Social compacting: Nedlac briefing; with Deputy Minister

Meeting report

Deputy Minister remarks
Deputy Minister of Employment and Labour, Boitumelo Moloi, noted that Department is committed to ensuring engagement with the Committee and she introduced the delegation from the National Economic Development and Labour Council (Nedlac).

Social Compact to tackle socioeconomic challenges: Nedlac briefing
Nedlac Executive Director, Ms Lisa Seftel, delved into the role of social compacting in addressing South Africa's socio-economic challenges. The emphasis on enhancing the social compact approach to confront the nation's grand socio-economic issues is evident in various government policy statements, including the State of the Nation Address and the Budget Speech.

Nedlac, established in 1994 through legislation, plays a vital role in promoting economic growth, participation in economic decision-making and social equity. It serves as a platform for reaching consensus and concluding agreements on matters of social and economic policy. Nedlac assesses proposed socio-economic policies and labour legislation before they are introduced in Parliament. Over the years, Nedlac has been involved in critical initiatives, such as the Presidential Job Summits, Economic Recovery and Reconstruction Plan (ERRP), Social Compact to Support Eskom, Covid-19 pandemic response and the establishment of the National Minimum Wage.

A social compact is essentially a core agreement among various societal stakeholders and government, outlining the rights and duties of each party. It necessitates elements of social partnership, thriving within the context of social dialogue and collective bargaining. Social compacting should be viewed as both a process and an institutional framework, starting from the belief that working collaboratively, coordinating efforts, and building trust between societal groups yield better socio-economic outcomes than working in isolation. It aims to maximise common interests in a principled manner, acknowledging that differing and conflicting interests may exist.

Social compacts come in various forms, including large-scale initiatives. Social compacts can emerge within the state, such as coalition agreements at local government level, bilateral arrangements between the state and social partners, and partnerships focused on various sectors, such as energy, freight, public transport, and crime. In addition, there are ongoing efforts to establish a social compact on nation-building and social cohesion.

In 2018, the Presidential Job Summit led to a Framework Agreement with 77 commitments aimed at retaining, creating, and enabling jobs. Various structures were established to monitor and facilitate the implementation of these commitments. The Covid-19 pandemic prompted a reprioritisation of commitments to support economic recovery. Notable achievements include the signing of the social compact to support Eskom, the establishment of the Temporary Employee Employer Relief Scheme (TERS), and progress in areas like localisation, industrial financing, and master plans. Social partners felt engaged and accountable in the process, although challenges arose, such as measuring job creation targets and the impact of the pandemic on job loss.

In response to the economic crisis caused by COVID-19, a Nedlac Forum for Economic Recovery was established in 2020. Social partners identified collective and individual commitments to boost confidence and turn around the economy. These commitments formed the basis of the Economic Recovery Action Plan (ERAP) and were subsequently incorporated into the ERRP. Work streams were established to address key issues in energy, public transport, localisation and small businesses. Although there were achievements in consensus-building, challenges emerged on the role of Nedlac in implementing the ERRP and contributions from different social partners.

The Social Compact to Support Eskom was initiated in 2019 due to the energy crisis. It involved government, business, labour and the community. Significant achievements include progress in generation capacity, embedded generation, Eskom's energy crisis plan, tariff pricing and climate change considerations. Challenges included government partners not initially participating, lack of understanding of Eskom's balance sheet complexity, and disparities in contributions from social partners.

During the Covid-19 pandemic, a Nedlac Covid-19 Rapid Response Task Team played a crucial role in responding to the crisis such as addressing non-pharmaceutical interventions, vaccination organisation, workplace health and safety, and relief efforts. New structures like Business 4 South Africa, the Solidarity Fund, Nedlac Community Trust, and the Event Sector Alliance were established to support the response. This experience highlighted the importance of compacts.

