ANC may just be getting serious about economics

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AS THE election hype gathers pace, something more important may be afoot — the African National Congress (ANC) and the government may have begun their most serious attempt yet to negotiate the economic future with business.

For a while, economic negotiation has been something everyone talks about but never does. The parties talk to each other but they do not bargain seriously. Now, the ANC’s election manifesto, and some hints in the state of the nation address, suggest that it, at least, might be getting serious.

We need negotiation because poverty and inequality still damage people and limit growth. But addressing them is impossible unless those with access to capital accept the need for change — without this, there will not be enough resources to address the problem. And so the circle can be squared only by compromises between business, the government and representatives of working people and the poor. Which means negotiation.

But workable compromises require more than simply talking. They need bargaining, in which parties make concessions and receive them in return. And so anyone who is serious about negotiation must develop a bargaining position that spells out what they want and what they are willing to give in return.

None of the key actors have done this — they either make speeches about the virtues of negotiation without saying what they will negotiate or they assume that the other side should agree to everything they want. Official documents, including the National Growth Path and National Development Plan, have urged negotiation and suggested issues that should be bargained. But they have not spelled out what the government and ANC want and what they will give in return. The manifesto begins to do that.

First, it spells out the ANC’s preferred changes. It wants to narrow pay inequalities and speed up black economic empowerment. The financial sector, it says, should finance more investment in development and curb lending practices "that lead to overindebtedness and associated abuses". Steps are needed to ensure that the urban poor live closer to the economic action.

It does not seem in a hurry to implement any of this — after the manifesto was published, Labour Minister Mildred Oliphant said its proposal for a national minimum wage would be investigated over the next five years. Which suggests strongly that these are negotiation positions, not policy decisions.

Second, it sends a message that it wants to negotiate. It wants business to "actively contribute to inclusive growth" and "economic transformation". It promises to "promote a national dialogue with all role players to enhance inclusive economic growth…".

Third, it gives a sense of what it will give in return. The government will strengthen infrastructure partnerships with business, unions and "community structures". It will "fast-track implementation", "reduce regulatory delays" and "integrate and align incentive initiatives". It will "speed up the roll-out of the special economic zone incentive" and ensure funding by development finance institutions "at concessional rates for priority sectors and in support of job creation".

Whatever the merits of the proposals, by offering concessions and saying what it wants, the ANC is signalling it seeks a bargain in which business support for a more inclusive economy is met with business-friendly changes. If businesses respond by spelling out what they are willing to concede and want in return, real bargaining may begin.

Even if that does happen, negotiation would face many obstacles. Not only would the ANC and the government need to flesh out their proposals in greater detail. Because any compromise would need to be acceptable to most voters, they would need to be far more in touch with what voters want than now. The fanciful claim in the state of the nation address that grass-roots protests happen because a small minority want what everyone else already has, shows the gap between those who govern and the grass roots is still big.

Nor is it certain that business negotiators would have the support they need from their constituency to make agreements stick. Despite all the negotiation talk, it is not clear whether the parties are ready for compromise, which needs a shared sense that there is a crisis and that none of the key economic interests can solve it without the others.

A successful economic bargain would also need labour to come to the table and, given the Congress of South African Trade Unions’ troubles, that is hardly a done deal.

Despite all of this, the ANC’s apparent new approach could be a watershed. We will not have growth in which the majority share if "solutions" ignore labour and movements of the poor on the one hand, and the need for investment capital on the other. The economic negotiation the manifesto seems to want is the only way of ensuring a growing economy that begins to offer something for all.

By Steven Friedman

Source: Business Day

Photo: Thinkstock

Friedman is director of the Centre for the Study of Democracy.