SA’s New Growth Path: enter Son of Gear

Posted on November 24, 2010


South Africa seems enamoured of acronyms, national economic policy providing a classic example. First we had the RDP, then GEAR and now the NGP. But the powers that be who have presented us with these labels have at least remained consistent about content: despite the name changes, nothing fundamental seems to alter.

The Reconstruction and Development Programme, which emerged in 1994 along with a ministry headed by former Cosatu general secretary, Jay Naidoo, gave way — as did the RDP ministry — to the Growth Employment and Redistribution document two years later. Both promised job creation and a boost to economic growth and were — with justification — described at the time by former Nedbank chief economist Edward Osborn as amounting to “a cascade of improbabilities”.

Now there is the New Growth Path, details of which were presented this week to the Cosatu central executive committee. Aspects of this latest economic outline were welcomed by the assembled delegates.

But, as Cosatu general secretary Zwelinizima Vavi noted on Wednesday, the union federation was “concerned about the macro-economic policy” contained in a document that may soon become dubbed, “son of GEAR”. Because, although some of the concerns expressed by unions — especially about executive pay levels — have been taken on board by the NGP, it remains grounded in the belief that strong economic growth is not only possible, but will lead to the redistribution of benefits and income.

Despite the very recent example of surplus domestic maize production, consequent price falls and problems for farmers, the new proposals also seem largely to ignore the realities of a global economic crisis rooted in debt and surpluses. Local belt tightening on a slightly more equitable level is one of the NGP proposals.

The new plan is to cap pay and bonuses for managers and executives paid more than R550 000 a year, but also to restrain wage rises for workers earning between R36 000 and R240 000. The proposed cap — hardly likely to affect those paid up to R1 million a month and more — is new; wage restraint a mere repeat of Gear.

The 1996 project noted: “The appropriate determination of wages is a critical component…..” And, as with Gear, there is no mention of higher taxes for the super rich or any restraint on dividend payments.

Tinkering with aspects such as industrial policy and infrastructure spend, without changing the “trickle-down” foundation will be seen by an apparently growing group of critics as little more than window dressing. On a wider level, there have been more complaints of late from within Cosatu about the federation and its members being used by the ANC as mere “voting fodder”.

Various trade unionists and federation spokespeople, with Cosatu often to the forefront, have have also been hearkening back to the macro economic document, Social Equity and Job Creation, adopted in 1996 by the combined labour movement. This prioritised redistribution as the path to growth and, as such, is diametrically opposed to the government’s economic orientation.

This difference provides a potentially serious challenge to government and to an ANC that relies heavily on the electoral support of Cosatu and its affiliated unions. As a result, the claimed “positive aspects” of the new policy direction are being given the hard sell by a government obviously concerned about the increasing rumbles of discontent within it largest alliance partner.

This was the reason that a phalanx of heavyweight ministers was drafted in this week to stiffen the resolve of the Cosatu executive to support the ANC. Perhaps critical among these heavyweights was economic development minister Ebrahim Patel, the former trade union leader. He is seen as key to selling the new “growth path” strategy not only to Cosatu but to the labour movement as a whole.

The government’s well founded assessment is that Cosatu, after analysing and debating the NGP document next month, will conclude that it amounts to “moves in the right (left) direction”. It is not, because the framework remains the same.

However, this is likely to be obscured by talk of infrastructure spend, minerals beneficiation and job creation, along with pledges to negotiate more equitable trading relations with countries such as China. And it is China that is already being trumpeted as the new (hoped for) source of foreign direct investment.

So the contradictions in the relationship between the ANC and Cosatu, will almost certainly continue, with every indication that the alliance will remain intact, at least for the foreseeable future. Because, for all the recent rumblings of discontent, it is obvious that the ANC holds the whip hand, in many ways more firmly than it did at the formation of the tripartite grouping.

The critical view that nothing has changed at fundamental political or economic policy level in 16 years of alliance rule seems vindicated. Several critics have also pointed out that the Cosatu leadership was also quickly “reeled back in” when the federation co-sponsored a “civil society” conference last month that excluded political parties.

The ANC and the smallest alliance partner, the SA Communist Party (SACP), a party Cosatu officially acknowledges as the only “workers’ party”, were enraged at not being invited. A public tongue lashing was duly delivered to Cosatu.

Having been publicly chastised, the federation officially announced its support for the ANC at the forthcoming local government elections. The only qualification was that Cosatu and its affiliates would not support ANC candidates “known to be corrupt”.

Since the ANC is unlikely to field candidates who clearly had their fingers in municipal tills and public purses, this hardly amounts to qualified support. And, coming so soon after the criticism for not having invited the ANC and SACP to the civil society conference, the protestations of loyalty looked somewhat akin to the abject apologies of an errant schoolboy.

But this expression of loyalty also came before the executive committee had met to hear what the NGC had in store. So Cosatu’s December deliberations should produce no surprises: expect unswerving support for the alliance, peppered with the same criticisms.