A response to Numsa’s attack on the National Development Plan

2013-03-24 10:00

The National Union of Metalworkers of SA (Numsa) and the National Planning Commission (NPC), and, indeed, most South Africans, agree on much.

That we live in an unjust society where the injustices of apartheid perpetuate themselves in high levels of poverty and inequality is undisputed. Colonialism and its apartheid offshoot was a cruel system of skewing the economic rents to a small minority of South Africans. It stifled the potential, creativity and human dignity of millions of South Africans.

Numsa and the NPC are in full agreement that the role of a post-apartheid state should be to reverse the effects of apartheid and to build a society where everyone has dignity and the opportunity to fulfil their human potential.

The NPC also agrees with Numsa that, to date, not enough has been done to reverse the effects of apartheid. In particular, we all agree that we need to radically transform the economy to achieve more just outcomes.

There are however, major differences in the paths to achieve that more than just outcome. The NPC seeks to radically transform the economy without destroying it. It seeks to do so while protecting existing jobs and through creating millions more jobs. Of course, destroying the economy would destroy the wealth of the rich. But it would also, in an instant, wipe out any chance that we have of creating a better life for the millions of poor people in our country.

Numsa’s proposals will have the effect of destroying any growth prospects and thus any prospects for genuine redress. To sift through the rhetoric and bluster of Numsa’s criticisms and get to the substance is quite difficult. But Numsa’s policy prescriptions for South Africa would include, among others: putting up tariff barriers to limit imports, imposing severe restrictions on capital flows, funding much larger social programmes through borrowing, and allowing inflation to rise astronomically.

Numsa also advocates the nationalisation of key industries, including mining, financial services, iron and steel, petrochemicals and construction.

If these proposals were to be implemented, the very firms that employ Numsa members would close down.

But we do not begrudge Numsa’s right to hold these views. Indeed, various unions, political parties, civil society organisations and individuals have their own prescriptions about how South Africa’s complex problems can be resolved. What is heartening is that virtually all South Africans – and we assume this includes Numsa – agree that we need to pursue the targets that are set out in the NDP for 2030: among others, the elimination of poverty, reducing unemployment to 6% and below, improving the skills base, building a capable and substantially corrupt-free state as well as efficient and affordable infrastructure.

Numsa is within its rights to open up the debate on what economic policies we should pursue to attain these objectives. Indeed, there is too little debate about the complex economic challenges confronting South Africa.

The fundamental difference between what Numsa proposes and the NDP is that Numsa’s proposals are exclusivist and destructive, and thus incapable of realisation. Everyone can stand up and condemn the NDP and demand that their own views should be implemented. The fallacy of this assumption is that they would then have to do it alone or in partnership with like-minded sections of society.

Numsa would know this better than most, that developmental states that have succeeded in attaining consistently high rates of growth and extricating millions of people from poverty had to build a social compact among all critical roleplayers in society, with the state playing a leading role. As such, besides the poor logic in its proposals, Numsa ignores this fundamental prerequisite to success.

It is true that our present economic system is not delivering sufficient benefits to all South Africans. The NDP proposes several measures to grow the economy in a more inclusive manner, to directly tackle poverty and inequality and to change patterns of ownership and control in the economy.

What the NDP proposes is not easy to accomplish, and all kinds of trade-offs and choices had to be taken into account. The economy is akin to a ship that we are all on. The ship is rickety, leaky and slow; it is not moving in the right direction. We need to simultaneously repair the ship, improve its speed and change its direction, while it is sailing. Numsa’s proposals are akin to sinking the ship. Numsa will then sing revolutionary songs about its revolutionary purity, as all South Africans, rich and poor, sink. Ironically, the rich often have ways of surviving; the poor don’t.

The National Development Plan proposes that we should raise economic growth, ratchet up exports to generate surpluses for investment, transform our education system to enable more people to benefit, grow employment to tackle poverty and inequality and implement a broader social wage to enable the poor to participate more fully in the economic mainstream. The plan also provides the most coherent proposals to date to improve the effectiveness of the state.

The plan calls for raising the level of public and private investment, lowering the cost of living for the poor, using a range of economic instruments to break the uncompetitive monopolistic hold on the economy of dominant firms and the reorientation of our cities so that the poor can more easily access work. It supports the current economic empowerment programmes while at the same time broadening the slant from simply equity ownership (which is necessary) to building new industries and new firms, and raising the proportion of black people and women in management and skilled positions.

The plan calls for a vibrant and growing manufacturing sector, one that can supply goods to both the domestic and international market.

South Africa is a small economy with a low savings rate. To create jobs, we need investment. To generate the resources for investment, we have several tools. We can tax. We can sell goods and services to the rest of the world. We can attract foreign capital inflows. If we want to grow tax revenue in the medium to long term, we have to grow the economy. To raise exports, we have to become competitive and have the infrastructure and skills to be able to compete, at least in some industries. If we want foreign capital inflows, we have to have a certain level of certainty on economic policy and provide attractive returns. The NDP sets out proposals on how to achieve these objectives.

Numsa has, at best, raised important issues for debate on economic policy. Whether it is capable of persuading other South Africans to its point of view is another matter. The less said about Numsa’s dismissive attitude towards delegates who attended the 53rd ANC National Conference and about its gratuitous insult on the partisan origins of the NDP the better!

– Mathe is the acting head of the National Planning Commission Secretariat

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