South Africa now faces a resource squeeze, where dwindling public revenue, expanding public spending and a stagnant private sector have created an unsustainable state wherein the national democratic project is at risk. The quest for socioeconomic transformation is urgent.
South Africa’s democratic transition is a pre-eminent example of political change achieved through dialogue-based consensus-building. While this legacy has been celebrated worldwide since the 1990s, South Africa’s failure to achieve sustained economic performance and subsequent socioeconomic transformation increasingly detracts from the nation’s image as a beacon of democracy.
Can social dialogue again offer solutions? Are social compacts workable instruments to help us navigate out of our current malaise?
The socioeconomic context today
The quest for socioeconomic transformation in South Africa is urgent.
With an unemployment rate of about 30%, South Africa now has 11 million people of working age who are unemployed. Considering that the median age of the population is only 19, the country’s growing unemployment problem will in the future be one of mainly youth unemployment.
With an urbanisation rate of about 60%, these young South Africans increasingly live in proximity to overburdened public infrastructure such as roads, schools and hospitals constructed largely during apartheid.
Expansion of housing, water and electricity access during democracy only partially mitigates their daily difficulties as deficits in public services to this cohort of citizens add to the deprivation that constitutes their daily lives.
In conjunction with the above socioeconomic outcomes, perpetuated over the two and a half decades of democracy, South Africa’s private sector has undergone a structural shift. The apartheid economy was marked by an industrialisation process, driven at its core by mining, industry and state-owned enterprises in energy, logistics, arms and steel. The result was that the labour market and labour movements were shaped predominantly by mining, metallurgy and related industries such as chemicals and materials production.
Since the transition to democracy, industrialisation in South Africa has lost ground while the services sectors have expanded as banks, for instance, developed digital and Africa-wide footprints, retail giants enlarged their market access into secondary cities, towns, suburbs and rural areas, and increasingly through online sales.
Alongside the largely stagnant and overburdened health and education systems, a thriving private healthcare and education cluster has now developed countrywide.
A two-speed economy
The growth and expansion of the tertiary economic sectors described above have resulted in a structural mismatch between South Africa’s labour market on the one hand and the labour force on the other. They have also resulted in deepening inequality of access between citizens from different income groups.
Whereas racial inclusion and exclusion was historically the predominant factor that determined access to public or private services, increasingly, income levels are now the predeterminant of access.
In practical terms, the well employed rely largely on a mix of ageing public services and high-cost private services to enhance their quality of life, whereas the unemployed and income-poor rely more fundamentally on public services for health and education, in an environment where resources are increasingly scarce.
The South African government has, from about 2010 onwards, relied increasingly on direct cash transfers, or social grants, to address the structural deficits in the socioeconomic system. Rather than address the underlying causes of the structural mismatch contemplated above, the nation’s problems have been financialised by government through fiscal expansion.
In simple terms, social grants and the mooted universal basic income have become an alternative to addressing the inability of the economy to create employment at a rate above the population growth rate, or better still, at a pace that can reduce the employment deficit that resulted from the apartheid system.
In addition, the rapid expansion of the public service has resulted in a disproportionate growth of public sector unions and the public sector wage bill.
In response to these long-run challenges described above, the South African government’s policy mix, on the one hand, and the political and governance environment, on the other hand, along with exogenous shocks such as the global financial crisis, changing trade conditions and more recently Covid-19, have meant that these structural deficits are growing at an accelerating pace.
In a nutshell, the spatial features and settlement patterns that resulted from apartheid-era planning, along with the structural legacy of the apartheid economy, have resulted in a ballooning of young, unemployed dependants on the state who coexist with the employed in a deeply unequal but interdependent society of consumers.
Against this backdrop, and as a consequence thereof, South Africa now faces a resource squeeze, where dwindling public revenue, expanding public spending and a stagnant private sector have created an unsustainable state wherein the national democratic project is at risk.
What is to be done?
The aforementioned dilemmas necessitate a response, the very nature of which will need to be society-wide if it is to adequately address the challenges South Africa faces.
The implication of a society-wide response is that the instruments employed to address the issues cannot, for instance, be limited to macroeconomic or microeconomic policy. By contrast, reliance on the market or on foreign direct investment is on its own unlikely to comprehensively resolve the challenges. Furthermore, reliance mainly on social policy or on non-governmental actors will unlikely result in the scale of change required to fix a breakdown of the system.
Importantly, while the difficulties faced by South African society are national in their scale and distribution, their complexity and interdependence are unlikely to be able to be resolved by efforts focused and formulated at the national level alone.
National-level interventions are simply too generalised to respond to the particularities of specific local conditions, of different industries and particular communities.
Nuanced, targeted solutions needed
Instead, nuanced and targeted solutions will need to be formulated. Such solutions will necessitate an appreciation of the systemic interrelationships between subsectors of South African society.
By way of example, in the same way that the migrant labour system enabled the mining sector during apartheid, the low-skilled urban settlement patterns of today will need to be matched with forms of economic development that rely on large numbers of low-skilled workers as an input.
