"Accelerating the rate of growth and pace of development through partnership, prioritisation and active participation"

Government's position paper on the Growth and Development Summit

Purpose of the GDS:

President Mbeki stated in his 2003 State of the Nation Address "our country has a continuing task to push back the frontiers of poverty and expand access to a better life for all. The challenge we all face as South Africans is to put our shoulders to the wheel to accelerate the pace of change." The purpose of the Growth and Development Summit (GDS) is to respond to the President's call.

When he first publicly announced his intention to convene the GDS, in the 2002 State of the Nation Address, the President indicated that the GDS would seek to "…address the urgent challenges facing us in the economy and build an enduring partnership in which all of us can lend a hand building a prosperous South Africa."

Objectives of the GDS:

Based on the President's dictum, the objectives of the GDS can therefore be packaged as follows:

• Building an enduring partnership - promoting a shared vision of South Africa's growth and development strategy to frame sectoral and developmental agreements and lay the basis for partnerships in action (partnership);
• Addressing urgent challenges - selecting from many possible interventions those which hold the promise of the greatest possible impact in the shortest possible time for accelerated investment, job creation, improved efficiency and productivity, greater social equity, and a fairer distribution of economic opportunities and rewards (prioritisation).
• Lending a hand - securing the commitment and active participation of all social partners in those areas identified for prioritised action in ways that build on lessons learnt from the successful implementation of social, economic and development programmes (active participation).

Background

Against a background of faltering growth and uncertain prospects internationally, South Africa entered 2003 with a strengthening currency, robust investment growth and rising business confidence.

Several important conditions for improved economic performance are in place - macro-economic stability, decent labour standards and institutions for social dialogue, sound public finances, a robust legal and financial infrastructure, well-developed transport, communications and logistical networks, an open trading environment, surplus energy capacity, rising quality in the schooling system and a set of dynamic higher education and research institutions.

These conditions have been achieved since 1994 both as a result of the comprehensive transformation of public policy and its implementation through legislation, government programmes and services and well as from the actions of those in civil society who have worked tirelessly for growth and development. An overview of the work of government can be found in the 2003 Intergovernmental Fiscal Review which provides an informative account of public expenditure and service delivery across several critical areas.

Nonetheless, much more remains to be done. South Africa has experienced a persistent structural unemployment problem and associated household poverty and vulnerability. The pace of investment, job creation, productive asset distribution and institutional development remain inadequate to overcome the legacy of disadvantage and marginalisation that keeps millions of people out of the mainstream of economic opportunity and progress.

A shared vision for growth and development

In the 2003 Budget Review Government elaborated its strategic programme of action for accelerating the pace at which we advance towards a shared vision for growth and development. The programme consists of nine key elements overlaid by a cross-cutting commitment to job creation.

The cross-cutting commitment to job creation is in line with the imperative articulated by the President "…to act to ensure that we reduce the number of people dependent on social welfare, increasing the numbers that rely for their livelihood on normal participation in the economy".

This clarion call by the President requires Government to work in collaboration with social partners to broaden the base for sustainable employment opportunities in all sectors of the economy.

The nine substantive elements of its strategic programme priorities, as detailed in the budget read by the Minister of Finance in February 2003, are:

• Progressive broadening of the income security net, revitalised health services and targeted poverty reduction initiatives
• A national skills development strategy, focused on productivity enhancement and learning opportunities for the unemployed
• Redistribution and restitution of land, coupled with investment in rural development and agricultural support services
• Public administration reform, founded on respect for citizens' rights, courteous and efficient service delivery, modernisation of systems and honest, accountable governance
• Investment in infrastructure, technology advancement and industrial expansion, in partnership with the private sector
• Strengthening the fight against crime and combating corruption
• Widening access to financial services, integration of small businesses into the formal economy and further easing of the tax burden on low and middle-income households
• A sustainable, broad-based and transparent approach to black economic empowerment
• Deepening of democracy, promoting peace and security and expanding investment and trade as principles of international cooperation and the New Partnership for Africa's Development.

Government has used these priorities to guide the allocation of state resources, both in terms of the work programmes supported as well as in terms of the scale of the support provided.

This can be seen from the strongly expansionary nature of the budget elaborated in the Finance Minister's Budget Speech.

