Thursday, 18 October 2012

Special Report : Full Package Of Issues On South Africa Economy

(Full Package of issues to respond to the economic challenges agreed to at the High Level Dialogue on the Economy chaired by President Zuma)

Leaders in government, business, labour and community organisations, convened under the leadership of the President of South Africa, recognise the challenges SA faces based on slowing global growth, the current industrial relations environment in SA as well as the tragic events in Marikana and elsewhere in the country and the impact of all these on the local economy.

The Nedlac parties agree that there is an urgent need to speed up the fight against poverty, to address the high levels of inequality as well as reduce levels of unemployment, all of which contribute to social instability. In addition, the parties recognise the challenges many workers and communities face with high levels of indebtedness.

 Government is implementing its employment-focussed economic framework, namely the New Growth Path. The parties also recognise the important role of tripartite-agreed sectoral charters, notably the Mining Charter, in addressing developmental needs. In the context of the new pressures facing the economy however, additional steps and speeded-up implementation is required to ensure that the nation's economic and social goals are achieved.

The parties agree to take steps to improve public and investor confidence in the economy and in social stability, using their respective resources and capacities to build a partnership for development.

The parties recognise the joint-responsibility of the public and private sectors to improve the living conditions of working communities, including the role of mining companies and municipalities.

The constituencies recognise the importance of defending the values of the constitution and the Bill of Rights and supporting the systems of orderly collective bargaining and combating violence in public protests and industrial action.

The parties agree to use the terms of the 2009 Framework for SA's response to the international economic crisis, to incorporate the lessons that were learnt in the implementation during the 2009-2011 period and to fast-track its relevant economic provisions and social measures as appropriate.

The parties have engaged in a process of discussion, which has culminated in a High-Level Council meeting, convened by the President and including Nedlac and its constituents, at which this package was finalised.

The package addresses three connected issues: the socio-economic and social cohesion challenges that contribute to the current climate; the security and law & order requirements; and the defence of orderly collective bargaining processes and institutions.

 The purpose of the package is to instil confidence in the economy and to indicate to the nation that social partners will - on their own and together - act decisively to promote inclusive growth, job creation and social stability.

The elements of the package include the following areas set out below:
  • Building confidence in labour market institutions and taking steps to address income inequalities and promote greater social cohesion
  • Action to combat violence and lawlessness and to stabilize communities and build wider support for the law enforcement agencies to carry out their work
 Addressing socio-economic challenges, through measurable progress on infrastructure development, youth employment, living conditions for miners and communities with sustainable human settlements, support for companies and workers affected by the economic slowdown, public employment programmes (CWPs and EPWPs), fast-tracking commitments in the social accords agreed in 2011, social security and health insurance reform and action to address reckless lending and growing debt levels.

The parties recognise the importance of implementation and speedy action, with clear systems to monitor the impact of the actions that are undertaken.

The package is a step towards a wider process to address the structural challenges in the economy and to use social dialogue to build a common vision on jobs, growth, social equity and development. These processes will commence during 2012. The High-Level Council will meet, in association with Nedlac, under the chairperson of the President, to receive regular reports on progress.

Part 1: Confidence in labour market institutions, addressing income inequalities and building social cohesion

SA has well-established labour market institutions and arrangements for collective bargaining. They have come under stress in several sectors recently, and may need to be adapted to deal with structural change and challenges in the labour and industrial bargaining environment. However, they remain broadly sound.

Collective leadership at all levels needs to be seen to be committed to re-establishing orderly labour relations.

The collective bargaining system must address new and existing challenges, including the large income inequalities, high joblessness and need to address productivity challenges on a joint basis.

Bargaining systems must regularly be reviewed by the parties to ensure they remain or become responsive to new labour market and social developments.

There is scope for bargaining councils and other collective bargaining structures to deepen the knowledge-base on economic and socio-economic issues in particular sectors, with research capacity to assist unions and employers, with information to be shared with workers in the sector. This could look among others at levels of profitability, sustainability, housing conditions, access to health care and other relevant areas.

