualification criteria relating to human resource development, job creation, and regionaland sectoral priorities. This followed research conducted on the previous regionalindustrial development programme. Other supply-side measures have also been shaped byresearch and discussions of the Trade and Industry Chamber, including the small/mediummanufacturing development programme, which is a grant scheme available for smallbusinesses.

Agreement was also completed on the national small business bill, which provided aninstitutional and regulatory framework to promote small, micro and medium-sizedenterprises.

Through the Japanese Grant Fund (JGF), a substructure of the Trade and IndustryChamber, substantial research has been done on 10 industrial clusters. This work isclosely coordinated with studies being undertaken by the Industrial DevelopmentCorporation (IDC) and the Department of Trade and Industry. The JGF is administered by theIDC.

The first phase of the Workplace Challenge project was very successfully completed inDecember last year. It is an initiative aimed at increasing the competitiveness,productivity and employment potential of South African firms and sectors by harnessing thejoint efforts of business and labour, as well as national and provincial government.Workshops were held in eight provinces to sensitise participants to the key issuesinvolved in workplace change and attaining world class competitiveness, and to eachother's perspectives. Almost 900 people took part in the workshops during the first phase.

Phase two of the Workplace Challenge, which is currently in preparation, will focus onassisting selected sectors and value chains to develop strategies and structures toenhance the performance of firms. A mechanism is being considered to increase thecoordination between the cluster research, the Workplace Challenge and other industrialpolicy initiatives currently taking place.

The fruits of the previous year's agreements were seen this year with the establishmentof Investment South Africa, the export finance guarantee scheme, the Ntsika InvestmentPromotion Agency and the National Small Business Council.

A new programme was initiated to help combat crime and violence. The high level ofcrime and violence in the country impacts negatively on the quality of life of allcitizens, as well as on the overall economic performance of the country. Fighting crimerequires action by both the authorities and organs of civil society. To build localaction-orientated partnerships, a conference against crime and violence was organised, inconjunction with the Secretariat for Safety and Security. For the first time, thereligious community and sports organisations were drawn into Nedlac activities. Theconference declaration lays the basis for local action by each participating organisation.The conference has produced a positive reaction. The establishment of Sport Against Crime,Sanco's Operation Mpimpa, the work of Business Against Crime and Cosatu's anti-crimemarches are to be commended for adding a new element in the struggle against crime andviolence. Follow-up work is being undertaken by the Development Chamber to build anddeepen these efforts.

The Development Chamber, which began its activities later than the other Nedlacchambers, also completed its first agreements in February this year. This includesagreement to support the establishment of a national development agency designed toprovide resource support to organs of civil society.

Agreement was also reached on guidelines for the establishment of local developmentstructures, which seek to facilitate more effective consultation between government andcivil society at the local level. An implementation plan to disseminate and promote theseguidelines has also been agreed.

A framework agreement was concluded on job creation in public works and theconstruction industry, with a special focus on community-based public works programmes.The agreement identifies problems experienced in the current community-based public worksprogramme, and makes recommendations to correct each problem identified.

A related job creation project, initiated by Nedlac's predecessor, the NationalEconomic Forum, has now been concluded. The project was administered by the DevelopmentBank of Southern Africa and had substantial tripartite involvement in its initial planningand allocation phases. It dispensed R256,8 million to 570 projects engaged in buildingroads, bridges, sanitation facilities, classrooms and community facilities. By Septemberlast year, shortly before the project was completed, 344 725 person months of employmenthad been created.

Discussions on macroeconomic matters are generally more complicated than other policyareas. However, during the last year, a report on discussions on the Budget (which wereheld in the Public Finance and Monetary Policy Chamber) was completed and submitted to theMinister of Finance. The report contained tax proposals made by business and labour.

For the coming year a process has been developed for Nedlac to input into the Budgetprocess, the medium-term expenditure framework, as well as a holistic approach to tax.

Capacity-building is a vital aspect of the Nedlac process. It is fundamental to allparties' ability to meaningfully participate in the process and to give effect to theobligations which they have agreed to. More than R5 million has been leveraged forcapacity-building since Nedlac's establishment. This has been done through jointprogrammes with other institutions and funding from donors, which has complementedNedlac's own capacity-building fund.

These resources have been directed to constituency capacity-building aimed at labour,small business and the community. Funding has been provided for the employment of supportstaff and services, constituency infrastructure and administration costs, and varioustypes of workshops. The largest part, more than R3 million, has been invested in educationon the LRA for shop stewards and officials of Cosatu, Fedusa and Nactu, and members ofFabcos and Nafcoc. Of this, the African-American Labour Centre contributed R2,5 millionfor trade union education on the LRA. Approximately 10 000 individuals have benefiteddirectly from the workshops and the manuals and videos which were produced.Capacity-building will remain a top priority in the coming year.

