Labour Speech to the Summit

Address to the 2001 NEDLAC Summit on behalf of COSATU, FEDUSA and NACTU, 

by Ebrahim Patel, 

27 October 2001

Deputy President Jacob Zuma, 
Leaders of Cosatu, Nactu and Fedusa, 
Leaders of government, community and business, 
Distinguished guests, 
Comrades and friends.

The annual summit is traditionally the opportunity to take stock of the state of social dialogue.

What then is the bottom line on Nedlac's past 12 months? It is a truism, chairperson, that all policies are fundamentally tested by whether they improve the lives of people.

The real bottom line therefore is not financial, it is about human beings. Some years ago, we introduced the Nedlac Summit to Jabu Xulu and Cynthia Gumede. Every year we gave an update on how their lives are proceeding, and what impact we made on their lives.

By the standards of ordinary societies, the output from Nedlac and more generally from social dialogue has been very productive. I will cite four examples to illustrate this.

We achieved a very substantial consensus between business, government and labour on the thrust and detail of changes to labour and insolvency legislation, and in the process turned what may have divided us into something on which we forged agreements and common positions. The agreed areas of the new law will improve the functioning of the labour market, introduce simplicity into individual dismissal conciliation processes, clarify the rights of parties in retrenchment discussions and during insolvencies, bring greater certainty to areas of the law such as transfers of businesses and improve bargaining councils and collective bargaining processes. In short it will make the law simpler, easier to understand and set out rights more clearly.

For Cynthia Gumede, the changes to the law will give some protection: while it will not outlaw retrenchment at her workplace, it does remove the anomaly in our law whereby she, and her union, had no recourse in the event of a dispute with her employer over the reason of retrenchment.

Nedlac adopted a code on HIV-Aids. The code sets out guidelines for employers and trade unions on dealing with HIV-Aids in the workplace. For Jabu Xulu, who works at a factory where 15% of workers are infected with HIV-Aids, the code offers him the basis to ensure that no one is dismissed simply because of their HIV status. But it will also give him a valuable tool to educate workers on the disease, and on the human compassion we should show in the face of such painful tragedy.

Substantial progress has been made to implement the Proudly South African campaign, aimed at improving the brand awareness of local goods and services, and promoting the 'buy local' campaign. Indeed, to date, sponsors have pledged R32 m in cash to the campaign, and R64m in total value. Cynthia Gumede, who you will remember works at a clothing company, will have her company's products, namely locally made clothing, advertised on TV, billboards, newspapers and posters on workplace notice-boards. The campaign will emphasise the high fashion and good quality package you get when you buy local. This will help to save jobs in her factory, and in other industries.

Nedlac has built complementary relationships with bilateral forums such as the Millennium Labour Council, and to that end, was able to partner an agreement on the LRA, BCEA and Insolvency act, with the support of the MLC. The Nedlac Executive Director will go on a study tour with MLC delegates in a month's time. For Jabu Xulu, the benefits of coherence in social policy is clear, if we avoid competing social institutions, and instead ensure all our forums converge and co-ordinate.

So, a busy and productive year. What then of the external context and its implications for Nedlac?

The local currency has been hammered by perceptions, and by events outside of our borders.

The human tragedy of the events of 11 September in the United States has been imprinted on our consciousness by the dramatic and painful images on television. One consequence of the events has been a shift in the economic policy area.

Governments saw the need to intervene actively and rapidly in markets, to prevent company bankruptcies, to prevent or reduce worker retrenchments in the airline industry, to maintain liquidity in capital markets and use macro-economic tools such as monetary and fiscal policy to prevent economic and social collapse.

This followed similar massive public sector interventions in the 1997 East Asian financial crisis, and they all underline the importance of carefully targeted actions by a modern state in defence of jobs, and to ensure markets work for people.

In our own country, there has been a large measure of agreement of the policy outcomes we need, and less agreement on the tools to achieve these. Agreed outcomes include the need to address the deep poverty and inequality within our country, secure rural development, eliminate the social deficit and above all, create employment.

The key challenge for our country is to promote what the ILO calls, 'decent work', namely, to increase the number of jobs, and simultaneously to improve the quality of jobs. This has been described as a programme to get more and better jobs.

For the year ahead, we should focus on practical steps we can take to achieve this.

We can make a real difference by how we take on this challenge, and by our focus.

Economists have expanded the concept of 'capital' in their attempt to explain the sources of economic growth. Initially, the term was used simply to describe physical stock and money. It was expanded later to include skills, namely "human capital', and ideas, namely intellectual capital.

We have in addition, a stock of 'social capital' in a particular society, by which we include the skills, traditions and know-how of social dialogue and agreement making.

We should more energetically and effectively use the 'social capital' that we have, of which our rich tradition and competence in social dialogue is an excellent example. This constitutes a comparative advantage for South Africa, and is one we should use to address the challenge of joblessness.