The parties commit to develop a deeper, constructive industrial relations environment, with broader dialogue on challenges faced by the sector, the company, the workforce and the surrounding communities.

Nonetheless, the immediate need is to stabilise the industrial relations environment.

To this end, the parties agree that the un-procedural reopening of wage agreements and resort to negotiations with local committees must be ended. Such processes are not in the interest of workers nor of employers, they damage confidence in collective agreements and create uncertainty in the economy.

Each party will take concrete steps to ensure this commitment is adhered to.

Union leaders will hold meetings in affected areas to address un-procedural actions and unprotected strikes. Community leaders will also engage in communities on the need to avoid destabilising workplaces.

The parties recognise the value of coordinated bargaining in the platinum sector, where bargaining arrangements are currently fragmented. They agree to work together to create the necessary basis for greater coordination of the bargaining system, including to consider an appropriate bargaining forum.

Income Inequality And Salary Gaps:
The parties agree that steps need to be taken urgently to address the large income inequalities in SA, which are a primary risk to our future as a sustainable and successful society. To this end, it will require commitments by those in executive positions to tighten their belts as part of building a shared commitment to prosperity and growth.

The parties make a call on CEOs and executive directors in the private sector and senior executives in the public sector to agree to a freeze on increases in salaries and bonuses over the next 12 months, as a strong signal of a commitment to build an equitable economy. They call for an informed national conversation on income inequalities and how best to address them. The parties will set up a committee to consider the local and international experience in addressing income inequalities and will develop further proposals within the next six months.

Part 2: Action To Combat Violence And Lawlessness:
The parties agree that the right to protest, to assemble and to strike must all be exercised within a clear and firm commitment to non-violence.

They condemn attacks on persons and destruction of property.

The role of the security forces is to maintain adherence to the law from all persons.

The parties have taken note of the actions by the security cluster of government. The strategy is aimed at ensuring that the state is in control and visibly in charge, citizens and their property are protected, conditions are created for the citizens to exercise their labour relations rights, a conducive environment is created for citizens to freely go to work and live their lives without fear of intimidation or violence; and there is confidence in the economy and in law enforcement sectors.

The strategic approach will contain a number of elements, including a containment strategy against violence and intimidation, conflict resolution mechanisms, engagement with stakeholders and effective communication.

The strategy relies on political support and close coordination between leaders from all constituencies with the law enforcement agencies. It will benefit from building wider societal support for security measures to stabilize troubled areas.

The Parties Now Hereby Agree To:
  • Send a common message that all protests and industrial action must be conducted within the framework of the law.
  • support all lawful action by the police aimed at protecting life and property
  • act strongly against intimidation and violence, identify the perpetrators and take firm and immediate steps, including expedited prosecutions.
  • meet with members of their own organisations to reinforce the message against violence and intimidation and to build a strong national constituency in support of this message.
  • Ensure that community policing forums respond to the challenges of criminality and violence in order to ensure local accountability and responsibility.
  • Support the setting up of the Marikana Commission of Inquiry and call for conditions to be created where persons can give evidence to the Commission without fear.
Part 3: Addressing The Economic And Socio-Economic Challenges:
The parties agree that a package of economic and socio-economic measures is necessary to address underlying social pressures and to act as a stimulus to pressures on the local economy as a result of slowing global growth. To this end, they have developed measures dealing with: accelerated infrastructure, youth employment, the living conditions of mining communities, workers and companies affected by the economic slowdown, public sector work programmes, reckless lending, implementation of accords and social security and health reform. These are addressed below.

The parties agree to work together to fast-track the infrastructure build-programme, with specific commitments by government, the business sector, organized labour and community constituencies.

The parties support the convening of an Infrastructure Conference by the President on 19 October 2012, to highlight the build-programme to investors and constituents.

