Trade & Industry

Articulating Historical Factors as a Guide to International Trade Policy We should stress to the World Trade Organization that we are still a developing nation which has had an uneven socio-political history, and as such any rules that South Africa should comply with must be commensurate with our past.

It is impossible for us to apply an accelerated tariff reduction across the board when this will damage the competitiveness of our industries.

The Three-Pronged Approach:

The ACDP proposes the following three-pronged approach to this issue:

An accelerated tariff reduction to be implemented on those sectors which will definitely benefit in both the short-term and long-term periods.

Such tariff adjustment can also be applied to those sectors that are powerful enough to contain such pressures.

A declining tariff protection phase, which implies a slower process in tariff reduction and should be applied especially to those sectors that will face major job losses; for example the clothing industry.

Continued protection to such sectors that are major contributors to our GDP and employment creation programs.

We, therefore, should give more attention to our food supply sectors, especially insofar as to consolidate the whole Southern African region as a strong food supply industry.

The ACDP is of the opinion that the relationship that ought to exist between the tariffs and Industrial policy is to be determined differentially according to the beneficial outcomes each sector will enjoy with regards to tariff adjustments.

International Considerations on Trade and Industry South Africa is a developing country whose socio-economic policy must be based on a developmental approach. This country needs to develop its infrastructure capacities to meet the needs of our people in areas such as health, education, welfare and employment.

South Africa is an emerging democracy and this must of necessity form the basis of its international trade policy. We have to share similar ideals and principles with other countries in order to achieve common goals of mutual interest.

South Africa is a constitutional state with a built-in human rights creed, and as such we should vigorously fight for human rights in other parts of the world.

Towards an Equitable Balance between Economic Growth and Job Creation It appears that although the economy might show marked signs of improvement, employment figures have remained virtually unchanged, while capitalization has advanced more steadily.

In fact, to become more competitive globally, the manufacturing sector has invested more in larger plants and modern technology, with minimal job-creating potential. A reason for this is to be found in the present government’s labour policies. The present inflexible labour policies are furthermore a definite, dis-incentive to foreign investment. The ACDP will revisit these labour policies so as to encourage greater employment and investment.

Job Creation

We believe that a job creation strategy does not necessarily have to be a highly technical and complicated issue.

It should remain within the simple economic framework of basic demand and supply.

Furthermore, the aspects of wage negotiation and bargaining policies refer to those who already fall within the ambit of employment and access. These debates on economic disputes center on the problems of those who are already employed, but they do not help us with the unemployed. (We do not, of course, mean that we should discard the wage and bargaining processes as we believe that those who have jobs must be protected, while those who offer employment should be able to generate greater production and profit levies, as well as to generate more jobs.

The ACDP therefore believes that job creation simply is about finding and creating jobs for those who are unemployed.

Suggestions towards the debate on job creation

a. Programs To Assist in Job Creation

Teal will allow funding to be directed towards a focused and sustainable job creation program including adult education and training.

b. Create an employee development and skills finance institution

In most instances the commercial banks, contribute to the discouragement of employment opportunities because of their stringent requirements. The idea is that the informal sector and smaller business operation can use this avenue as a savings and loans facility, instead of using the bigger banks for such transactions.

Regulations of course will have to be drawn up as regards to qualifications and conditions, but access to such an institution should be created to encourage development and employment strategies. In fact, limited or non-taxation principles can be applied to such groups, depending on their levels of growth and expansion.

Government can filter funds into this finance institution that would ordinarily have been used by various Ministers creating their own employment initiatives. Other institutions may wish to pour funds into this institution, if government can provide tax incentives for such investment practices. c. Small Business Enterprise We believe that small business enterprises should be the cornerstone of the job creation market.

