The impact of socio-economic restructuring on the working class and the challenges facing them

Speaker: Phillip Dexter (Executive Director, National Economic Development and Labour Council)

Respondent: Johan Maree (University of Cape Town)

Harold Wolpe Memorial Trust forum meeting

Cape Town, 23 October 2000





‘Is an accord between the government, business, community and labour desirable and necessary for development in South Africa and what is the role of Nedlac in the structuring of such an accord?’


The views expressed in these discussions by Phillip Dexter are his own and should not be attributed to the South African Communist Party (SACP), the African National Congress (ANC) or Nedlac


Nedlac is an institution created by a 1995 Act of Parliament. Its predecessors, the National Manpower Commission and the National Economic Forum, were set up largely in response to a strategy and pressure from the progressive trade unions and progressive sections of business that was exerted on then apartheid government. The ANC has always supported the notion of social dialogue and welcomed and led the process of drafting legislation that created Nedlac. Nedlac is a statutory body that brings together government, business, community and labour to negotiate and discuss anything of a socio-economic nature.

Nedlac has representatives from civil society formations in the form of its community constituency. This last feature makes Nedlac different to comparable tri-partite institutions in most other countries. The International Labour Organisation and people in other countries are paying a great deal of attention to this model of civil society participation as organised social forces. Nedlac has four chambers – trade and industry, development, the labour market, and public finance & monetary policy.

I have been executive director for a year now. My role is to run the secretariat, although I also have some ability to help shape agreements and discussions. Obviously, I have my own political beliefs and affiliations and therefore have to be careful to be even-handed in managing the negotiating processes.

The National Manpower Commission (NMC), an advisory body in which originally only white labour formations were represented alongside the apartheid government and business, preceded Nedlac. In the late 1980s Cosatu forced its way into the NMC. Once the idea of institutionalised social dialogue became accepted, the National Economic Forum (NEF) was set up. Although not a statutory body, it had the support of the government of the day, the ANC, as well as organised business and labour.

All this is supposed to make me sound as though I am an authority on social dialogue! Although I am caricatured by some as a dogmatic Stalinist, by others simply as dogmatic, there will obviously be different opinions on any such claim. I have, however, done a tremendous amount of reading in the last year to bring myself up to speed on issues pertaining to social dialogue both at home and abroad. It is more interesting than I had expected and the possibilities for successful outcomes through social dialogue cannot be easily dismissed. One recurring issue in my work is the perceived need for an accord between government, business, labour and the community to ensure shared growth and social equity.


The need for a social accord

There is nothing new about trying to put accords into place, but in South Africa this has always been a vexed issue. A minority of trade unions believe they should not bind themselves into any agreements or accords with business and government. Those that agree to any role for institutions of social dialogue advocate using the institutions strategically to extract concessions from government and capital, while continuing to use mass mobilisation as the main driver of social transformation.

A second group, not that distinct from the first, is more pragmatic and believes both in engaging through institutions of social dialogue that require unions’ active participation, but are hesitant when it comes to the notion of a social accord. This is because such accords have traditionally been structured around limiting wages and prices, and this is seen as this limiting the scope of unions to use their power to improve conditions and fight for the interests of workers.

Another view, not necessarily in contradiction with the above, is that some kind of an arrangement or series of agreements between government, business, community and labour around socio-economic issues is essential for growth and social equity. This requires a negotiated approach to socio-economic transformation.

There are of course those in labour who reject any notion of social dialogue and those that are not committed to any form of mobilisation for direct action. These are obviously minority views that do no dictate any course of action in the labour movement.

It is important to note that these disparate views are mirrored or echoed, for different ideological reasons of course, in government, business and in the rest of civil society. There is, however, a recognisable consensus among the majority of leadership across the constituencies that social dialogue and Nedlac are important and should be supported.

These different perspectives are essentially concerned with the same challenges that entering into such a process would bring. The caricature is that once agreements were struck, no more involvement of the rank and file trade union membership or other organisational membership would be possible. I don’t think this would be the case if the agreements are carefully structured and if they are a series of agreements rather than one single accord. It also depends on what the trade unions and community organisations do to involve their membership in the process of structuring such agreements.