In the same way that apartheid’s low-cost industrial inputs in energy, logistics, steel and so forth, coupled with the human capital development arising from the technical colleges of old, enabled the industrial manufacturing cluster, the emerging developments in renewable energy, in remote and digital working and the like, will in future need to be matched with market needs to which South African entrepreneurs can respond.
A new approach to planning
What the situation calls for is a new form of economic and industrial planning which is neither state-centric and command and control, nor free market and unregulated. Rather, the approach needed is a coordinated effort, at different levels of aggregation, informed spatially and in terms of industries, while taking into account the cross-cutting enablers of public services at national, provincial and local levels.
This approach implies the need for a vehicle for intervention which must not be bureaucratic, standardised and dictated unilaterally by any one social partner.
Instead, a co-creative effort is required by all social partners, likely brought about through a series of complementary social compacts. Such an approach will necessitate a move towards deepening deliberative democracy as opposed to more formalist procedural democracy, as has been tried to date.
From misalignment to consensus
The aforementioned approach is more easily said than done.
The approach implies a cultural shift in the leadership echelons of politics and government, of business and labour and among non-government and non-profit sectors. This leadership and culture shift would need to move from one of the combative and disruptive engagement to complementary and supportive styles of engagement.
That is not to say that contestation is undesirable.
On the contrary, contestation is essential for the identification of optimal policy or strategic alternatives. However, contestation must take place in good faith and within the context of a shared commitment to a mutually beneficial outcome. If parties do not engage in good faith and without a fundamental shared commitment to outcomes in the national interest, contestation becomes an instrument of subversion and debilitation.
There have been examples in South Africa where social dialogue processes and forums have been used without good faith in the narrow interests of politicians, businesses and individuals in the labour movement.
In such cases, the consequence has been agreements in principle, without such agreements enjoying support in practice. Such false agreements, and the processes that gave rise to them, have served to cynically mask or defer the resolution of points of disagreement, rather than to resolve them through shared concessions and reasonable compromise.
In some instances, the derailment of consensus-building processes has been due to a dearth of leaders who have the capacity for facilitation of the engagement in the national interest. Such facilitation depends fundamentally on the capacity to rise above sectoral interests and convene and provide a platform for partners in good faith, and on enabling constructive voice behaviour from participating parties.
It requires inviting marginal voices and strengthening these voices, distributing the competitive space for dialogue fairly between parties, and placing limits on strong voices that have disproportionate power due to historic or structural reasons.
Critically, effective facilitation of social dialogue for consensus requires the management of the dialogue agenda in such a way that the substantive issues are retained at the centre of the discourse and that emotive derailment is avoided.
It requires adequate engagement, reflection and reflexive engagement with the issues, so as to enable the highest likelihood for mutual understanding to emerge between social partners. As such, dynamic social dialogue of this kind is at one level a shared-learning process whereby the frames and assumptions that inform the positions of parties are formatively engaged with.
Such facilitation of identifying issues, surfacing assumptions and engaging reflexively across the table while managing the tone and process of engagement, is an art to be mastered and a technical skillset to be honed.
Practical steps towards consensus
South Africa’s diverse and complex stakeholder landscape means that a one-size-fits-all approach to social dialogue is unlikely to succeed.
There are of course some key national issues that necessitate centralised consensus for both symbolic and substantive reasons. The management of land reform, in creative tension with the protection of property rights, is a prime example.
The mishandling of these high-level issues has the potential to call into question the framework conditions that constitute the overall social contract of which the South African Constitution is an expression. Such mishandling can undermine the minimum threshold of confidence in the process of national consensus-building and can further destroy trust between the social partners.
For this reason, it is crucial that dialogue and consensus-building take account of the several but interrelated processes of political contestation such as during election cycles, formal institutional procedures such as through Parliament, formal but structured institutional engagements such as through Nedlac, and informal back-channel or parallel bilateral engagement between business and government counterparts, between business or business formations, by chambers and labour, as well as by civil society more broadly. These processes must further take account of the bureaucratic and professional processes of government at the executive, Cabinet and three-tier departmental levels.
To effectively manage the interplay of these inter- and intra-institutional processes and their competing institutional logics, a perspective of coordination from a process point of view and of long-term outcomes from a directional point of view, is crucial. So too is timing in the dialogue process design.
In this regard, South Africa’s constitutional vision is helpful but not fully explicit or exhaustive. Similarly, the existing legislative framework is only partially directive, and the historically informed norms not entirely helpful. The process will require ongoing navigation.
Framing the dialogue agenda
For these reasons, it behoves national leaders to reflect deeply on the questions about the dialogue agenda, including:
- Consensus about what?
- Consensus between whom?
- Consensus to what end?
- Consensus resulting in what actions, by whom, to what end?
This is crucial in that consensus on its own does not constitute progress towards material ends.