These are fledging economic giants, and as such their vibrancy and creativity pushes them towards expanding their markets. Big business has already achieved their saturation points and is therefore more liable to reduce staff. Whereas small business operates on the opposite trend that in order to expand, more markets should be entered, thus ensuring push in their production levels and therefore increased labour. We believe that this sector in order to enjoy tax deductible benefit will be dependent on their ability to create jobs. However, to provide a balance of equity to those small businesses that are too specialized to create larger job creation opportunities, the small business enterprise should overall benefit from a low taxation policy. d. Big Business and Labour Our view on this matter is that both labour and big business must ensure that production levels as well as wage and employment levels remain competitive. However, the cost of labour particularly has resulted in South African businesses not being globally competitive. The issue of the present inflexible labour legislation needs to be revisited, as one seeks to obtain a balance between the interests of business and labour in South Africa. We simply need to find ways to equitably balance the scales of employment, production and growth. e. Government The government has a role to play to ensure that delivery of social services and the economic growth environment is conducive to sustainable development. It should also provide projects which involved labour intensive programs. These initiatives can be conducted within rural areas, or developed on the peripheries of urban areas. The influx to urban areas increases the rate of unemployed persons, and as such we need to reduce urban economic stress. f. The GEAR Issue The growth, employment and redistribution program (GEAR) aims to create 400 000 jobs per year by the year 2000. In other words, 126 000 jobs should have been created in 1996. Only about 25% of that figure was reached. Similarly, therefore, the 1997 target of 252 000 jobs is also unlikely to be met. Economic and labour market policies must ensure that South Africa follows a more labour-absorbing growth path, which narrows the gap between the haves and the have-nots. The ACDP gives its support to the general objectives of GEAR, subjected to following conditions: – It is supported by lower job loses; – Increased labour-intensive programs; – Sufficient government expenditure on basic needs services. g. Affirmative Action We as a party acknowledge the need for repentance from all the generations that gained and are still gaining, even indirectly, from the race-based apartheid system. We also acknowledge the need for forgiveness from those who suffered under it and continue to suffer because of it. However, Affirmative Action, as it is being applied currently, is undeniably racist in its foundation. It has in its application been approached incorrectly and created further institutionalized inequality. The ACDP would change the focus of Affirmative Action from “previously” disadvantaged to disadvantaged individuals. Because of the historic and current racial and socio-economic nature of poverty, the real focus of an Affirmative Action policy, based on disadvantaged, would not change dramatically from one that is race-based. However, this change in focus, away from the current racially discriminatory nature of Affirmative Action, will make it a social welfare issue. Fair and adequate restitution, addressing the multi-generational wrongs of the apartheid system, is a very complicated and emotive issue that can be divided into the two broad categories of Social Restitution and Financial Restitution. The ACDP recommends a change in the application of this newly focused model of Affirmative Action, to one that facilitates personal empowerment of the currently disadvantaged, thereby helping them to compete equally in the market place. Affirmative Action should aim to make people self-sufficient, to contribute to the running of the country in all its sectors. We should not have it written into the constitution as a permanent right. This will only be counter-productive. The ACDP will therefore amend the Equality Act insofar as it conflicts with ACDP policy. Furthermore, the ACDP recommends the creation of a substantial Apartheid Restitution Fund that firstly, focuses on the social redress of the wrongs of apartheid by subsidizing primary, secondary and tertiary education opportunities, and that provides entrepreneurial support. Secondly, this fund should provide the backing for a Financial Restitution Claims process. Lastly, the ACDP would change the name of Affirmative Action to something that reflects the nature of this social upliftment and redress exercise, such as “Apartheid Restitution”, which also automatically leans a time line to this process. h. Labour Policy Objectives We must strive for a labour policy that contributes to job creation, full employment and economic growth. We are witnessing how the global economy is undergoing sweeping changes, as more emphasis is being placed on adopting new production methods which will minimize the effects of labour unions and worker privileges. We will have to ensure that the rights of our workers are protected within this globalization trend. In fact, more should be done to boost job creation through a controlled decent living wage, and distribution of job to more workers. We need to concentrate on how to divert certain jobs into more profitable labour-intensive programs and therefore resist the temptation to retrench people. Employment conditions must not be regulated by strict rules in the work place, but by strict ethical codes to determine what is reasonable and equitable to everyone for an acceptable standard of employment.