Government commits to fast-track a number of infrastructure projects and to take steps to ensure full spending of R844,5 billion allocated to public sector infrastructure over the next three years. Spending will be carefully monitored. Credible actions will be taken to improve institutional capacity. Monies that are expected to be under-spent will be allocated to other programmes that are shovel-ready. Greater flexibility will be developed to allow government to do so.

The projects that have already started or where planning and regulatory approval processes are underway, will be fast-tracked and rolled-out on an expedited basis, in order to speed up job creation and provide support for stronger economic growth. The full infrastructure programme is comprehensive and detailed and will not be repeated here. However, a select number of projects in urban and rural areas have been the subject of fast-tracking, and the following examples are provided:
  • Increase the number of households to be connected to the national electricity grid and invest in the maintenance of the electricity distribution system
  • Expand road maintenance and new road building, including a new road and bridges in the Eastern Cape Pondoland area and programmes in N West, Free State and elsewhere.
  • Accelerate building the 20km water pipeline and pump station in Limpopo
  • Announce measure to assist in attracting investment and jobs in the biofuels sector.
  • Accelerate an integrated broadband rollout, shortening the existing 8 year programme to achieve a national footprint.
  • Accelerate the conversion and building of the remaining 446 inappropriate schools over the next three years.
  • Increase fiscal allocations to health capex programmes with the capacity to increase spending in a cost-effective manner.
  • Provide for a water maintenance programme in the next Budget to address water leaks and create jobs.
  • Ensure the energy build-programme in Medupi, Kusile and Ingula continues on track to provide energy and act as an economic stimulus in the short term
  • Accelerate the implementation of a long term sustainable acid mine drainage solution, with steps taken by 2013.
  • Finalise the project development and contractual commitment on a Sedibeng Sanitation Scheme to commence construction by 2014.
  • Speed-up the engineering and planning work on the Mzimvubu Dam to permit the commencement of construction work on the dam-build by 2014.
 The Parties Agree To Sign A Memorandum Of Intent (MoI) On A Partnership On Infrastructure, Which Will Be Based On The Following Areas Of Engagement:
  • Support for government's commitment to expand the levels of infrastructure spending
  • Containing costs and ensuring competitive prices
  • Encouraging retirement funds and the private sector to invest in infrastructure
  • Strengthening anti-corruption measures with clear action against transgressors in the public and private sectors.
  • Developing an industrial relations system for infrastructure projects that will avoid industrial disputes, protect workers and help to speed up delivery of projects.
  Promoting skills development and training in all infrastructure projects to widen the pool of skills in the economy.

Expanding opportunities for industrialisation through local procurement measures and investment in the supplier industries

Sequencing project timelines where possible, to assist to migrate workers between build-programmes

Promoting small business, cooperatives and new enterprises, empowerment, greening the economy and research & development.

Integrating private sector capital projects in mining, manufacturing and agriculture, with infrastructure programmes.

Business Commits To:
  • Cost containment by companies through competitive prices charged in public contracts so that taxpayers receive value-for-money, with the signing of an Integrity Pact by all CEOs of companies in the infrastructure area (including suppliers) to commit to measures to support such cost containment and competitive pricing and avoid corruption
  • Make skills and expertise available to support infrastructure development, with skills transfer arrangements to ensure sustainability
  • Programmes to provide training and extension to SMMEs so that they can supply services and inputs.
  • Support local economic development and community skills enhancement
  • Urge all members of organised business to increase the levels of investment in productive sectors of the economy to complement the public investment package, which will seek to expand growth in manufacturing, mining and agriculture as well as other key jobs drivers.
Labour Commits To:
  • working closely with private sector contractors and SOEs to develop a constructive industrial relations environment
  • Address the need for productivity improvements on the build-programme
  • Encourage retirement funds to invest in infrastructure projects.
  • Community commits to measures to create community support for infrastructure programmes and to identify available skills and capacity at local level.
Youth Employment:
The parties will conclude a Youth Employment Accord, substantially along the lines of measures discussed in August 2012 at Nedlac. These include the following:

1. Improve the training and work experience of young people

2. A National Youth Service programme with public sector brigades and programmes aimed at youth, with brigades focused in areas such as
  • Health programmes
  • Rural development
  • Literacy programmes
  • Green economy measures
 3. Employment set-asides for young people in key sectors of the economy.

