ADDRESS BY DORIAN WHARTON-HOOD ON BEHALF OF BUSINESS

For the purposes of this talk, I think that "summit" is agood word to use for this annual gathering. Let us imagine the people in this room huddledtogether at the top of one of South Africa's great mountain peaks. From the summit,one can see the surrounding landscape for miles. Similarly, at this Nedlac Summit, we havethe opportunity to lift our gaze from our daily occupations and take a wider view of whatis happening in South Africa and where we are headed in the future.

The first thing to observe is that we are one and a half thousand daysinto the democratic era in South Africa. Speaking not only as the Chairman of BusinessSouth Africa, but also as a common citizen, I observe that the society unfolding around usis healthier than we could have dared hope. In many ways, politically, morally andeconomically, this society has been rescued from deep trouble. Many of the people in thisroom - from all four constituencies - have played a part in this and some have devoted alarge part of their lives to this effort. No matter how enmeshed we become in dailydifferences and disputes, we should take care to remember and recognise thesecontributions.

We now know, four years into the democratic era, that these effortshave achieved far more than merely save our society from disaster. We can see that a freeand viable nation has been established, which will, in turn, form the basis for a fair,prosperous, creative and hopefully safe society. However, whilst we must not lose sight ofthe progress that has been made in laying a firm foundation, we must also recognise thatin practice we have much more to do in implementing the policies that will allow us toachieve these goals.

I will first discuss three seminal achievements of our new society.Then, in view of these achievements, I will suggest some pointers to our future success,and the role Nedlac can play as a midwife to our future.

Three Great Achievements

First - and most important in the long run - our ConstitutionalAssembly has given us a fine constitution, probably one of the finest in the world. Theconstitution guarantees open, democratic government and personal freedoms. At the sametime it contains important social goals, which we could ignore at our peril. Theconstitution provides a sound basis for a free and prosperous society.

The second achievement of our new era is an economy based on solidfoundations. Is there any greater compliment to the management of our economy than thefollowing? An economic tornado last year hit the most successful emerging economies -those in Asia. The crisis decimated their currencies and left them dependent on massiveIMF support. In the midst of this storm, the South African economy remained intact,keeping our currency on an even keel, and shrugging off the attentions of speculators.

Let's pause at this point for a moment. The cost of a full-blowneconomic crisis would have been devastating. A crisis means lost jobs, lost income, losttax revenues and lost investment - all on a massive scale. Our society would have beendisrupted, confidence lost and the economy grievously weakened. A crisis averted andavoided is thus a boon to the economy, and bears testimony to our economic policy. Ofcourse, there are still some elements of a sound economic policy which need to be put intoplace, but all those responsible for our solid performance in the face of the recentpotentially catastrophic events deserve our congratulations.

The third great achievement of our new society is, to me, a deeplypleasing one. Since 1994 we have witnessed the unlocking of talent, creativity and energyof all South Africans where previously apartheid stifled the human potential of millionsof people.

A different and exciting dynamic is now afoot. Where the old societywas prescriptive, the new is more tolerant. While the old society harshly excluded, ournew society tends to include. The old South Africa was secretive and opaque, whereas thenew style of government is moving towards openness and transparency. I find it highlymotivating that the talents of South Africans, previously repressed, held back ormisdirected, are blossoming - in politics and public administration, in sports and thearts, and in business.

There have been some discordant notes however. Unfortunately, from timeto time, criticism is perceived as being negative and disloyal. In some cases this may bejustified, but without constructive critical appraisal, debate is inevitably sterile.

Strikingly, the new constitution, our economic policy and our return tothe world are the results of the efforts of our political leadership. How has the rest ofour society, and in particular business, responded? The short answer is that businesseshave invested and innovated on an impressive scale. These elements deserve a closer look.

Private businesses have been enthusiastic investors. Last year privatefirms were responsible for 96% of gross domestic savings. Businesses have used thesesavings to invest more in factories, equipment and buildings which have createdsustainable employment. Since 1994 private businesses have invested a total of R 307billion in South Africa. Investment is increasing all the time. Last year R 71 billion wasinvested, some 70% higher than in 1993, the last year of the previous era. At the sametime, businesses have innovated at an unprecedented rate, launching new services andproducts in telecommunications, information technology, finance, manufacturing and mining.

I would also like to mention the effects of unlocking the talents ofall South Africans. One consequence has been the dramatic emergence of black business.Black business, in terms of entrepreneurial energy and the exercise of control overestablished companies, has exceeded expectations. According to McGregor, the marketcapitalisation of listed companies in which black interests have effective control or asubstantial influence now exceeds R 110 billion. Three years ago it was less than R 3billion. This is a most encouraging development.

Our companies are now free to deploy South African talents throughoutthe world. South African companies are selling beer in China, devising new financialproducts across Europe, building sophisticated data networks on all six continents, andmanaging mines virtually everywhere. Export earnings, expertise and profits flow back toSouth Africa from all these ventures. Closer to home, South Africans are providinginfrastructural and financial services that are transforming our own African continent.

Much Work Remains

I sketch the above picture to convey the dynamism that has been ignitedin South African businesses by the internal changes in the country and our return to theworld. But much work remains to be done, in society generally and in the business world inparticular. I want to point out four areas that require on-going attention.