But growth and development cannot be achieved by government acting alone, and everything that needs to be done cannot be done at once. Government therefore proposes to its social partners that a joint programme of action be developed to accelerate the pace of change - and that this programme be built on the basis of partnership, prioritisation and active participation. Government further invites its social partners in Labour, Community and Business constituencies to embrace the set of nine programmatic areas outlined above as an agreed (and resourced) platform on which to build the proposed joint programme of action.

Social partners in NEDLAC agreed that the agenda of the Growth and Development Summit should be managed under four broad headings each of which is separately discussed below. They are:

• Investment: creating the conditions for growth and development;
• Skills and equity: Investing in people;
• Job creation and enterprise promotion; and
• Local action: partnership to build vibrant communities.

Government has built on this agreement as a basis on which the prioritisation process should commence and has identified a couple of intervention areas under each theme; and social partners are invited to indicate what their respective contributions will be in addressing the above-mentioned challenges under each of the agreed four themes. The objectives of the GDS, namely "participation, prioritisation and active participation" have been used to guide the selection of Government's priorities. Government believes that once an agreed set of priority intervention areas have been identified, each should be unpacked to clarify the roles and functions of each social partner, a plan of action developed and, where government has not already allocated resources then new resources should be identified by social partners.

Investment: creating the conditions for growth and development

Investment in productive assets and services, especially in labour absorbing sectors, and investment in social and economic infrastructure, remain at levels well below what our society needs, and well below what the economy can sustain.

The following priority initiatives are proposed to accelerate the impetus of investment.

• The pace and quality of public infrastructure investment, including both enhanced construction of new social and economic infrastructure, and improved maintenance of public assets, relies on both adequate budgetary provision and a dynamic and responsible institutional environment. A joint task team is proposed to address infrastructure planning and project management bottlenecks, to strengthen the design and terms of public-private partnerships and construction contracts, to improve the coordination of infrastructure planning, urban and rural development and industrial investment, to enhance national, provincial and local collaboration in infrastructure development and to promote effective and accountable management and maintenance of public assets.
• Reducing input costs: The competitive advantage that underpins investment in industry and job creation depends in part on input costs, pricing and quality of raw materials, transport, energy, communications and other services, research and technology development and support and other aspects of the business environment. Drawing on the progress made in improving the investment environment and diversifying industrial and trade activities in the past decade, a focused review of opportunities for productivity enhancement and reducing the costs of inputs and intermediate products and services and improving the quality of investment opportunities is proposed.

Skills and equity: Investing in People

More and more young people are successfully graduating from school but too many of these graduates are unable to make the transition to work - not only because jobs are not available (although this is clearly part of the problem) but also because they have not yet acquired skills needed for employability.

To address the employability problem government has adopted a two-pronged strategy (incorporated in its Human Resources Development Strategy). On the one hand it has restructured the public provider landscape at both further and higher education and training levels for quality promotion as well as to increase the number of traditional enrolments and pass rates of students. On the other hand it has introduced a new set of labour market institutions, the Sector Education and Training Authorities (SETAs) to signal skill needs and then resource and facilitate their development. One of the key instruments for skills development in the hands of the SETAs is the new learnership programme. The learnership programme is principally a work-based training route which aims to provide a parallel set of options for unemployed young people, particularly school leavers and young inexperienced graduates who are otherwise unable to find work. However, it should be kept in mind that learnerships are also available to those already in work. Learnerships combine theoretical learning and practical experience in a workplace. To succeed, the learnership programme needs employers to agree to engage learners and workers need to support the campaign to accommodate young people on limited contracts into their workplaces. An additional requirement for taking learnerships to scale is the active involvement of the public provider community. Employers who enrol learners in the learnership programmes will be entitled to tax incentives that would enable them to offset the cost of enrolling learners.

Alongside investment in skills, South Africa needs a deliberate and sustained framework for broadening enterprise ownership and control and extending economic opportunities to disadvantaged people. To complement the Employment Equity Act, a policy on black economic empowerment has now been tabled. The Summit provides an opportunity to explore its implementation and agree on joint approaches to managing and monitoring this strategy.

Areas for social collaboration include:

• Learnerships: Massive increase in the recruitment of unemployed young people into learnerships supported by the expanding participation of public providers in the delivery of the theoretical components of these new programmes;
• Codes and charters: Development of codes and sector/enterprise charters, in keeping with the BEE policy framework

Job creation and enterprise promotion

To ensure that people can "depend on participation in the normal economy for their livelihoods", government must create an environment conducive to enterprise development, job creation and diversified participation in income generating and service delivery activities. A key part of this strategy rests on fundamental microeconomic reform to ensure markets are effectively regulated, land and agricultural reform take place and that emerging enterprises are lifted into the formal economy and not confined to the periphery of economic activity.