Through section 77 of the LRA, Nedlac has a central role in dealing with socio-economicprotest action. The LRA sets out a procedure through which workers may obtain protectionfor participating in socio-economic protest action. This is a new function and one whichwe are having to learn quickly to manage. So far, three different notices of protestaction have been served on Nedlac. The law has not been clear and this has contributed toa legal dispute in respect of the notification by Cosatu of protest action on the basicconditions of employment bill negotiations. Following the recent decision of the LabourAppeal Court, we have taken urgent steps to comply with the ruling. Clarifying anddeveloping section 77 procedures is a top priority for the next period.

At the 1996 Nedlac summit, attention was given to the Nedlac process and agenda. Wehave subsequently made considerable adjustments to ensure that Nedlac reaches agreements,resolves disputes and enables information to flow more effectively. Coordination betweenNedlac's chambers and other institutions is taking place on an issue-by-issue basis. In anevolving institution like Nedlac, adjustment and refinement of the process must be anongoing activity to ensure that it remains dynamic and operates as effectively aspossible.

The improvements made include strengthening the role of the Management Committee incoordinating and expediting the work of the chambers; regular senior-level policy sessionsfor each chamber, which allow for more strategic discussion; a strategic focus session ineach Executive Council meeting, and a more coordinated approach to dealing with proposalsfrom government for legislative amendments. The new format for this summit, with fourcommissions on key debates, is another step towards improving the environment forstrategic debate and thinking.

Our relationship with Parliament needs further attention. It has become morestructured, and meetings between chamber delegations and specific parliamentary committeeshave taken place and will be continued. Work on a protocol for relating to Parliament willinvolve consultations with the chairpersons of parliamentary committees later this year.

Internationally, Nedlac has established contact with many other social and economiccouncils and similar organisations, and has hosted a number of international visitors. Ofgreat significance is the interest in the Nedlac experience from countries in the southernAfrican region. This contact will continue to grow. I welcome the attendance here today ofClaude Ricaud of the Mauritius Social and Economic Council, who will host the nextinternational summit of social and economic councils in 1999.

In accordance with the Nedlac Act, a report on social and economic conditions in SouthAfrica has been prepared. The purpose of the report is to assist and inform the Nedlacprocess. The report is based mainly on data obtained from government departments, theCentral Statistical Service and the South African Reserve Bank.

In general, the report shows that developments are taking a positive direction,although considerable room for improvement still exists. However, in respect of employmentthe situation is unimproved.

The main features of the report show positive growth, although at a modest level.During 1996, non-agricultural growth was less than 2%. Overall labour productivity hasincreased compared to wages and salaries. Private sector investment is rising, althoughthe level of current fixed investment is still below the 1990 level. Non-gold exports aregrowing strongly.

Public expenditure has been reprioritised with a decrease in the defence budget butincreases in education, welfare, housing, police and prisons. However, interest paymentson debt has increased substantially. There has been an increase in the delivery of water,sanitation, housing and basic services.

Regarding unemployment, non-agricultural employment continued to decline in 1996 as ithas done throughout the 1990s, except in 1995. The Central Statistical Service's latestfigures show that 29% of the economically active population is unemployed, with theEastern Cape and the Northern Province being hardest hit.

On the distribution of income and wealth, South Africa remains the second-most unequalsociety in the world, with 26% of African households having an income of less than R570per month.

The full report is contained in the documentation packs and will be available tomembers of the public from next week.

In the coming period, we are prioritising reaching agreement on the skills developmentstrategy and, in particular, on a mechanism for the financing of training.

Many additional issues are already being considered in the chambers. In the comingmonths our priorities will include the following matters:

The demarcation of sectors for collective bargaining purposes.

• The Masakhane Summit scheduled for late July, and the related question of municipal service tariffs.
• Legislation dealing with water rights.
• Issues related to enhancing housing delivery.
• The social plan to cope with the employment aspects of economic restructuring.
• Competition policy.
• Reform of public sector procurement.
• Research into domestic savings and investment.
• The establishment of the public sector transformation forum.

In conclusion, I believe that our endeavours have been fruitful. However, as indicatedin the report on social and economic conditions, there is a very long road still ahead.Nedlac must continue to play a vital role in South Africa's transition by working towardsa common vision and by forging an ever greater consensus on the crucial balance betweenconsiderations of equity and of efficiency. A strategy for employment creation remains atop priority.

What has already been achieved gives us all every reason to be confident about thefuture. I look forward to a year of consolidation and enhanced delivery.

I would like to thank all the members of the Nedlac structures and those who haveparticipated in the process for their time, energy and dedication. In particular, Iacknowledge the special efforts of the overall convenors and leaders of delegations. Tothe staff of the Nedlac secretariat, I thank them for their total commitment anddedication which is so vital to the success of Nedlac.

The struggle continues! Forward to victory!