We would not be the first society to do so. In 1979, Margaret Thatcher and Ronald Reagan made supply-side economics the conventional wisdom, rolling back a post-WWII consensus on Keynesian economics. This entailed a liberalisation programme that at its heart saw trade unions and social dialogue as a rigidity, an obstacle to progress.

Yet two other countries, followed a more effective alternative policy with substantial results in rising employment, rising incomes and strong, sustained economic growth. Holland and Ireland both tapped into their 'social capital', and entered into a series of bilateral and tripartite agreements over the next few years, that lifted their economies out of structural weaknesses.

Our reality is different to both that of Holland and Ireland, but also to Reagan's USA and Thatcher's Britain. What we do share with Holland and Ireland is the strong institutions of consensus building.

Are these two historically exceptional cases? Indeed, no. Permit me to quote to you the comments of someone whose society confronted a tough challenge

"I see a great nation, upon a great continent, blessed with a great wealth of natural resources. Its ... people are at peace among themselves; they are making their country a good neighbor among the nations.

I see a... (country) which can demonstrate that, under democratic methods of government, national wealth can be translated into a spreading volume of human comforts hitherto unknown, and the lowest standard of living can be raised far above the level of mere subsistence.

But here is the challenge to our democracy: In this nation I see tens of millions of its citizens -a substantial part of its whole population -who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day. I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.

I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children

I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.

I see one-third of a nation ill-housed, ill-clad, ill-nourished.

'It is not in despair that I paint you that picture. I paint it for you in hope - because the Nation, seeing and understanding the injustice in it, proposes to paint it out. We are determined to make every.... citizen the subject of his country's interest and concern; and we will never regard any faithful, law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."

This quote, so appropriate to contemporary South Africa, was by US President Roosevelt, in 1937 in a country faced with a serious challenge, and the will to address it. It required a shared vision between all key stakeholders, and it ushered in a combination of bold policies of worker rights, poverty eradication, and public works programmes to build infrastructure and create jobs. President Mbeki incidentally, used this quote at the launch of the Millennium Labour Council in June last year.

The Declaration adopted at last year's Nedlac Summit, and the subsequent joint statement adopted by the MLC, set out agreed goals. They confirm a consensus to make SA a leading emerging market, and a destination of choice for investment, both local and foreign, and to expand social equity and fair labour standards. They spell out some of the social and economic challenges we need to take on to achieve this.

For four years we have set out very different macro-economic policies, and there has been deep disagreement on the policy choices of government. The past year has not seen real progress on developing a comprehensive agreement on economic policy. To do this will require open debate, a preparedness to review current policies and sufficient leadership by all of us to develop an agreement.

There have been significant differences in the past year on the issue of privatisation. As organised labour, we have expressed our unhappiness with the 'restructuring' programme, on its anticipated employment consequences, and on the impact on basic service delivery for the poor. The parties failed to forge a consensus on privatisation. Opportunities during the section 77 meetings were not utilised. Yet, a careful reading of the public policies by key parties makes one conclude that it is possible, with the necessary flexibility and serious negotiations, to build a greater level of consensus than what we currently have. Let us do so. This same effort is required to build consensus in other areas where we strongly differ, such as trade policy, given our experience of massive job losses as a result of the manner and pace of market opening.

The broad consensus on labour market reform provides a solid basis on which we can now tackle these important challenges.

One source of optimism is that there appears to be an emerging though tentative consensus developing on the need for a new policy mix, beyond a stabilisation programme, directed at human resource development, job creation and increased investment. This possibility, tentative as it is, should be used by and in Nedlac to open up a serious discussion on the range of fiscal, monetary, industrial, trade and investment policy measures required for equity and growth.

There are positive developments we can build on: we have started to lay the basis of some policies that can secure achievement of the decent work objective: we have

• a sophisticated and modem industrial relations system and have recently agreed to adjustments to some key areas of our labour market,

• a Proudly SA campaign that will foster greater demand for locally produced goods and services,

• an exchange rate that provides opportunities for a significant export drive, and

• a major programme of investment in skill development, whose economic dividends should manifest itself within the immediate future.

For the year ahead, in addition to the macro-economic challenges outlined, there are some distinct areas we should focus on, which include:

• Developing a concrete industrial policy directed at saving jobs and growing employment, and avoiding an undirected trade policy that results in high levels of unemployment
• Investing in a major public infrastructure programme that will create jobs and build vital social and economic infrastructure. In this context, consideration should be given to the package of financing measures we have previously tabled, including the proposal for a Reconstruction Bond as a vehicle through which a set-aside from the life assurance and retirement industry can be safely invested to finance much-needed infrastructure.
• working hard to improve public institutions, including those in the labour market, and reducing the gap between policy and actual implementation
• increasing levels of private investment, through the opportunities that arise from an active industrial policy and from public infrastructure programmes, and through negotiations between stakeholders on commitments to increased domestic investment
• addressing the productivity challenge through a Productivity and Equity Agreement at national level, with tangible measures and targets
• agreeing on a concrete HIV-Aids treatment plan that can be introduced in partnership between government, labour, business and community organisations.