We are dealing with enormous structural problems in our economy and an unequalled social deficit in South Africa. People have legitimate aspirations for some significant improvement to their lives, and want access to opportunities and resources. There are other countries with similar problems, but South Africa is somewhat unique that there is a conscious group of fairly well-organised people, recently engaged in direct political action, who want these things put right before too long. There are sound arguments about the impossibility of any stability outside a negotiated approach to socio-economic transformation – the idea that, for example, if you don’t get water, electricity and other basics to people they will ultimately riot or engage in physical confrontation with the establishment. Within the ANC alliance, some people would say unless we engage in negotiating socio-economic transformation, little economic success is possible. Because we were able to negotiate a relatively peaceful transition from apartheid, there is a generally favourable sentiment towards negotiating socio-economic transformation.

Any idea that the government is going to achieve its objectives and delivery targets without mobilising business, labour and the rest of civil society in support of its programme is really pie in the sky. The capacity of the state to transform and deliver without popular mobilisation is old-fashioned, but some people, even in government, still hold that view. They see the state, or the state and private capital alone at best, as being able to achieve socio-economic development or, at worst, as being able to ensure growth and eventually some participation for the marginalised and the poor in the economy.


The constituencies in Nedlac

The business constituency – organised business – is not as representative as one would like to see. It is dominated organisationally and intellectually by a small group of people who essentially represent the interests of monopoly capital. Small business, emerging business and black business are not as well represented as they need to be in terms of discussions and decision making. Some of the reasons for this are historical and others are simply due to a lack of resources, especially on the part of small business. There is a consequently something of a disjuncture between what is required of organised business and what it actually does. It may be that the notion that business on its own is going to restructure this economy and that organised business will provide the intellectual framework still prevails in certain quarters. If that is so, it is a profoundly mistaken view.

Labour is fairly strong and well organised, but the trade union density is not enough to get everything the unions want out of any process of negotiations. The level of trade union organisation is remarkable given the history of trade unionism and repression against organised workers by the previous regime. There is a notion in some quarters that the strategic capacity of the unions has been diminished by the departure of certain individual leaders into government. This view is an unfortunate, and quite frankly, patronising one.

What is true is that the challenges of this new period, in which the economy has been radically restructured in certain respects, in which external shocks have had a negative impact on the economy generally, and in which the general imperatives of globalisation are against the interests of workers, are immense. No organisations were prepared for these processes and their impacts, least of all the trade unions and in certain respects they have been on the back foot, as it were. But that is not to suggest that anyone in government, business or the community has responded to these challenges any better. It is just that the scoreboard tallies much more negatively in terms of trade union membership and thus is seen as an indication of the performance of the trade union leadership.

The community constituency is an unusual, loose body of organisations. While there are important social forces not represented in the community constituency, such as the churches and co-operatives, the fact that organised formations of civil society outside of labour and business are included in Nedlac is an important opportunity to mobilise beyond labour, business and government. The community constituency has five sectors: the disabled (who are very well organised), civics, women’s organisations (who are fairly weak), the rural development forum (which has collapsed) and youth (which is fairly a vibrant if not always strategic group).


Public and private investment

Some strategic agreements that ensure private capital invests in the local economy are necessary. Domestic capital is trying to invest outside the country as much as possible. I received information that the amount of capital in funds which may be invested offshore may increase from 15 per cent to 30 per cent. The government was somewhat naïve about allowing companies to have their primary listings offshore. It accepted the argument of companies that offshore listings were necessary to get better access to capital, but this has not been demonstrated in any tangible fashion. What has happened instead is a loss of capital, a loss of revenue for government and a loss of prestige attached to the Johannesburg Stock Exchange.

I am not suggesting business should become philanthropists. A notion of shared growth – stakeholder capitalism – can be married with social equity. It allows for interfering with the process of accumulation by extracting material commitments from business to invest in South Africa. This would positively affect the way the country is viewed internationally. It would also mean that government would be forced to make a particular kind of commitment to spending that would also stimulate growth and equity. The fact that we have managed to stabilise our economy is an achievement, but this does not mean you have to accept the Growth, Employment and Redistribution macroeconomic strategy (Gear) as the answer to all our economic problems. This view has led to a characterisation by some that Gear was a necessary but not sufficient policy framework for economic growth. The extra effort that is needed to drive growth can be best mobilised through concrete agreements between the Nedlac constituencies.

