Ramaphosa's Job Pact: What's hot and what's not?

President Cyril Ramaphosa unveiled his jobs pact on Thursday at the Jobs Summit. It includes the moderation of executive pay and dividend payments as a way of forestalling job cuts. And banks have agreed to a R100-billion fund for black business to complement the state’s black industrialist pot of money.   

Here's what's hot and what's not.                     

What's Hot

The vision: We can’t be a nation of zombies

Ramaphosa painted the unemployment crisis in evocative and meaningful ways, not in the political language of slogan and process. Of joblessness, he said, “It diminishes the human ability to eradicate poverty, tackle inequality and working poor. It has a devastating effect on families and communities. It erodes dignity. As you look at unemployed people, they go around like zombies – aimless. They have their dignity destroyed and eroded. It contributes to social problems like poor health, poor educational outcomes and criminality.“

The prognosis: He spread the blame from apartheid to state capture

Populist politicians tend to blame all South Africa’s crises on apartheid as if we have not had a democratic government in office for a generation now. Ramaphosa did not do so. He started out with a historical explanation for joblessness, “Extreme unemployment is the product of an economy starved for decades of meaningful investment in its people through education. The structure of our economy which was built on the extraction of minerals and (to some extent it) remains untransformed.” But Ramaphosa also acknowledged his government had created “policy uncertainty and policy inconsistency” and that “declining confidence has curtailed investment”. He said that state capture had undermined investor confidence and public trust. It had eroded key institutions which could have been used to raise living standards, said Ramaphosa.

Big ideas and a number

The framework agreement did not shy away from putting a number on its ambitions. If successfully implemented, it will mean 275 000 jobs a year over five years which will have a significant multiplier effect on the economy. Banks have agreed on targeted loans and investments in black-owned enterprises to the value of R100bn over five years. 

Fresh food; big money

Ramaphosa has clicked that superfoods which we are very good at growing – things like avocados, macadamia nuts, cherries, berries – are like South Africa’s new gold and coal. Global demand for fresh food exports from South Africa could increase from R54bn to R90bn by 2030, said Ramaphosa. He has also moderated his language on land and did not mention land expropriation without compensation once. Instead, Ramaphosa said that labour, government and business had agreed to increase the amount of land under cultivation; expand tenure rights to rural land-dwellers, to procure land for black owners and to redirect spending to black and women-owned farmers. In addition, agribusiness and the banks have developed an R600m facility for new owners of the redistributed land. 

Implementation plan

In previous Jobs Summits, grand ideas have withered on the vine. This time, there’s an implementation plan with timelines. “The social partners have agreed that there will be a framework agreement that is both ambitious and realisable,” said Ramaphosa.  

What's Not

Dividend holds: populist or revolutionary idea? 

Executive salary sacrifices and foregoing of dividends. “This, I regard, as a revolutionary decision,” said Ramaphosa. “Before you throw people into the streets, those with high salaries should make sacrifices,” he added. This idea is likely to get the most public attention but is it likely to work? It’s highly unlikely that South African executives can be weaned from their stratospheric packages and shareholders are going to scream blue murder before they forego dividends. Saving jobs are one thing, but without efficient spending by the state and the assurance that taxes are not being captured by rent-seekers, this idea is a non-starter.  Executives should be judged and paid by how well they run their companies and here, of course, the South African C-Suites have a lot of work to do.

“South Africa first – in a special way, not in an arrogant way.”

So Ramaphosa sub-tweeted US President Donald Trump whose slogan “Make America Great Again” is a retreat into narrow nationalism. But how likely is the Buy SA idea that Ramaphosa is putting his Presidency behind likely to work? Of course, we should not buy imported food, fruit and vegetables, but that’s because of its cost to the planet. Consumers make decisions on cost and convenience: go to the southern end of Johannesburg to see how China Malls have taken over the retail sector to understand why this is a non-starter as a mass-based plan. It’s great, though, that blue-chip companies have agreed to buy more local products. These include Adcock-Ingram;  Edcon, FirstRand,  Nandos, Mondi, Nestle, Sappi, Standard Bank and Tsogo Sun.  

SA unlikely to meet 6% unemployment target by 2030

Ramaphosa said it is unlikely that SA will meet its target of 6% unemployment by 2030 unless extraordinary measures are taken. At a jobs target of 275 000 jobs a year over five years, it’s clear that we will not meet the target. There are six million young people out of work out of a total jobless number of over nine million. 

Trade unions will open a clothing factory employing 200 people in the Eastern Cape in three years

Too far away. Too small impact. And trade unions are not great at running businesses especially clothing businesses.

Financial disclosure and lifestyle audits for civil servants

The social partners have agreed on the need to introduce financial disclosure for all government employees and to undertake lifestyle audits. Hundreds of thousands of civil servants do business with the state by trading with their own companies. Although this is illegal, it continues to happen. It is highly unlikely that public service unions will be able to get their members to stop or to disclose their finances or to agree to mass lifestyle audits.  

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot