The business industry has rapped the government over the knuckles over its delay in crafting a social compact that will deal with policy uncertainty, enable the ease of doing business and attract investment on the back of dwindling economic growth.
This comes as the government and its social partners represented in the National Economic Development and Labour Council (Nedlac) have long passed the 100 days set by President Cyril Ramaphosa to finish a comprehensive social compact to address issues of economic growth and unemployment.
Deputy President Paul Mashatile on Friday held a dialogue with business leaders, including CEOs and senior executives, as well as business associations, including Business Unity South Africa, Business Leadership South Africa, and the Black Business Council amongst others.
The closed engagement, which was hosted by the Johannesburg Stock Exchange (JSE), focused on the role of government and business in addressing the socio-economic challenges facing the country.
The captains of industry raised issues of concern affecting their constituents, particularly those relating to their ability to operate efficiently.
They urged the government to work with a greater sense of urgency in attending to the current energy crisis, crime and corruption, and processing of applications relating to statutory obligations hindering their ability to conduct business effectively.
JSE Group CEO Leila Fourie said the private sector was more than willing to play its part in building a social compact in spite of economic challenges it was facing.
“Business, and society at large, is dealing with challenges on several fronts, most obviously energy security and the deteriorating reliability of the logistics system,” Fourie said.
“Collaboration, mobilisation of capital and execution is required to rebuild business and investor confidence. The JSE, as a conduit for capital, can play an important convening role in solving many of these challenges.”
South Africa’s rate of unemployment regressed to 32.9% in the first quarter of 2023 as industry struggled to absorb the growing labour force amidst curtailed production and activity levels due to the ongoing energy crisis.
Eskom, which has implemented continuous severe power cuts for months, on Friday issued a warning of an unprecedented Stage 8 load shedding in winter as generation capacity will be constrained further by rising demand due to the cold weather.
Bureau of Market Research director Professor Carel van Aardt on Friday elaborated on various matters influencing economic and labour market performance in South Africa, focusing on the labour market issues underlying the current low job creation levels and high unemployment levels.
Van Aardt said the average real annual gross domestic product growth rate was expected to show very little growth in 2023, pointing to issues such as education and skills as some determinant of this stagnant growth.
According to Van Aardt, a new labour market policy paradigm is required to address the various burning labour market issues by ensuring that the working-age population becomes increasingly able to create their own employment by increasing their educational level and entrepreneurial skills.
“However, the government cannot be allowed to shirk its responsibility to create an enabling environment for the economy to grow, making South Africa an attractive destination for foreign direct investment, creating opportunities for private capital to invest with an expectation to generate profits, thereby creating jobs,” Van Aardt said.
“Infrastructure development and maintenance, together with efficient provision of quality services, cannot be over-emphasised in the role the government ultimately plays in sustainable economic growth and job creation.
“The government must fulfil its responsibility towards its citizens as an enabler, citizens must acquire higher levels of human and social capital, and the labour market must evolve to be more flexible to support start-up businesses in a less rigid environment.”
Some analysts have hinted at an investment strike as foreign investors have sold R11.4 billion of South Africa’s bonds for this year to date, undermining the rand which weakened to R19.51 against the dollar two weeks ago.
Responding to business industry’s concerns, Mashatile emphasised the government’s commitment to working with the private sector to find lasting solutions to the challenges facing the country.
Mashatile informed business leaders that a comprehensive social compact between the two partners would go a long way towards putting South Africa on the right track.
“As a means of moving forward, engagement with the JSE-listed companies will be institutionalised for future engagement and as a platform to expedite the implementation of the commitments made,” Mashatile said.
It was agreed that such a meeting between the government and the business community should be convened in the next six months, starting with a follow-up meeting with Western Cape-based JSE-listed companies to be held soon.
BUSINESS REPORT