Nedlac Business Convenor, Mr Kaizer Moyane, said Nedlac remains the platform for social dialogue where social partners work together on key issues. The social compact should not lead to paralysis, however, there are times when there needs to be agreement before taking action. There are items which are known to be within the competencies of one of the parties and thus easily executable. He noted Business collaboration with government on crime.

If the government commits to an issue, it would be helpful that a specific department is named so that department can be held accountable. There should be a general understanding that Nedlac is not only for the Departments of Employment and Labour (DEL) or Trade and Industry and Competition (DTIC) but also for other departments.

Social compacts must be realistic and within a fair scope. Commitments should not be made on a grand scale, particularly on items that will be unachievable. For example, there are items that the Business constituency can commit to at a policy level, but it is known that certain items should be left to individual businesses.

Nedlac Labour Convenor, Mr Tony Ehrenreich, said that compacting is the key function of Labour, specifically, the negotiation of agreements, complying with those agreements and making sure that the agreements can take forward the ambitions including being able to interact with the constraints, challenges, and opportunities in government while building trust and linkages with various social partners.

Where there are antagonistic relationships with social partners, especially Business, where there is often difficult bargaining on how to distribute the surpluses created, the plea is that there must be creative links between the different areas of engagement. Supporting what the Executive Director has shared, Labour would like to add that social compact at an international level is found to be effective, such as the African Growth and Opportunity Act (AGOA) agreement, where there has been extensive collaboration between South African social partners and government to prepare a posture and ambition on what should be achieved in those trade agreements.

Mr Ehrenreich said that strengthening linkages built across industries will continue to be beneficial and allow the flow of understanding of what is happening at both macro and company levels. Thus, the frameworks that have emerged provide a structure for companies to pursue their ambitions, grow, expand, and create more job opportunities. However, there must be a closer look at implementation as there are gaps in implementation at Nedlac. The government should be held accountable for the implementation of the interventions, especially in difficult areas where it has been hard to find agreement.

Congress of South African Trade Unions (COSATU) Parliamentary Coordinator, Mr Matthew Parks, highlighted that when businesses do well, this creates opportunities for expansion in the country. Although the impact of COVID-19 was seen in businesses, it is encouraging that there was a significant recovery post-Covid including a successful vaccine rollout.

Nedlac Community Convenor, Mr Thulani Tshefuta, pointed out that Priority 1 of the Medium-Term Strategic Framework talks about building a capable, ethical, and developmental state that provides a firm basis for active citizen participation. Nedlac’s structure composed of different social partners, builds on the idea and importance of an active citizenry as a multisectoral response to societal issues. It has yielded great fruits in the past and will continue to do so in the future. Therefore, social compacting should begin by identifying and defining the issues in the national agenda.

Nedlac Government Convenor, Mr Thembinkosi Mkalipi, indicated the Government constituency's agreement with the report presented by the Nedlac Executive Director.

Discussion
Mr M Dangor (ANC, Gauteng) expressed his thanks to Nedlac for the role played in bringing together the various constituencies to take forward the national agenda. He asked if Nedlac believed that its constitutional mandate was being achieved. He asked that there be an expansion in the manner Nedlac is working to achieve the 2030 National Development Plan (NDP).

Mr Dangor said that the presentation referenced challenges faced by Nedlac and its constituencies. These challenges should be mentioned explicitly to the Committee so that assistance can be provided.

What international best practice does Nedlac intend to learn from to improve local operational efficiency? What strategic partnerships does Nedlac have with academic think tanks and other organisations? What role does Nedlac have in providing strategic prioritisation for the implementation of the Medium-Term Strategic Framework (MTSF)?

Ms H Boshoff (DA Mpumalanga) said that Nedlac’s role is to promote both equity and participation through social dialogue for sustainable economic growth and social equity. However, it seems that social equity has fallen by the wayside as the divide between rich and poor has grown exponentially. How has Nedlac implemented its constitutional mandate to ensure growth and prosperity in SA?

