Hon. Deputy-President David Debede Mabuza
Hon. Minister of Employment and Labour Thulas Nxesi
Leadership of Nedlac Social Partners
Nedlac ED Lisa Seftel
This is the first time in the history of Nedlac that its summit is being convened virtually. This is an indication of the extraordinary time our country, and the world, finds itself in! The Covid-19 pandemic has had a devastating impact on our socio-economy. However, we must remind ourselves that our economy was in recession pre – Covid and the pandemic has exacerbated an already bad situation. The economic trajectory for our economy and the social implications are even more challenging and we have to put our economy onto a sustainable growth path so that we achieve growth rates of between 4% and 6% if we are to get onto the first rung of a long ladder to prosperity for all our people. This is an extremely demanding requirement, given that we have been downgraded to junk status and have made little to no progress in addressing fundamental structural issues constraining growth over the last several years.
We need to reflect on some of the key indicators which demonstrate the dire situation our country is in:
GDP contracted by 1.4% in 4Q2019 Expected to shrink by 8% in 2020
GDP contracted by 0.8% in 3Q2019
SA was in recession, now in a depression where even if we take the necessary steps it is expected it will take us three years to return to pre – pandemic levels of GDP. Unemployment measured by the expanded definition has grown from 38.7% in 2019 to 43.1% currently with our youth the most disadvantaged by the impact of the pandemic. Budget deficit 2019/20 at 4.5% expected to grow to 6.8% of GDP
Debt to GDP 2019 of 62.2%, Forecast of 81.8 % of GDP, growing to nearly 100% in the next three years with attendant debt service costs that will significantly constrain crucial areas of expenditure. This is before we include debt and contingent liabilities at the level of local authorities and State-Owned Enterprises.
We have seen unprecedented outflows of debt and equity capital during the year, exacerbating the challenges of accessing capital on appropriate terms and conditions to fund the deficit.
We can all agree that our economy was in dire straits pre-Covid and is in crisis today. The recent twin downgrades into lower rungs of junk status were, unfortunately not a surprise because we have not taken the necessary decisions to address growth, the fiscal crisis, and the resultant social impact. The Institute of Security Studies estimates a 5% contraction in GDP this year (a number well below current estimates) could result in about 2.5 million more people categorised as extremely poor in 2021. The social impact of our indecisiveness is apparent.
BUSA has had numerous meetings with government over the past three years in which we have raised the crisis confronting the country. We have consistently suggested that government needs to acknowledge the severity of the crisis and act with urgency to create an environment which maximises private sector investment and ensures the utilisation of available capacity and expertise. We have consistently impressed on government the need for public-private sector partnerships to enable government to fulfil its mandate of building social infrastructure and delivering services to people, while the private sector is optimally positioned to invest, create, and grow businesses, create jobs, and contribute to the fiscus.
Nedlac has played a critical role during the Covid pandemic in bringing social partners together, through the Nedlac Covid Rapid Response Task Team (RRTT), where we have worked together urgently and harmoniously to address the impact of Covid-19. In partnership, we have, addressed a number of issues including COVID TERS, managing the various lockdowns, determining, and implementing behavioural change protocols and engaging government on restrictions to many sectors of the economy that have been particularly impacted on by the virus and lockdown measures. BUSA believes that this process has worked well and has reinforced the successes demonstrated by the country’s response to the pandemic. It has provided a basis for future cooperation and partnership as we continue to deal with the many socio-economic challenges confronting our country.
On the back of this, in agreement with the President and our social partners, we started engaging on the economic recovery for the short, medium, and long term. These engagements have been more challenging, and we have not made as much progress as the situation requires in agreeing upon, and implementing, fundamental issues imperative for economic growth.
We need to reflect on why, during the most severe socioeconomic crisis since the birth of our democracy, we have not acted with the necessary resolve and urgency to address the economic, social, and fiscal crises we face, many aspects of which pre-existed the pandemic. We offer the following observations on this:
We need to move beyond ideological debates to a real time and pragmatic, fact-based assessment of our circumstances. In that context, Government must show leadership in rising above ideology to implement critical actions that are in their domain. We recognise the difficulty of making hard choices and trade-offs but that is the reality confronting us and is clearly visible to all stakeholders.
The engagements between social partners must be credible and the bona fides of all partners must be accepted –we must make act transparently, collaboratively and with integrity. The engagements must be such that every social partner is of equal status and is given the opportunity to contribute wherever they can add real value. Given the current crises, the engagements must focus on implementation of three or four critical deliverables that will instil confidence and put us onto the first rung of a long ladder to sustainable inclusive growth that alleviates poverty, addresses inequality, and removes the burden of the inequity of unemployment from the shoulders of society.
There must be an expedited timeframe for such engagements within which maximum agreement must be sought. However, government must determine the way forward, after attempts to reconcile differences and implement effectively as the mandated government of this country. The multilateral engagement must also allow for bilaterals if these are appropriate for progress and parties must bring the required insights, skills, and experience to the table for all engagements which must also allow for constructive criticism where appropriate. We raise these issues here because Nedlac remains a critical structure for social dialogue and compacting. We note the process that is underway at Nedlac to review its role, mandate, positioning, representation, and other matters. This is being undertaken to ensure Nedlac is “fit for purpose” for the current challenges and future trajectory in the socio-economy. We believe this is a critical exercise and we have used our recent experience in social dialogue and engagement to inform the review.
Business remains committed to social dialogue and engagements, but we will continually put at the top of the agenda the severe socioeconomic crisis we are in and thus the imperative for urgent and effective action to implement critical decisions. We must consistently review the progress that is being made, and social partners must have the option to reconsider participation in engagements if they consider such action to be appropriate. We will continue to reiterate our view that, as a country, we need to live within our limited means, prioritise areas of expenditure purposefully and implement decisions competently, effectively and with commitment.
In conclusion, we commend the Nedlac ED, Lisa Seftel and her team on a herculean effort under very difficult conditions this year. We wish Nedlac all the best in the coming year and commit to optimising our participation as business, building on the successes achieved during the year, the relationships that have been forged and strengthened and the need to ensure that our country can achieve its potential notwithstanding the ongoing pandemic and socio-economic challenges. Only by leveraging our combined resources, relentlessly and professionally implementing critical decisions, and co-operating effectively, will we be able to achieve our collective vision. Nedlac and its social partners have a crucial role to play in achieving that outcome.
I thank you
Business Unity Vice President