By way of example, again in terms of land reform, a social compact between the mining and agricultural sectors and their stakeholders would be somewhat more effective if these questions were answered, perhaps as follows:
- Consensus is needed between the mining houses, agricultural businesses and government, who control large tracts of land, and with their counterparts in communities, in government at various levels and across departments. The focus of such a compact would be about how land access, land use and land ownership might be optimised to secure the long-term prosperity of South Africans;
- To this end, as addendums to the compact, co-authored statements of intent for specific portions of land in particular locations, where the interests of specific stakeholders intersect, can be formulated to give tangible expression to the consensus reached in compacts;
- Such consensus would seek to ensure that levels of access to land is enhanced, that land use is maximised within set timeframes, and that ultimately land ownership over time more appropriately expresses the shared interests of South Africans; and
- In this vein, a compact on land reform as a guide whereby interested parties can approach government and private sector actors such as investors, and one another with the view of formulating plans and strategies for securing the outcomes envisioned in the compact.
One of the benefits to this approach is that it moves the deliberative process away from elites at the top of government, business formations and the like to where the stakeholders are, from where competing issues on the agenda crowd out matters of importance, and to where the issues are top of the agenda.
The other benefit is that the dialogue process is expanded to include the involvement and contribution of local and diverse parties who are directly affected by the issue.
Notably, the very notion of needing new social compacts implies a measure of change to the status quo and to the codified and unwritten rules of the game and the power relations between stakeholders.
As such, the effectiveness of the process depends directly on the credibility of the process itself.
Powerful actors will likely boycott or manipulate the process should they feel their interests are subverted beyond an appropriate degree of evolutionary change. Similarly, stakeholders who stand to benefit from the intended change will likely undermine the process, should they consider the rate of change to be too slow or too minimal to be meaningful.
Likewise, the process will fall apart if the facilitating parties are seen to be on one or the other side of the issue, favouring one or more stakeholder, or lacking the personal credibility to retain the amicable cooperation of the participants. For this reason, processes must be transparent and open to democratic accountability.
Building capacity for consensus-building
The goal of a consensus-based national path towards higher levels of inclusion, equality and social justice will of itself require a deepening of South Africa’s capacity for consensus-building.
The nation’s previous experiences with the political settlement and historic successes such as in labour market reform through social dialogue will not on their own be sufficient to ensure future success.
Both of these successes depended on small groups of representatives on behalf of constituencies, negotiating in a centralised manner and deciding a new order on behalf of others.
The character of South Africa’s socio-economic obstacles is such that their solutions will of necessity be developmental, emerging over time. They will furthermore need to be pluralistic and inclusive, requiring the coordinated efforts of multiple and diverse parties. These criteria imply the necessity for a larger cohort of able facilitators who provide leadership in forming compacts, and the need for cultural adoption by business actors, individuals in government and in society more broadly, of compacting as a preferred means of settling disputes and pursuing shared outcomes.
Consensus, as contemplated here, is not in its ideal form a set of codified agreements which are strictly adhered to by parties.
Instead, the consensus is conceived of as a threshold for collective action.
By way of example, investors will invest when they have confidence that there is sufficient consensus among stakeholders to ensure that their returns will materialise and most of their risks are averted. Similarly, government will formulate and execute plans, enact regulation and laws as a consequence of, and not in spite of sufficient consensus, to thereby guarantee that stakeholders will continue to commit, contribute to and accept the framework conditions of the country.
The goal, therefore, is reaching sufficient consensus as a threshold for collective action.
Finally, it is due to the preference for the above notion of sufficient consensus that the involvement of civil society as represented by non-profits, non-government organisations, academia and community groups or activist groups is crucial.
Over time, as the interests of those in business and government, or even organised labour become entrenched, the actors will collude to further their narrow interests. This has begun to happen in South Africa today.
It is most likely those who opt to contribute to society, though civil society will take a contrary point of view in the social dialogue process.
In the democratic setting, it is the contrarian voices of civil society that constitute a check and a balance on the formation of vested interests in other sectors. Long term, the involvement of civil society at the national dialogue table is a mainstay of the entire system, though from time to time it will complicate the process.
Sufficient consensus then is sought through optimal participation and representation and created as the product of credible processes whereby mutual understanding of issues is sought so that mutual agreement may be forged and collective action enabled.
It is in light of this appreciation of the role of dialogue that the GIBS Centre for Leadership and Dialogue was created and continues to convene South Africans from all walks of life to deliberate about our shared future. It is why we invest in the Spirit of Youth Leadership Programme for school pupils and foster society-wide engagement on our campus. Beyond our commitment to business, we are committed to securing South Africa’s democratic gains and seeing the constitutional vision realised.
It is our firm belief that social dialogue and compact-building are crucial tools to be used in this endeavour, that leadership that is consensus building is the key enabler of the solutions we must find and that the time for such leadership is now. DM
Marius Oosthuizen is the director of the Centre for Leadership and Dialogue at GIBS. His current PhD research is focused on the use of dialogue at Nedlac since the democratic transition in 1994.