Two major issues will determine success or failure for our economic recovery
18 September 2020
As the country returns to a kind of normality under Level 1 Covid-19 regulations, two major issues are concerning for their ability to impede a swift economic recovery. How these turn out will determine whether or not South Africa is written-off by foreign investors as just one more African economy unable to live up to its full potential.
The first concerns the details of the Government’s yet-to- be-revealed economic recovery plan. Second, but no less important, is how the pay dispute is settled between the National Education Health & Allied Workers Union (Nehawu) and the Government.
The devil as always will be in the details. The recovery plan must carry with it the commitment to measureable action to create a business and investor-friendly environment in the shortest possible time. The Chamber is pleased that this new social compact has been forged with government, business and labour. It suggests that realism about economic realities is beginning to gain ground. Anything less than this collaborative approach to confronting what are intractable socio-economic problems will fail to deliver on its promises and will make it difficult for us to dig ourselves out of what is a very deep hole.
That said, we must guard against the growth of a cosy relationship with big business in which barriers to entry and to competition are allowed to grow into an African version of a corporatist state.
With regard to the Nehawu pay dispute, the Chamber is less optimistic. Union negotiators tend to assume that money can always be found to meet their demands, whatever the national economic circumstances. They also assume that profit is theft instead of the prime motivator of progress. Both mind-sets must change in the national interest. It will be difficult.
Should Nehawu achieve its demand for above-inflation increases for its members it will be a pyrrhic victory. No one will be victorious, not union members, not the Treasury, not taxpayers, and not the governing party. Without economic growth and foreign investment the money for pay rises will be worthless within a year, as will the increase in union dues.
Should the Government succumb to Nehawu it will deal a devastating blow to business confidence both internally and abroad, and embolden other unions to make equally excessive demands.
The antithesis of success in these pay talks would be an agreement that panders to political interests. In short, unless both sides make the national interest their priority, it is a distinct possibility that the economic recovery plan will fail.
Issued by Dean Le Grange, Media and Digital Co-ordinator, Cape Chamber of Commerce and Industry, 18 September 2020
