The Prospects for a Social Pact in South Africa

Today I attended a discussion between Adam Habib and Judith February at the Open Book Festival in Cape Town. The topic was Habib's book, South Africa's Suspended Revolution, and the conversation revolved around Habib's view of the political and economic forces that have shaped post-apartheid South Africa, particularly the schisms that exist within society due to the level of inequality.  Habib's primary idea is that South Africa needs to develop a social pact between business, government and labour in order to make the compromises necessary to tackle the deeply embedded economic and social problems within the country.

Habib had harsh words for corporate leaders earning tens of millions a year while trying to push through 6% salary hikes for workers earning a few thousand rand a month. He also criticised the ANC as transitioning from a party of liberation towards an "enrichment mechanism for politicians and the politically connected". Habib believes that the poor have no leverage in the current political environment, and been the victims in this fight for resources between business and the state.

Habib is the newly appointed vice chancellor of Wits University, but I had heard him speak four years ago at a bank-organised conference and was impressed by solutions he presented for the South African economy. I have often repeated his idea that "South Africans should build an economy for the workforce we have, not the workforce we wish we had". Back then he had stressed the importance of a Social Pact, but in the ensuing years the progress has not materialised — and in fact, the malaise has worsened.

The question is whether there is sufficient leadership in South African government, business and labour needed to make the difficult decisions necessary to move the country forward. South African business since 1994 has been responsible for employment and wealth creation, but to date shown little interest in the long-term objective of creating a more equal and inclusive society. Businessmen would question whether this even their responsibility, but in the case that "suspended revolution" does materialise then those with capital the most to lose. The governing party has chosen to pursue various Growth and Development plans (NDP/NGP), which allow them to pay lip service to issues without having to actually do much. It would be better for them to focus on fixing the existing structures rather than creating new ones.

While it is tempting to rue the mistakes that have been made by both business and government since 1994, I believe that Habib's idea of a "social pact" has a big part to play in reversing the current course of the South African economy.