As I said earlier, there are still some problems. Firstly, as a societywe save far too little. While business savings are high and the government's savingsperformance is improving off a low base, personal savings are still abysmally low and needto be encouraged. Low savings is one of the factors why our overall investment rateremains low when compared to the average for the developing world.

Secondly, criminals continue to plague the lives of too many SouthAfricans. It is encouraging to note that progress is being made in this area, and thatBusiness Against Crime is working closely with government agencies and departments toassist in the fight against crime. If we are serious about achieving the kind of societywe want, this is a fight that none of us can afford to lose.

Thirdly, business continues to believe that aspects of our labourmarket need restructuring in order to transform the ability of the economy to attractlabour-intensive investment. Similarly, the ability of big, and particularly smallbusiness, to create jobs is being severely hampered by onerous and costly labour marketregulation.

I believe that these factors underlie the twin problems of widespreadpoverty and mass unemployment. These problems have multiple causes and require a number ofremedies in which all of us must continue to play a role. It is to find solutions forthese kinds of problems that Nedlac exists. It is appropriate, then that the preparationsfor the Presidential Job Summit are high on this year's Nedlac agenda.

I want to suggest three key words for addressing poverty andunemployment in this country and also in preparing for the Presidential Job Summit. Theyare "education", "world" and "people".

The first word, "education" serves as a reminder thatimportant roots of the poverty and unemployment we see today lie in the systematicexclusion of most South Africans from access to a decent education, which prevents themfrom realising their potential. The legacy of this meagre investment in human capital willbe with us for some time to come. These factors severely impact on the employability ofmuch of our workforce. It is crucial that the quality and quantity of training, andparticularly education, in this country catch up with the front runners in otherdeveloping economies.

The second word we have to bear in mind is "world". We allknow that people, ideas and capital - as well as goods and services - now move freelyacross nearly all national boundaries. The increase in trade means that the best goods andservices from any source are available to our citizens at competitive prices. This helpsto improve living standards and reduce our inflation rate. It also means that newinvestment, and the employment it brings, will always find the most investor friendlylocation.

One consequence of being part of the world is that countries which wantto attract businesses that will produce goods for sale on the world market will have tocomply with certain fundamental policies, especially competitive tax rates and a freetrading environment. If the environment is not sufficiently attractive, production andjobs will find another home. All too often, this uncomfortable reality is forgotten, ordeliberately ignored. Closing our eyes to the realities of global economics will come backto haunt us.

There are so many countries that already have these essentials inplace, that we have to ensure that South Africa stands out from the rest by developing andimplementing leading edge policies which will attract this investment. This appliesparticularly to the quality of our people. With the right education and training and afavourable economic environment, South Africans have the potential to be as productive asthe world leaders. However, laws and regulations alone cannot bring about higher wages andsecure employment for South Africans - only vastly improved levels of productivity canhelp achieve this.

I want to make it clear that when I speak of productivity, I mean thatthe productivity of managers, workers and capital all need to improve. Ifthis sounds like a finger-pointing exercise, the fingers are pointing at all of us. As acountry we are not sufficiently productive or efficient, and until we become so we willnever be internationally competitive. The fact that many talented South African graduates,managers and skilled artisans are leaving the country is a cause of great concern. Thehuman capital that we are losing will be replaced, but this will take a considerableamount of time and money. We must, therefore, hasten to improve the business and socialenvironment in South Africa to ensure that we retain, and develop, the skills of those wehave nurtured.

Nedlac

As I said earlier, at its best, Nedlac plays the role of a midwife inthe delivery of the society we all wish to live in. Let me say this quite bluntly:business is convinced of the value this organisation has brought, and continues to bring,to our country. It has led to better understanding between the social partners, and to thesharing of important insights and knowledge. While business, or the other social partners,might not always achieve exactly the policies or legislation they want, Nedlac provides aforum for real engagement on issues which affect all South Africans - and this is initself important.

Of course, complete harmony has seldom, if ever, been achieved betweenthe social partners, but this is hardly a fair test of Nedlac's contribution. Some ofour differences run deep. The midwife can be held responsible for the birth of the baby,but not for the behaviour of the parents! We need to be frank about the shortcomings ofthe process, in the hope that they can be addressed. No one side is to blame, but we willhave to work together to improve Nedlac's performance. A welcome development is theacceptance by the parties that they will often have different convictions and that it isneither disloyal nor harmful to the process to express these views. The intention ofNedlac was never to reduce public discourse to a sterile exchange. Business will continueto be frank in stating its views and will remain loyal to the process of negotiation.

We have drawn inspiration from the recent gold summit and hope that relations at Nedlachave attained the maturity to enable us to make similar progress at the forthcomingPresidential Job Summit.

All of us know that we live in a wonderful country. Equally, no onewill disagree that much remains to be done if South Africa is to realise its fullpotential. I would like to make a sincere plea that we devote our energies to furtheringthe interests of all South Africans. Let's not waste time fighting about our pettydifferences when South Africa has a window of opportunity to be a world player of note.Let us rather join together in meeting the challenges that lie ahead.