Through some kind of strategic engagement with public and private capital, the chances of achieving greater economic growth and social equity to meaningfully address the social deficit becomes possible. There is scope for trade-offs, providing a commitment to expanding the role of the public sector is extracted. For example, public works programmes may require agreeing to low wages, but the trade-off will be lower unemployment.



Ireland has experienced phenomenal economic growth and increases in real wages over the last 20 years. This has been possible by increasing investment, enhancing people’s skills and thus enabling them to access better jobs, and restructuring the tax regime. The benefits to workers come through higher wages, and tax on lower paid workers is reduced. It needs to be said that Ireland was able to secure resources for social development and skills training through the EU, a source of funding we do not have access to. There are other examples – Holland, for example. The Millennium Council was born of a visit of South African labour and business to some of these countries.

Two interesting points emerge for me:

1.   I don’t think anyone who calls himself or herself a Marxist or believes in a socialist project has a blueprint for how to get from capitalism to socialism. This is a complex issue because we are talking about an engagement with capitalism that is essentially reformist in nature. That I think is fine, but if such a series of agreements were to become possible, it presents the possibility that any progress towards socialism in my lifetime may well be put on the back burner – development will take place within an essentially capitalist framework. Although Ireland has become a Mecca for venture capitalists, it has offered the possibility of socio-economic development and opportunities for ordinary people to improve their lives. This achievement is too important to dismiss lightly.

2.   One of the key things in an accord would do is create accumulation opportunities for black people, in other words be a driver for black economic empowerment and the creation of black middle class or what some have erroneously characterised as a patriotic bourgeoisie. But there is something of a contradiction here. Although the process is driven largely by labour, one of the main beneficiaries would be a class of people who would probably ultimately stand in opposition to the interests of labour.

3.   I am not sure if I am in favour of one over-arching accord, but I am in favour of a series of strategic agreements. This presupposes that business, labour, community and government remain committed to an ongoing process of institutionalised social dialogue. We are unique in having this arrangement in a developing economy. Such institutions are traditionally found in European social democracies. In the case of Nedlac, there are significant legislative powers that force people into the process. In other countries, participation in institutionalised social dialogue is voluntary. The degree to which the process is voluntary or legislated needs to be considered in the future.


Johan Maree

I agree with a great deal of what Phillip has said.

What are the goals of these accords? Why do we need an accord? We will not get out of the hole we are in without it. A primary goal for me would be to get the country into a job-creating growth path. We are losing jobs in the formal sector for two main reasons:

1.   Trade liberalisation has opened us to the world economy and we are facing challenges that were not there before.

2.   Our years of isolation have made us inefficient. Resources, which were being used inefficiently, are being shaken out, and much new investment is in technology that reduces the need for labour.

There is a need for social partnership, given the current environment of a lack of trust. We need a society that emphasises the need for partnership. Should this/these accord/s happen through Nedlac or in Nedlac? Is Nedlac just a facilitator? The Presidential Commission on Labour Market Reform proposed that an institution like Nedlac should perform such a facilitation function.

The state needs labour and business to implement its policy instead of relying so heavily on macroeconomic tools. The state needs to get labour to moderate demands and business to invest in job creation. In Sweden this kind of corporatism worked for 40 years – at its peak, labour, the state and business were able to secure full employment in that country through an agreement which included wage restraint and other measures to achieve equity. The system worked until the public sector started organising itself through unions which did not have the same interest in sticking to the agreed level of wages. The state then started to use economic tools, tightened its belt, and this led to a loss of jobs.

Does the National African Federated Chamber of Commerce (Nafcoc) not represent business interests unrepresented in Nedlac? The key assumption is that all constituencies will be bound by agreements made at a forum like Nedlac. There is a problem with Business South Africa representing the business constituency – it was cobbled together and does not have enough power to properly represent business.

