Winds of change blowing for better or worse
RECENT months have been filled with signs that are worrying and confusing. Possible mine closures and disinvestment by some mining companies, the violent and deadly saga at the Marikana mine, the downgrading of South Africa’s sovereign rating and the subsequent downgrading of the banks, the strikes in the Western Cape farm sector, and the government’s review of the "willing buyer, willing seller" policy all represent the winds of change — but for better or worse?
South Africa’s economic landscape is unfolding in the context of the global financial crisis, although many African economies are growing healthily.
The economies of Nigeria, Zambia, Angola and even Zimbabwe are seeing meaningful growth, largely boosted by mineral and energy resource exports.
The dynamics in South Africa’s mineral sector have the potential to undermine, if not cripple, South Africa’s growth prospects.
The downgrading of our sovereign and banks’ ratings clearly has its own consequences, especially in the context of international markets.
The ratings will affect other institutions and potentially lead to socioeconomic difficulties.
Recent media reports on the mining sector are enough to ring alarm bells. Anglo American Platinum’s intention to close some of its operations poses a threat to employment in the sector.
Its decision to retrench 14,000 employees is a sign of serious problems that cannot be left unchallenged.
The sentiments surrounding the Western Cape farm strikes fall in the context of the continuing problems besetting this sector. It is important that the farm sector is not compromised — if it is, the result could be food shortages and unproductive farms, so a workable balance needs to be sought by those involved.
The mining and farming sectors are among the biggest employers in our economy, possibly second only to the government. It therefore goes without saying that we need to nurture the "goose that lays the golden egg". This is important because of high unemployment. However, it cannot be at the cost of poverty wages, mining safety, unfavourable socioeconomic conditions in mining communities and the unbearable conditions of farm workers.
South Africa’s structural dependence on these sectors, especially the mining sector, requires a serious review. Clearly our economy needs to diversify and promote other sectors, such as the knowledge economy, manufacturing and resource beneficiation — bearing in mind that a knowledge economy is highly dependent on the nature of our education system and our innovative capabilities. The state of the education system at the moment, and basic education in particular, leaves much to be desired. When it comes to manufacturing and beneficiation, the state must propel these sectors — our competitive advantage lies in the mining and farming sectors, but we need to harness them for the benefit of all.
The mining houses’ strategy of retrenchments risks setting precedents. So too do the unaffordable wage agreements reached in Marikana and in some of the farming settlements, which have the potential for setting a precedent for other sectors in the economy. Wages are a key cost of production and they are either affordable or not. Once they are deemed unaffordable, businesses will either collapse or mechanise.
There is no doubt that all of these events will have a changing effect on the economy. The important task is to manage this change and ensure a positive effect. Practical steps need to be taken to ensure that jobs are saved, not lost. Beyond that, we need more job-creating opportunities. There is a need for a dialogue with the trade unions about the present wage regime and broader labour conditions. As a matter of principle, high wages must go hand in hand with high productivity.
South Africa’s socioeconomic and political landscape is highly volatile at the moment. The large numbers of unemployed youth are running out of patience. The highly unionised and politicised workforce is also flexing its muscles in its own selfish interests. Slow domestic economic growth, which is largely influenced by the global crisis, is not making it easier to find meaningful solutions.
Amid all of this, change is around the corner. It must be managed by insightful leadership with the ability to find lasting solutions and to engineer change that will be for the best.
• Mokwena is director of the Centre for Public Enterprises and a research fellow at Wits University.
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