The call for Economic Codesa

I was captivated by the article Allister Sparks delineated in his Business day Column: At home and abroad entitled “‘Economic Codesa’ may help SA span ideological divisions". He set forth a balanced view of what South Africans, particularly business and labour, needs to put into perspective when considering their relationship pact. His operative word in his views is “compromise” by both labour and business to craft a solution that would seek to benefit both the employers and the employees in the quest for better employment conditions, job creation, reasonable wages, and involvement of employees in the growth of the business among others. He belaboured the latter by citing an example of how local business leaders could emulate or learn from the Germany’s “social partnership” model, in which workers participate in how business decisions are made and have more of a share in the profits that accrue.

His (Allister Sparks) thrust of the article is that South Africa should consider the sequel of the political Codesa 1 & 2 in the form of Economic Codesa. He believes this ‘platform’ would deliver better results when both labour and business compromise.  While I agree with his views on the compromises that both business and labour should consider for a better South Africa economically, I differ with his views on Economic Codesa as a platform to achieve or steer towards equitable economic share. What his views lack to acknowledge is, the ‘economic negotiating power’ that business possesses as a result of ownership of means of production and capital. This economic negotiating power is in the hands of White South Africans and foreign investors. BEE was the best case scenario, in the spirit of reconciliation and building of a rainbow nation, considered by the Black majority led government. There’s no better platform on which White business was presented to compromise given the political history of this country. In my belief and at worse government short itself in the foot by structuring BEE to focus on percentages of all the elements of BBB EE Score cards. That was a “unilateral compromise of economic codesa” by the black majority led government at its best, if not worse. 17 years into democracy the majority still cry foul of land ownership. White capitalists and land owners ignore their nation-building blind-spots. There’s nothing that workers (labour) and poor people would put on the table to compromise. For example, a CEO gets a 60% salary increase when the company has performed poorly, yet the employees get less than 10%, yet after a battle littered with strikes. This is tantamount and akin to professional slavery in a democracy.

It’s unfortunate that the result of the current economic landscape is the foundation of our world-wide touted and praised transition to democracy. Aluta Continua!

Likely unintended consequences due to failure of cross-policy making and implementation

The announcement of the new fund to be accumulate from the 3% annual net profits of companies to contribute to SMMEs funding and development is a welcome move, but personally i have my reservations.

The move is good from an ideology (transformation) perspective. And of course, finally, thank you there's now implementation taking place. The 3% has been there, as stipulated in the BBB EE Act and Code of Good Practice. It is not necessarily a new thinking, but an implementation mechanism (in a form of fund). This could have been done some few years back when the BEE regulations were enacted. My, perhaps, trillion rand question, is that why should government (ANC) always 'enter' this soft when the corporate jungle is so thick to 'penetrate'. For me the accumulation of the fund is unsustainable as a result of it appearing to be a 'choice' for corporates to comply. This thing (3% from profits for ED), first and foremost is legislated. Therefore it should not be a choice. It must be compulsory to all categorised companies with an incentive to get more BBB EEpoints. This view of mine is informed by at least the media reports. Hopefully there's more meat into it in the main document/ strategy/plan. As it stands, it looks like a choice because of a dangling carrot or the 'the low haging fruit' given to companies that they'll be awarded BBB EE scores when contributing to the fund.

The consumer driven industries are worth billions of rands annually and growing. Retail and FMCG are but two industies i can think of as examples. They dont need any BBB EE scorecard to generate billions of rands and profits for their investors. Do you think companies operating in this industries are going to contribute to this fund willingly? I know a company that generates over R5b in net profit per annum. This means it has to contribute over R150m per annum to this fund. This company is so untransformed that if the labour department and its inspectors are doing its job properly, it would fork out not less than R50m as a fine for not complying with the Commission for Employment Equity's annual EE reports submission if the EE Act (under review) provisions imposed on non-compliant companies were to be applied. That would eat heavily on their bottom line. Guaranteed, business will fight against the EE Act review of a 10% fine if this fund is to be puched hard by the government. Of course it will because there is pressure to create jobs. My suspicion is that the 'hype' of achieveing the 5m employment goal in five years will compromise the implementatin and enforcement of EE regulations compliance. So, government needs to place a watchful eye there. This fund will most probably be a best case scenario of choosing between EE compliance and ED compliance. This would point to the impact of  government's failure to thoughfully develop effective cross-policy  making. As we all know and are well-know to be doing, developing cross-cutting policies but failing to implement, this is such suspect of not winning it when it comes to implementation.