4. Private sector commitments to draw young people into employment and training.

5. Youth cooperatives and youth-owned small businesses to promote greater youth involvement in the economy.

Living conditions for miners and promotion of sustainable human settlements for all communities

The housing problems of Marikana reflects a broader problem for the country, with rapid flow of workers to new economic opportunities without adequate investment and coordination of human settlement planning (which includes basic service delivery such as sanitation, electricity, refuse removals, supply of water, roads and other infrastructure, schools, healthcare facilities and police stations, and retail sites). Capacity challenges in local government must be urgently addressed.

It is agreed to deploy a crack team in the municipalities particularly in the mining areas to plan for the full housing and municipal infrastructure needs in specific areas and address institutional capacity.

The parties agree that housing strategy should stimulate the supply of rental stock, including through
  • Rapid land release programme
  • Provide conducive conditions for private sector participation in the rental space
The social partners agree that the time is ripe for the establishment of a new partnership to urgently address the development of sustainable human settlements in key mining districts of South Africa. A taskforce is being established by the Presidency to bring together relevant government authorities with leaders from business, organised labour and communities to plan the new partnership. Particular focus will be given to:

1. Identifying common priorities and roles for each partner

2. Addressing blockages to the proper use of budgeted resources at local government level

3. Integrating local urban development initiatives with the national infrastructure-building plan and utilising better the considerable resources that mining companies have made available to meet their commitments under the Mining Charter.

It Is Agreed To Focus On Key Secondary Mining Towns And Areas, Including:
  • Rustenburg
  • Lephalale
  • Emalahleni
  • West Rand
  • Welkom
  • Klerksdorp
  • Carletonville.
While the steps above relate specifically to areas with a large mining industry, the intention of public policy is to integrate mine-workers into sustainable municipal human settlements.

Business commits to use monies provided for in Social Plans as well as other social interventions to support local social and economic development. This includes greater coordination between all social partners, local municipalities and communities to expand the impact of the funds available through mining companies and complement what government has in place.

Community organizations commit to mobilize local communities for development and in support of the initiatives set out herein.

Support For Companies And Workers Affected By The Economic Slowdown:
Government has considered funds that can be made available immediately for companies and workers affected by the economic slowdown. Six facilities have been identified: the training layoff fund, a fund for companies in distress, the Manufacturing Competitiveness Enhancement Programme, the Jobs Fund, IDC facilities for industrial funding and small business funding support.

The parties will reflect on the lessons from the implementation of new funding instruments during the 2009/10 economic downturn and incorporate the learnings in the design and implementation of such instruments in the period ahead. They will do more to communicate the benefits of the funds and encourage workers and employers to participate.

Government will take measures to expand and increase the reach of the Training Layoff Fund to more workers. A sum of R2 billion will be available to assist workers at risk from retrenchment, to be retrained and supported.

The parties will work closely with the DBSA to utilise resources in the Jobs Fund.

The Industrial Development Corporation (IDC) remains a key driver of industrial investment, through its partnership with private sector companies. The IDC has expanded its funding envelope to R102 billion over a five-year period and will be encouraged to ensure full take up of the facility by users, based on sound business cases.

Government will extend the current programmes of support for companies in distress, building on the success of the 2009-10 programme. The IDC will continue the Fund that was launched in 2009 and will ensure that R2,7 billion is available immediately for the programme.