Accords of this kind demand labour agreeing to stay wage demands. The state must give and take. If labour stays its demands, the state must make up for this by improving the social wage through heavy spending in areas such as education, health and welfare. Can labour deliver its constituency? Can the leaders hold the members to sticking to accords? In Germany, the consultation collapsed because labour got tired of adhering to what their leaders agreed on their behalf.

What about representivity – are the unemployed, the weak, the jobless, represented in Nedlac? The powerful tend to break through accords. Finance is the strongest partner. Often the financial sector, particularly that of the state, does not comply with the terms of an accord. An example is the way the Department of Finance came up with Gear. Gear is a sound policy, but the process through which it was arrived at was wrong – there was no negotiation. How will it be possible to contain the strong and lift up the weak? Those with power get what they want. It requires great effort on the part of the state to continue to represent rural, weak and unemployed people.

From the point of view of the socialist project – the kind of agreement we have talked about is a social partnership agreement, based on accepting that labour and business are partners and essential to the process. If Cosatu did not push for Nedlac, it would not exist. But does Cosatu want to use Nedlac or the ANC alliance to achieve its ends? These are two quite different projects – one builds social democracy, the other is a strategy for achieving a more fundamental democratic socialism. Which will it be?

Nedlac gives constituencies powers to reach decisions by consensus. All labour legislation, all significant socio-economic legislation has to go to Nedlac. Parliament has autonomy, it has final power, but it has ceded some of its power to Nedlac. In his study of transitions to democracy, Adam Przeworsky said a second transition, an economic one, is necessary. He says the consolidation of a democracy will only be achieved if all the major social forces work through an institution. Nedlac is such an institution.



Representation in Nedlac

·       What about the community constituency – who is the voice of the sector, is having such a constituency not just going through the motions? People may claim to speak on behalf of the community but not in fact do so.

·       The community sector’s strength has declined since 1994. What about the disenfranchised, the unemployed and the rural?

·       The unemployed and the informal sector represent more of the potentially employed people than organised labour does. The bulk of the population is not represented in this forum in the labour or the community constituency.

Phillip: The only representative people in a democracy are those members of Parliament who have to be directly elected. Regardless of how many people are included as part of organised labour or any other constituency, some will always be unrepresented. You don’t need labour to be represented 100 per cent in the Nedlac organised labour constituency or 100 per cent of business to be represented in Nedlac to get a good outcome. This is particularly true of the community constituency. To some extent you have to say, ‘if you want to be represented, get organised’. Two million disabled people are very well represented as an interest group – in some ways they are the best-organised interest group outside of labour within Nedlac at the moment. If an interest group is unhappy about how they are represented (or not represented) they need to organise themselves. The theory is that sectors in social compacts use social compacts to advance their interests. For example, organised labour has secured a very good labour relations framework for all South Africans.

The real problem comes in the class and social structure changes that are occurring in our society and the shift in patterns of mobilisation and organisation. There has been a decline in social mobilisation, and less participation in elections. Perhaps we have a romanticised view of how much success we had in mobilising people, for example, the idea that we had organised all the coloured people in the Western Cape. The opportunities exist for representation, but not much is done to assist people to get organised and represent their constituencies. I argue that the ANC as a political organisation does represent unemployed people, and a wide variety and cross-section of the people as a whole. This doesn’t mean these groupings should not organise themselves independently. The strength of representation in social dialogue is broader than Nedlac; it is in the general discourse, in the pages of newspapers and in other places. It would be a problem if Nedlac had a veto over government. At the moment, what Nedlac can do is make a very strong suggestion in its input, based on the outcome of negotiations between Nedlac stakeholders. Legislators, for example, cannot easily ignore this.


Taking account of the individual circumstances of women

·       I am interested to know about the role of women in Nedlac. There is this notion of a community. But 52 per cent of them are women, and they are the people who bear the consequences of decisions taken here and elsewhere. If you have a formalistic notion of ‘community’, you are relying on women to get organised in the same the way men get organised.

·       No serious attention has been paid to women who constitute the rural poor, the unemployed, and the survivors at an individual level. Mobilising these women is really crucial.