There are other countries in the Global East such as South Korea and Singapore which have used social cohesion to grow their economies. Has Nedlac engaged with these countries to determine if their practices could be implemented in South Africa?

It appears Nedlac is a lot of talk but little implementation because its mandate is not derived from its policies but government. Ms Boshoff therefore requested that Nedlac affirms that it will move away from this practice to ensure that the equity goal is reached and maintained.

The presentation spoke about new structures that have been put in place and Ms Boshoff requested that the Committee be given information on what the collective outcome of these new structures has been.

Ms M Moshodi (ANC, Free State) thanked Nedlac. What is influencing Nedlac policy particularly in prioritising strategic programmes to link the Medium-Term Strategy Framework with the realisation of the NDP?

What does Nedlac think can be done to mobilise society, labour, business, and government to make the necessary sacrifices for the common goal of uplifting millions of unemployed citizens?

What international best practices has Nedlac considered to improve operational efficiency towards achieving a sustainable and long-term social compact?

Mr M Mmoiemang (ANC, Northern Cape) indicated that there has been applaudable progress. Given the constraints in the national fiscus as articulated in the Medium-Term Budget Policy Statement (MTBPS) which will have an impact on Nedlac in achieving its goals, how is Nedlac navigating this? Has this matter been at the forefront of the Nedlac agenda to determine what could be done to turn around the situation?

In January 2023, social compacting was topical and Business Unity South Africa (BUSA) made a statement about its readiness to take social compacting to finality. Concerns were raised about other stakeholders. Is there an element of sense in that assertion? BUSA said the priority must be on agreeing on interventions in the priority areas and implementing these, and then working on a social compact to rally society around these.

The challenges raised in the presentation, specifically, the deviation from the agreements thus pushing all the stakeholders to maximum limits. Is this an area that needs to be strengthened?

On contestation around ideological positions, is that an obstacle in terms of social compacting? For example, where some parties will see crime as the sole priority while others will another issue as such.

Mr Mmoiemang said that the progress achieved by Nedlac is commendable and recommended that the Nedlac platform should be used to push the NDP goals so that by 2030, the NDP is achieved.

The Chairperson said that the point raised about the Social Compact framework is fundamental so that issues of concern are pursued.

The Chairperson noted that the Department of Employment and Labour has not amended the Nedlac legislation since 1994. Are the challenges faced by Nedlac emanating from the legislation not being amended despite the changing times? Can some of these challenges be addressed legislatively?

He agreed about learning from international comparison and best practice. He made an example about trade in the international space such as the World Trade Organisation (WTO) where countries craft negotiations among themselves without including their social partners. This creates many troubles including the adoption of the resolutions because the social partners have not been included in the process.

The Chairperson requested that Nedlac reply in writing on the challenges faced with ERRP.

Nedlac response
Ms Seftel thanked the Committee for offering a hand of support in certain areas. She noted the questions about the role of Nedlac on the NDP, MTBPS, advancing social equity, advancing the national mandate and so on. What Nedlac does in addition to social compacting is facilitation of key processes. For example, with the MTBPS, the Minister and his officials engage with the social partners about three times a year on key issues that should be in the MTBPS including giving feedback on these.

Ms Seftel acknowledged that there are ideological differences between the social partner on monetary policy and fiscal policy which are articulated in Nedlac. Key aspects of the NDP have come to Nedlac. For example, currently, Nedlac is looking at the tabled revised Master Skills Plan and the Human Resource Development Strategy. So what happens in Nedlac is that social partners get mandates and input.

On trade policies and international frameworks, Nedlac has an active committee called the Technical Sectoral Liaison Committee (Teselico) which the Minister of Trade Industry and Competition consults for WTO mandates to ensure that the voices of the social partners are included in the process. Already there are discussions on how Nedlac can coordinate social partners for the forthcoming WTO meeting. Another example of these kinds of forums for input from social partners is the EU's Carbon Border Adjustment Mechanism implications for SA. What Nedlac does is engage, understand, and then provide inputs in government processes.