The IDC has set up a facility geared to projects with a high employment impact, and R7,5 billion will be available through this facility over a four year period, at concessional rates (currently prime less three percent).

Government will ensure that the IDC monies allocated for projects with a high employment impact, are continued and where possible, enhanced.

Government has announced a Manufacturing Competitiveness Enhancement Programme to assist manufacturing companies (except those covered by existing incentives for the motor vehicle and textiles industries) to have access to more affordable working capital facilities. The aim of the fund is to increase and maintain jobs, allowing distressed companies to access it as well. Government will continue to ensure budgetary allocation for the Programme during this period.

Government will continue to make available funding for small business support through the Small Enterprise Finance Agency (SEFA). The parties call on private sector companies to aggregate and combine their socially-responsible investment efforts, supplier development programmes and local procurement efforts, to reap the benefits of economies of scale and increase their impact on small business development.

Public Sector Work Programmes:
Government commits to scale-up the Community Works Programmes from 171 000 job opportunities currently to 1 million work opportunities per annum, with this target to be reached over the next number of years. The date when the target will be reached will be based on expanding institutional capacity in the state and society, and this will be addressed as a matter of urgency.

The model of community involvement as delivery agencies in the CWP can be used more widely.

Expanded Public Works Programmes: Government will expand the programme from a current 502 000 full-time equivalent jobs to 685 000 full-time equivalent jobs by 2013/14 financial year (which will employ 1,6 million persons)

S'hamba Sonke: Government will expand the scale of road building and the road maintenance programme, particularly in poorer provinces. These programmes will be designed to maximise employment opportunities.

NARYSEC Programme: Government will increase the number of participants in rural youth employment programmes (see section on the Youth Employment Accord).

Action To Address Reckless Lending And Growing Debt Levels:
The parties recognize the financial pressures on many South Africans which is reflected in, and often aggravated by, growth in unsecured lending. Among others, this contributed to the strikes in Marikana and elsewhere.

Government commits to crack down on unscrupulous lending practices and to act against the growth of high-cost lending for poorer communities. The parties support the actions by government and the credit regulators.

These steps need to be complemented by greater financial education to borrowers and measures to promote access by poorer communities to legitimate micro-lending facilities.

Green Economy, Procurement And Skills Development Accords:
The parties recognise the value of the New Growth Path social accords concluded during 2011. These accords in particular cover:
  • the green economy
  • local procurement
  • skills development
  • basic education performance.
While the timelines in the Accords were appropriate to the time when they were developed, there is a need now to fast-track the commitments.

A Report on progress with implementing the Accords will be compiled within three weeks. Each party will announce within four weeks the steps it is taking to fast-track implementation of its commitments.

Social Security And Health Insurance Reform:
Although progress has been made in the design of social security reform arrangements, the present institutions remain highly fragmented and many working families are insufficiently protected against income loss in retirement or in the event of unemployment, disability or loss of a breadwinner. The social security reform framework and access to basic health insurance need to be given greater impetus.

Many people are dependent on welfare grants because of poverty and lack of economic and employment opportunities. In the absence of decent work and entrepreneurial opportunities, social welfare plays a key role to address poverty and inequality.

While recognizing this, steps need to be taken to help those South Africans capable of working to migrate from being recipients of welfare payments to obtaining job opportunities, skills and becoming economically empowered.

Next Steps And Way Forward:
The parties agree to speak with one voice on the current economic and industrial relations challenges faced by the country.

They agree to set up a monitoring and evaluation system to track progress with implementation and its impact. During the period when the economy is most vulnerable to external and internal shocks, a high-level committee will meet on a monthly basis to evaluate the actions undertaken to implement this package.

Government has drafted its own internal implementation action plan to address commitments made in this document. The high-level team will receive an implementation plan setting out who will do what, by when and with what resources from each constituency.

Strong societal mobilization behind this common approach is vital and we will work closely with communities to make this a people-centered response to our challenges.