SA’s social compact has stalled

President Cyril Ramaphosa indicated in his State of the Nation Address in February that the government and its social partners had 100 days to finish a comprehensive social compact to address issues of economic growth and unemployment. Social partners, as represented in the National Economic Development and Labour Council (Nedlac) are the government, labour unions, businesses and “communities”. These stakeholders are involved in addressing South Africa’s socioeconomic problems.

South Africa has a history of addressing key socioeconomic problems through inclusive initiatives. The initiatives that have succeeded and yielded the most positive results have been those based on compromise and consensus among stakeholders. The very first of these is the country’s Constitution.

More recently, in 2020, the minister of public enterprises, Pravin Gordhan, signed a Nedlac social compact framework aimed at supporting Eskom for Inclusive Economic Growth. This social compact was underpinned by an appreciation of the implications of the energy crisis on South Africa’s economic recovery and broader development. Similarly, addressing South Africa’s unemployment will need efforts from all social partners.

An understanding of social partners’ collective responsibility is necessary for tackling South Africa’s socioeconomic problems. Such would be based on the understanding that all social partners, not just the government, are necessary for the social compact to be successful.

In July, former president Thabo Mbeki criticised social partners for still not having a strategy in place for achieving a social compact. But a point that is often missed when discussing this issue is that social partners failed to establish a social compact in the 100 days that were marked by Ramaphosa’s presidency. It has been nine months since the State of the Nation declaration and there has been little to no progress.

The main reason for this is a lack of consensus among the social partners. The draft framework document has been rejected by some, who differ on commitments and targets set by the government through the draft framework.

An often-overlooked element of functional developing economies is the necessity for deep collaboration, cooperation and partnership between key institutions, and formal structures of society such as Nedlac. A closer examination of South Africa’s public policy-making environment bears witness to longstanding mistrust between social partners represented in Nedlac.

This institution has a significant role to play in fostering legislative proposals that would support economic growth, develop strategies for employment opportunities and bolster a robust labour market. But realising these objectives is often hindered by a lack of agreement.

Over the years, not only has this mistrust resulted in protracted battles over policy arrangements, but it has also threatened the very same economic development we all desperately seek.

For improved collaboration between social partners, consultation remains critical. Despite efforts by the presidency to bolster robust and meaningful consultation through key policy instruments such as the National Policy Development Framework and structures such as Nedlac, South Africa’s public policy environment still falls victim to poor consultative processes.

Often, the government has tended to stonewall these processes, reducing them to mere rubber-stamping and box-ticking exercises. Not only has this crystallised the uncertain relationship between social partners, but it also became the catalyst for the creation of obsolete, ill-informed and unscientific public policies.

It has become common for social partners to mudsling and shift blame. Business, for instance, has often rationalised its lack of investment behind the veil of not being adequately included in key decision-making processes.

Not only has this been counter­productive, but it has also provided the context for policy actors to negate their national and social responsibilities as corporate citizens.

Government’s approach of limiting the depth of its engagements with social partners has precipitated withdrawal among these very same social partners from engaging with issues of the country in a nuanced and reasoned manner. Responding to the draft social compact framework, Business Unity South Africa, which represents the business community in Nedlac, has said that it is planning to reject the social compact because the government has ignored its views.

Business stakeholders argue that concerns on matters such as investment targets, retrenchments and localisation targets have not been addressed by the framework. If this is anything to go by, it highlights the tense relationship between business and the government, underpinned by a high level of distrust.

On 25 July, in his address to the nation, Ramaphosa announced the government’s plan to address the South African energy crisis.

In response to this address and its announcements, the South African Federation of Trade Unions, an important component of social partners in the context of organised labour, informed the public that unions were not consulted in the process of the plans that have been detailed by Ramaphosa on the energy crisis.

Understanding that the measures announced by the president have implications for labour, particularly those unions who organise in the mining and manufacturing sectors, the consultation concerns raised by labour unions do not send the right message when the government still needs these partners to participate in the implementation of critical plans.

Even when there is some level of consultation between the government and the social partners, it often lacks depth and clarity because stakeholders tend to speak with different end goals. This contradiction was further demonstrated at the recent panel discussion between the coal industry and the government.

Both parties argue they have been open to discussions but concede that these have been limited and have not been able to reach a level of agreement on the question of how to forge the desired just transition.

One of the key points of contention from the coal industry is that an energy transition that does not have a clear plan in place to address the livelihoods of those who rely on coal mining may be an “unjust” transition. Ultimately, the success of a genuinely just energy transition plan rests on mutual agreements.

The development goals envisioned in the country’s National Development Plan 2030 are under threat considering the intolerable rising cost of living, slow economic growth, and persistent levels of inequality and joblessness. In addressing this, some recommendations may be addressed by the presidency.

It should commission a national dialogue of social partners to supplement the Presidential Social Sector Summit hosted in August and has been criticised for excluding some key stakeholders.

Such a dialogue would be aimed at creating a common understanding and easing the prevalent tensions that hinder progress. Such a conversation would also have to look at the effectiveness, strengths, and weaknesses of Nedlac as a structure.

Policy instruments aimed at improving consultation such as the National Policy Development Framework and the Socio-Economic Impact Assessment System would have to be part of the agenda, with the view of strengthening them.