Ms Seftel said that it is hoped that early in the Seventh Parliament to bring a Nedlac Amendment Bill to Parliament. One of the areas it is hoped the Amendment Bill will tighten up is the relationship between Nedlac and parliamentary processes. The other area to tighten up is representativity. There is work that can be done to improve the relationship between Nedlac and Parliament so that issues raised by Nedlac are taken seriously in the parliamentary process.

On international best practice to enhance operational efficiency, at some level Nedlac is a unique organisation internationally, but it has strong links with various international institutions where Nedlac can get relevant experience. Nedlac also has bilateral engagements with similar socioeconomic councils in other parts of the world. The benefit of learning from international best practice is that it is often on specific issues. For example, Nedlac is beginning to look at what labour legislation should change for a just transition.

There is engagement with academic institutions and think tanks. This is one of the lessons that has been learned internationally, where there is stronger academic input into such processes. Increasingly, Nedlac has relationships with universities and academic institutions that provide expert input on issues Nedlac is working on.

Ms Seftel indicated that Nedlac will provide in writing the challenges faced with ERRP, especially in key governmental processes.

Mr Ehrenreich affirmed that Nedlac will provide in writing the areas where there are challenges in getting government officials to respond to the process and substance of the engagement.

Mr Moyane replied to the point that Nedlac is a lot of talk and little implementation that it is important to recognise the mandate of Nedlac which has been set up specifically to discuss policies or draft legislation before they are sent to Parliament for approval. Thereafter, it is for government and the executive to implement. Nedlac does also have the responsibility to monitor implementation of legislation. It is not Nedlac's role to implement the legislation but rather to observe and ensure effective implementation.

Mr Parks said that is easy to lament why certain things are not going right. Given the socio-economic challenges faced in South Africa, the work that has been achieved by Nedlac is commendable. As a social dialogue platform, Nedlac has played a critical role in government processes and there has been a positive shift on various issues including the robust National Minimum Wage discussions and responding to the Covid-19 crisis.

Mr Mkalipi said that Nedlac is a critical structure The function of a social dialogue is to have a conversation and iron out differences. Therefore, as already mentioned, the implementation lies outside Nedlac’s scope of work.

On international forums, such as the WTO, the challenge is that the nature of such organisations is set up for engagement between governments of countries. However, there is nothing that hinders governments at a national level from including social partners in the process which will inform decisions made by the country.

Mr Tshefuta said that the feedback provided by the Committee should not be a mere question-answer type of engagement. The feedback provided by the Committee should be taken seriously as it can go a long way in improving the work of Nedlac.

If the intention is to be meaningful about social compacting, it would be useful to first identify and agree on the issues of national importance. In this case, the NDP Diagnostic Report challenges government as South Africa's educational outcomes are poor and many South Africans are unemployed. This should be setting the agenda on the issues that ought to be prioritised. This can be a way to have the strategic link between the NDP and the Medium-Term Strategic Framework.

The promise of the Constitution centres around the progressive realisation of socio-economic rights. Therefore, Nedlac’s success should not only be defined by the number of policy and bills discussed, but Nedlac must also take interest in the extent to which the issues agreed on find expression in the daily lives of the people of South Africa, even if the implementation is the responsibility of other organs of government.

The Nedlac Act is outdated in that it has been overtaken and outgrown by the evolution of Nedlac itself. It cannot be used as a point of reference for the work that is being done by Nedlac. Therefore, processes are underway internally through the Governance Task Team to review the Nedlac Act and its constitution so that Nedlac is fit for purpose not only what was the intention at the establishment of Nedlac but drawing lessons from what has been tested in practice and that work. This is the core of the social compacting mentioned.

The Chairperson thanked the social partners and Nedlac for the presentation which has allowed for more lessons on the functions of Nedlac. The written responses should be submitted within seven days.

The Committee adopted the meeting minutes of 31 October 2023 and the meeting was adjourned.