·       A number of these women who hold society together are unpaid workers. Society needs to compensate them for doing the most important work – raising children. It is terrible that this goes unrecognised. They also do physical, unpaid labour. These people also lack time and time is the most important requirement for becoming politically involved. You must go to them. Some lawyers are going out into the community to inform people that they have property rights –people who would think it is too difficult to go to a court, too overwhelming. These people do not have the luxury of time. It is overwhelming to take on the state. The style of government you are talking about in Nedlac was invented by women in the US and Europe at the turn of the 20th century. In the US they set up wage boards for women staffed by one feminist, one person from capital, and one representative from the working women. The Supreme Court declared these institutions unconstitutional, reverting to the old style of power relations. What they got under the New Deal was not nearly as powerful, or as sensitive to individual circumstances. Blanket solutions will never work. You must take into account people’s individual circumstances.


A multi-layered approach is necessary

·       The challenge is to think about social accords that enable people to participate without seeing consensus building as a romantic ideal. How do you mobilise people around issues like job creation? If representation is seen too formalistically, it only includes some people. We brought together 70 people from the five higher education institutions in the Western Cape, labour, government, business to discuss their economic role as part of the ‘learning Cape’ pillar of the provincial government’s economic development strategy. This is an example of a way of getting people into layers to work on a common social project. A multi-layered approach to accords is more likely to hold people. It is necessary to get people to buy in to an approach. We need to bring more people in to think about, for example, job creation – how far we should look inside the country, and how far outside. This is consciousness-raising approach rather than a formalistic one.


Inward industrialisation

·       Is there a possibility for extending inward industrialisation as one possibility for growth?



·       What has Nedlac done about HIV/AIDS?

Phillip: HIV/AIDS has been on our agenda for some time. Our HIV/AIDS code is now complete. There were attempts on the part of business to get compulsory testing approved, but this was unsuccessful. At each workplace, representatives of employers and employees must work out a strategy for dealing with the epidemic. Employers were reluctant to sign the code initially because they were afraid that committing themselves would mean bearing huge costs in the workplace. There was also clear evidence in the discussions on HIV/AIDS of a continuing in racist perception of the problem, which sees only a black horde with AIDS. Some of the sentiments expressed on this issue were frightening. The agreement which was reached will now go to Parliament.


Securing the commitment of capital

In housing there was an agreement and a series of commitments on the part of capital, but capital has subsequently wriggled out of this.

The government currently offers incentives to business up-front, but it does not impose any conditions to ensure progress towards reducing the social deficit.

After World War II, social accords were strongly state and labour-led, and there was strong post-war reconstruction. This presupposed patriotic capital and a convergence between the vision of labour and that of the state. Gear is a package of incentive measures to business to invest – but none of the investment targets it proposed have been met. There is a stalemate. We need to encourage public sector investment and a social wage via the ANC alliance or Nedlac. We need a radical social development project to achieve the objectives of the Reconstruction and Development Programme. The state believed it was too weak to do reconstruction and development, so it relinquished control to capital. There is currently no balance of forces. Business is far from a sense of pervading crisis and a need to reach an agreement. Business is too far away from the social reality of social dislocation to respond appropriately.

Phillip: Business people say investment is about sentiment. Showing people there is an agreement on socio-economic transformation would be a powerful foundation for improving sentiment, but one overarching agreement is unlikely. There is a stalemate in the struggle between the key social forces – it is clear we are not achieving our targets with regard to poverty eradication, job creation and so on. If we have government and powerful social forces ranged around important issues (like Cosatu is organised around broader social issues, not only the economic issues affecting its members) we have an opportunity to do something qualitatively different. The big problem is that, in the current arrangement, there is no compulsion on business to participate in any national project. There has been some investment, but not in the way and at the kind of scale that is required to really drive growth. The banks realise there is a stalemate: this could be seen in their response to the recent SACP marches – they were all there to say they want to discuss the issues that were being raised.


