in an outflow of domestic rather than an inflow of much needed foreign investment if necessary rates of economic growth were to be realised. Once the 1994 election was over, the ANC’s collectivist commitments, embodied in its Reconstruction and Development Programme, were to be swiftly replaced by a Growth, Employment and Redistribution (GEAR) policy which, although proclaiming similar objectives, adopted market-oriented and unambiguously capitalist means. GEAR was soon to be complemented by the legislative formalisation of BEE which, by the extension of share deals and corporate appointments to chosen members of the ANC elite, enabled business to secure and further its interests through ‘political connectivity’ and deracialised the apex of the economy by the creation of a class of ‘patriotic capitalists’ beholden to the ruling party.
For what Scott Taylor (2007) has termed the emergent, pro-market ‘reform coalition’ to be realised it needed to be underpinned by a wider social compact. There were two dimensions to this. The first outcome was the creation of the National Economic Development and Labour Council (Nedlac), whose purpose was to seek consensus on social and economic policy among government, business, labour and civil society before they were discussed in parliament. The principal achievement of Nedlac was to be the passage of key statutes which restructured the framework of industrial relations. Pride of place was enjoyed by the Labour Relations Act of 1995 (LRA) which sought to replace the existing adversarial culture that had characterised industrial relations with ‘codetermination’ (on the post-war German model) between employers and employees. It brought together all employees (hitherto treated differentially by the law along largely racial lines) together within a single system of industrial relations, also guaranteeing organisational rights to trade unions, overhauling dispute resolution procedures, and establishing clear rules on dismissal. The LRA was later to be supplemented by the passage of three other measures, the Basic Conditions of Employment Act of 1997 (designed to ensure fair labour practices); the Employment Equity Act of 1998 (designed to promote equal opportunity in the workplace); and the Skills Development Act of 1998 (which aimed to promote investment in training). Although the passage of these Acts recorded the ANC’s intent to pay its debts to Cosatu, at the same time they constituted an attempt to bring the order and predictability to industrial relations which business had long desired. Indeed, if strike statistics are anything to go by, they seem to have worked, at least until the mid-2000s.1 The broader effort to promote social dialogue was, however, to be undermined by the second dimension of the social compact.
During the latter years of apartheid, large-scale capital had undergone a major process of consolidation into huge conglomerates as international companies disinvested in response to political turbulence and sold their assets to local buyers. From the early 1980s, South African large-scale capital had increasingly come to appreciate that only a democratic settlement could provide the opportunity for kick-starting an economy whose steadily worsening performance had its roots in the enormous costs of maintaining a repressive political apparatus based on white minority rule. Further, by the late 1980s it was recognised that, apart from locking up capital within the country, the protectionist regime which apartheid had fostered had rendered South African companies inefficient and uncompetitive. Consequently, when democratisation came, with GEAR in its wake, it offered not only the challenges presented by international competition, but also major opportunities. Large-scale capital underwent a restructuring. Major conglomerates such as the Anglo-American Corporation, Sanlam and Old Mutual ‘unbundled’, choosing to focus on their ‘core’ businesses, their ‘non-core’ assets being snapped up by a mix of public and private investors, domestic and foreign. Meanwhile, a parallel process involved a number of major South African corporations (Billiton, South African Breweries, Anglo-American, Old Mutual and Liberty Life) being allowed by government to migrate to the London stock exchange and to become truly multinational. And as foreign investment flowed in the economy became increasingly internationalised and financialised, developments which were matched by the growth of the service sectors and changes in the composition of manufacturing. In particular, key employment sectors within manufacturing – such as clothing and textiles – were to find themselves placed under threat by imports from low-wage competitors based in, notably, China, while, in contrast, the mining sector – albeit shifting away from gold to minerals such as platinum – was to be boosted by the rising global demand for commodities (Mahomed 2010).
These structural changes were accompanied by an increase in capital intensity in major industries, notably mining, associated industries and agriculture. In part an adjustment to technological advances, this was also a response by private employers to the perceived costs of the new framework of industrial relations. The result was a restructuring of the labour market which saw full-time work steadily giving way to an increasing informalisation of employment. Whereas, on the whole, ‘standard employment relationships’ were extended in the public sector (which became increasingly unionised), private employers sought to reduce costs by replacing labour with machinery; by outsourcing their supply chain to smaller employers; shifts to part-time work; and so on. Overall, the proportion of the workforce in full-time employment (and hence protected by trade unions) began to decline,2 as the proportion of workers employed in an essentially deregulated labour market, into which the government’s new labour dispensation did in fact extend (or if so, very unevenly), increased (Webster 2006; see also Nicholas Pons-Vignon’s and Miriam Di Paola’s chapter in this volume).
The outcome of these and other changes is that the post-1994 ‘reform coalition’ and the associated social compact have begun to unravel, as relations between government, business and labour have become increasingly fractious and contested. Nedlac’s importance and effectiveness declined significantly following the government’s adoption of GEAR, as large-scale business acquired greater influence. This in turn led to increasing strains between the Mandela and Mbeki governments and Cosatu, culminating in the role of the organised left (Cosatu and the South African Communist Party) in unseating Mbeki at Polokwane in 2007 and securing his ejection from the presidency in 2008.
The arrival of Jacob Zuma to power was projected by his supporters as heralding a move to the left in government economic policy, versed principally in terms adopting strategies characteristic of a ‘developmental state’ in which the state would assume a greater role in directly promoting public sector – and guiding private sector – investment. A major outcome has been the formulation by government (in association with an inclusive set of advisors from industry, unions, academia and civil society) of a National Development Plan (NDP). Winning the broad support of business, this envisages the government’s heavy engagement with private capital over coming decades in the expansion of the infrastructure needed to fuel the economy’s development. In practice, however, little appears to have changed. Significant sections of Cosatu now reject the NDP as an extension of GEAR; business complains bitterly and regularly that official rhetoric favouring a developmental state is contradicted by policies across different government departments (notably the ministries overseeing mining and trade and industry) which deter investment and impose red tape; and employers complain that the passage of a Labour Relations Amendment Act will serve only the interests of Cosatu, and increase the costs of employment in what they deem to be an already highly ‘inflexible’ labour market. Meanwhile, faced by the difficult financial conditions since the onset of the global financial crisis in 2008, the government has retained its conservative macroeconomic framework, prioritising the containment of official expenditure and the control of inflation over the stimulation of the economy to promote investment and employment. South Africa, laments Sampie Terreblanche (2012), has become ‘lost in transformation’.
As the second decade of democracy draws to a close, South Africa seems at war with itself, veering off course rather than staying on track. Yet such a judgement needs to be cautious, as the following comparative perspective indicates.
SOUTH AFRICA AT TWENTY: A COMPARATIVE AND INTERNATIONAL PERSPECTIVE
The ANC in 1994 promised