Relevant policies include small business training and mentorship, support for development of markets, tax incentives for small businesses and for industrial investment, investment in transport and communications, broadening of access to financial services, promotion of industrial linkages and reorientation of industrial incentives and support measures.

Alongside enterprise development, employment creation can be promoted through labour-based social and municipal service delivery and community development programmes. Valuable lessons have been learnt through the poverty relief and employment programmes implemented since the Jobs Summit - these are currently under review. The Budget provides for stepped up employment largely in support of municipal infrastructure and service delivery improvement.

Issues for consideration at the Summit include:

• Expanded public works programme: Enhance labour intensive methods in the construction of public infrastructure, and expand public works projects for urban renewal and rural development.
• Enterprise support and empowerment: Strengthen small business incentives and support, including access to financial services, mentorship and incubation, and use public and private sector procurement to promote enterprise development and black empowerment.

Local action: partnerships to build vibrant communities

Though programmes may be effectively developed at a national level, the challenge is to improve the pace of local level implementation. Too often key initiatives (like small business support, housing, health, welfare and community services, tourism development or land reform, including the use of mineral rights and so on) encounter implementation obstacles at the local level. Unblocking these obstacles requires concerted effort by all social actors, not only government.

Certainly government has challenges of its own, such as improving the co-ordination across national departments as well as between spheres of government. The Integrated Development Planning process at local government level is the vehicle that government has adopted to achieve this end. But community members, including labour and business at local level, can make vitally important contributions to local social and economic development. The President has promoted the Vuk' uzenzele campaign - or direct voluntary action - which gives one example of the form this help can take. But there are other ways - through service on local boards and advisory bodies, councils of education and training institutions and the like, as well as through new forms of partnership with government, which can be profit-based (such as formal public private partnerships) or be based on more co-operative, non-profit based principles. Of course direct investment is also key for growth in all localities.

Finding the right vehicle for partnership and action at local level is a matter for local actors to determine. However, these partnerships can be strengthened by national agreements, which eliminate obstacles and smooth the way for local implementation and which provide support and leadership from national constituency organisations to their members at local level. The challenge facing government and its social partners at the Growth and Development Summit is to select those areas of agreement, which will have the greatest possible positive impact at local level "to accelerate the pace of change".

Only when all constituencies "have their shoulders to the wheel" will the problems of social exclusion and poverty be overcome and growth fast tracked.

Opportunities for joint initiatives include:

Implementation mechanisms: Examples of the various contributions social partners could make and provide support for local level implementation have been indicated above. It is therefore required of teams that will be engaging each other in preparation for the GDS to identify a limited set of initiatives and develop a set of implementation plans. These should be accompanied by firm commitments by social partners to report on progress against commitments.

Special attention needs to be paid to those commitments which will enhance the successful implementation of programmes targeted under the above three themes (investment, skills and equity, job creation and enterprise promotion), however there is a wide range of other government programmes planned for local level implementation which also require social partnership. It would be desirable for a process to be agreed whereby the participation of social partners in this wider range of such additional programmes, not specifically listed in this document; can be agreed at the Summit.

Information: Improving the relevance, timeliness, accessibility and quality of information available to local actors, as well as their capacity to use it, is key to successful management at local level. Social partners are invited to work with government to explore practical ways in which this might be achieved. Government is committed to strengthening its Multi-Purpose Community Centres as one element of this focus area.

Way Forward

Government is submitting this document as its contribution to the Growth and Development Summit. It anticipates that the other social partners will similarly have prepared their contributions.

Following an early exchange and presentation of contributions, government believes that a process must immediately commence to arrive at a common vision and set of priority areas for action as indicated.

Given the urgency and importance Government places on the GDS, Government accordingly urges all social partners to make their teams available to start with the interaction at NEDLAC without any further delays.

While the formal consultative process on the GDS will be processed through the NEDLAC structures, Government will continue to engage in other parallel processes to ensure that views of other interested parties not formally represented at NEDLAC also influence the outcome of the GDS process.

DIRECTOR-GENERAL: LABOUR
REPUBLIC OF SOUTH AFRICA
P.O. Box 745
Cape Town
8000

Tel: (021) 462 2886
Fax: (021) 461 5118