The American experience

The New Deal under Roosevelt was a tripartite accord. State capacity was weak until that point. The accord was provisional. Capital bided its time for 35 years until it could smash the accord in the 80s. The accord was confined to regional industrial regions, now known as the rust belt. It left out the South, and had race and gender inequalities. It provided a minimum wage and an income grant to women with dependant children. The accord had many flaws – certain sectors and constituencies were left out, and it may have strengthened the hand of capital. There were labour victories in the 1930s, but these have since been overruled. The social wage component was attached primarily attached to people belonging to strong unions, especially men. Labour was brought in only in the form of organised labour, leaving out women, agricultural workers, domestic workers, and unorganised women in the South.


A basic income grant as part of a social wage

The notion of a basic income grant has been knocking about for years. It is the single best way of getting resources to people. Some process of agreements will be necessary to implement this.

Cosatu put a proposal on the agenda for a basic income grant in 1998. A commission of inquiry has now been appointed under the leadership of Vivien Taylor to investigate the issue. The proposal is for a universal income grant to all adults (not to households, that is, to men). The idea is to get away from private health, private transport, private housing, medical aids, and private retirement funds. Cosatu has been pushing away from the privatisation of these things. A public social wage would massively lower the non-wage costs of labour. Unskilled wages form a very small part of wage costs in any case. Since 1994 increases in labour productivity have far outstripped wages, and yet we are not getting more jobs. If we look at the social wage package, we can get away from the idea that labour must accept lower wages.

There have been such real increases for lower-paid workers in Scandinavia that they have to import lower skilled workers.


The role of Nedlac

·       What Nedlac does after agreements are struck? Oversight, monitoring, holding people accountable, especially when it comes to issues of delivery (for example, housing and pensions?

Phillip: Nedlac has moved from primarily making input legislation to doing more monitoring work and engaging around strategic issues. I like the idea of a series of accords, a rolling process of social dialogue as a way of ensuring good governance. Some local authorities are coming to us to ask us to set up institutional mechanisms, but we do not have a budget for outreach activities.

·       How do you monitor and ensure complaints with agreements, especially since capital is represented by a small sector?

Phillip: Because the agreements reached at Nedlac often go on to become legislation, some of them are easy to monitor, for example, the Basic Conditions of Employment Act. Others are more difficult. Government almost withdrew from the Nedlac chamber that deals with macro-economic policy, arguing it did not need to negotiate this. The Jobs Summit, a series of agreement with some very good components, saw little implementation and no real commitment from the parties after the 1999 election. The constituencies could have ditched it, but decided instead to force themselves to go back to Nedlac and commit to implementing these. Government has made commitments to housing project pilots, and there is a flurry of activity. Another example was the Buy South Africa campaign (to encourage ‘made in South Africa’ as a brand). Initially there was little action, now the parties have committed money to it, and it is being launched. When one of the constituencies is active, you see a result. There is an impending agreement between a trade union and a company in this respect. Nedlac presents opportunities to bring things into the public arena. Trade unions went through some difficulties, but are now mobilising themselves. There are many small victories. In one management meeting, labour asked about whether the goods needed for the government’s taxi recapitalisation programme would come from South Africa. Government has had to promise to come back.

·       Is Nedlac facilitator or controller?

Phillip: Nedlac is more than just a secretariat. At times detailed work is done there, at times the constituencies just use it to float issues. Nedlac is not an implementation agency. The people who represent the various constituencies have learnt to use the institution intelligently.



Phillip: We have a fragmented and diverse society, a history of conflict coupled with huge socio-economic inequalities. We need places to engage in debate. Parliament is one such place. There could be improvements in the way representation works in Parliament through a constituency-based system, but the institution is a very good one nonetheless. When the President set up working groups and business and labour launched the Millennium Council, people said Nedlac is dead. When I was interviewed for the job of executive director, I asked the labour, business, community and government constituencies whether they were committed to it, and they said yes, Nedlac is the primary institution for social dialogue. They have honoured this pledge. These other developments are proof that our democracy is maturing and that social dialogue is expanding. Workers have been talking to bosses for a long time – the idea of a high-level chamber for bilateral dialogue such as the Millennium Council is an extension of that. Would we be better off without Nedlac? One businessperson put it this way; ‘if we did not have Nedlac we would have to invent it’. I agree with that sentiment.