Sunday Independent Business Report writes that trust, co-operation and collaboration should be strengthened as a precondition for social dialogue in the National Economic Development and Labour Council (Nedlac).

This includes other interventions pertaining to improving fiscal, monetary and industrial policies, as well as providing employment incentive schemes.

These are some of the suggestions made by Dennis George, the general secretary of the Federation of Unions of South Africa (Fedusa), on how South Africa’s economy can be stimulated.

George’s comments come as the South African Reserve Bank on Thursday made an upward revision of the country’s gross domestic product (GDP) forecast for 2018 and 2019 to 1.4 percent and 1.6 percent respectively from 1.2 percent and 1.5 percent.

George was adamant that social partners should undertake structural reforms to the economy to achieve higher inclusive economic growth and employment creation.

“The social partners leaders agreed that the National Development Plan (NDP) targets of 5.4 percent GDP and creating 11 million additional jobs by 2030 are appropriate for the country to kick-start the economy.

“However, trust, co-operation and collaboration were destroyed by the irresponsible, irrational and disastrous cabinet reshuffle on March 30 last year, when President Jacob Zuma replaced Pravin Gordhan with Malusi Gigaba as Minister of Finance and Sfiso Buthelezi as Deputy Minister of Finance replaced Mcebisi Jonas,” George said.

He said as a result of the reshuffle, the rand plummeted to R13.41 against the dollar from R12.81 and the economy slumped into a recession.

“On the positive side, the ruling party elected Cyril Ramaphosa as leader, which caused the rand to appreciate to R12.3303 to the dollar,” George said.

Commenting on Statistics South Africa’s report of a 1.7 percent yearon-year increase in manufacturing production for the second consecutive month in November 2017, George said while domestic demand was weak due to low business confidence and policy uncertainty, increased new manufacturing and export orders pointed to a continued expansion in global activity.

“Ramaphosa should lead the engagement in Nedlac with business and labour to kick-start the economy to achieve higher inclusive economic growth and employment creation,” said George.

He also said that Fedusa supported the notion that structural reforms could increase the growth potential of the economy and could spur higher inclusive economic growth rates that could gradually reach 2.5 percent from 2021 and 4 percent from 2027 onwards.

“These growth rates would certainly accelerate debt reduction and improve the levels of service delivery to realise poverty alleviation and reduce unemployment and inequality,” he said.

George suggested that the social partners in Nedlac and the Ramaphosa factor should confront the numerous reforms to broaden competition in the economy, limit the size and grip of state-owned enterprises, improve the quality of the education system to tackle skills shortages, as well as reduce the cost of energy.

The main risks to debt sustainability arose from the ratings downgrades in early 2017 and the rising contingent liabilities in state-owned enterprises, said George.

He said the government had extended R350 billion of guarantees to beleaguered Eskom for the construction of power plants, and a further R220bn in guarantees were granted to independent power producers from which Eskom is contracted to purchase electricity.

“The fiscal deficit remains high, but is mainly driven by increasing interest payments.

“Fiscal strategy should include limiting spending increases and raising tax revenues through the achievement of higher inclusive economic growth and employment creation,” said George.

The original of this report by Luyola Mkentane appeared on page 20 of Sunday Independent Business Report of 21 January 2018

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