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“Incoherence” is the main challenge to economic growth: first OR Tambo panel

Bongiwe Tutu
July26/ 2014
PLAN PANEL: (left to right) Nonkululeko Nyembezi-Heita (CEO of Ichor Coal NV), Khulekani Mathe (Head of NPC Secretariat), Siki Mgabadeli (Moderator), Neil Coleman (COSATU strategist), Adam Habib (Wits Vice-Chancellor), agree on consensus and coherence for the NDP to work.    Photo: Zelmarie Goosen.
PLAN PANEL: (left to right) Nonkululeko Nyembezi-Heita (CEO of Ichor Coal NV), Khulekani Mathe (Head of NPC Secretariat), Siki Mgabadeli (Moderator), Neil Coleman (COSATU strategist), Adam Habib (Wits Vice-Chancellor), agree on consensus to take the country forward with the NDP.                                                                                          Photo: Zelmarie Goosen.

 

The main challenge to economic growth—as set out in South Africa’s National Development Plan (NDP)—is “incoherence”, according to some experts at Wits on Thursday.

Vice-chancellor Prof Adam Habib called the NDP “incoherent” and said “trade-offs” were needed. The private and public sector as well as trade unions needed to come together and make concessions in order for the NDP to work.

“We need a pact agreement on the NDP, we need a coherent plan that involves the business, labour, government and society,” said Habib.

“The NDP was ideologically driven rather than practical.”

Providing a business perspective, Nonkululeo Nyembezi, CEO of Ichor Coal NV, said there needs to be “frankness between constituents and people in government need to be open”.

The panellists said the reason for the disagreements about the NDP was a lack of consensus on its policies.

Congress of SA Trade Unions (Cosatu) strategist Neil Coleman said there was no broad consensus with the implementation of the NDP “and the NDP cannot be implemented without consent from and coherence with the workers.”

Coleman said the NDP was “ideologically driven rather than practical.”

 Arguments

The panelists also argued over whether the NDP would create jobs and whether these jobs would be sustainable.

National Planning Committee Secretariat head Khulekani Mathe said the plan’s goal was to bring unemployment levels below six percent by creating 11 million new jobs by 2030.

However, Coleman countered that these would be unsustainable, low-paying jobs that would threaten economic stability. He said the youth wage subsidy would result in wage repression.

“Repressing wages of first time workers will deepen inequality and economy with not grow,” said Coleman.

Cosatu general secretary Zwelinzima Vavi, who was present in the audience, told the panel that wage repression would lead to more income inequality and instability in the country.

“When you depress wages of the youth, and whilst you say nothing and in fact celebrate the fact that the CEO’s continues to smile to the banks and take their monies all over the world, then you know that you’re  going to work on political instability,” said Vavi.

Mathe disagreed the NDP would result in wage repression “there’s no way government would impoverish the people by doing that.”

He said the NDP instead supported “wage incentives”.

“What we do propose is a wage incentive, popularly known as the employment tax incentive, which is to try and encourage employers to employ more young people,” Mathe said.

The panellists agreed that income inequality was a problem but disagreed on whether the NDP would reduce the gap between rich and poor.

Coleman said that the NDP aims to decrease the Gini coefficient, a measure of inequality in a country, to 0.6 percent. This would still leave South Africa the most unequal country in the world “and this is our ambition,” he said.

The discussion on Thursday was the first of the ten-part OR Tambo Debate Series hosted by the Wits School of Governance.

Bongiwe Tutu