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4. Building the Economy

4.1 PROBLEM STATEMENT

4.1.1The South African economy is in a deep-seated structural crisis and as such requires fundamental reconstruction. For decades forces within the white minority have used their exclusive access to political and economic power to promote their own sectional interests at the expense of black people. Black people have been systematically exploited and oppressed economically and South Africa now has one of the world's most unequal patterns of distribution of income and wealth. A disproportionate share of the burden of poverty and inequality has fallen on black women who have been subject to systematic gender oppression. Economic deprivation has created a fertile base for the violence and instability now engulfing our country. The ever-changing and destabilising global economy has also adversely affected the local economy.

4.1.2Marked regional disparities exist within the economy as a result of policies designed to ensure a migratory labour supply to the mines and of the ethnic division of South Africa under the apartheid system. Enforced segregation and industrial decentralisation have located whole communities in areas where their economic viability is threatened. A few metropolitan regions account for the bulk of national production, while some provinces are affected by a crisis of unemployment, and can barely afford to provide basic services. Almost half the black population was compelled to live in so-called 'homelands' where per capita incomes are less than a quarter of the national average.

4.1.3Successive minority governments and business have tried to promote growth by encouraging local production of manufactured goods which were previously imported. This policy led to the emergence of a significant manufacturing sector in our country. However, the disparity between the low income levels of the majority of consumers and factors leading to rising price levels ensured that the manufacturing sector served the wealthy and excluded the poor. The sector is in general characterised by poor productivity and an undue dependence upon low wages. It makes little contribution to foreign exchange earnings, but depends to a very great extent on imported machinery and equipment paid for out of foreign exchange earned by mineral exports.

4.1.4Over the past decade and more, growth stagnated, investment dropped precipitously and average real incomes declined. The economy remains dependent on mineral exports, and the manufacturing sector cannot create jobs, meet the basic needs of the majority or compete on world markets. The decline in investment within the public and private sectors, and capital flight, have contributed to an ageing capital stock and contraction in the manufacturing sector. Capacity utilisation of manufacturing plant and equipment remains at very low levels. Speculative investment has replaced productive investment, with a consequent decline in job creation and overall employment levels.

4.1.5The South African economy is also characterised by excessive concentration of economic power in the hands of a tiny minority of the population. Through the pyramid system and the resultant control over a vast network of subsidiary companies, a small number of very large conglomerates now dominate the production, distribution and financial sectors. In addition there is a high degree of monopolisation and blatant anti-competitive tendencies such as predatory pricing and interlocking directorships in certain industries. With regard to land, white ownership and often corporate ownership are overwhelming. Not only does this create racial and social tension, but it is to be seriously doubted that such high levels of concentration can be economically beneficial.

4.1.6A particular weakness of the economy, aggravated by racist and sexist policies, is the inability to maintain a dynamic small-scale and micro enterprise sector. Smaller firms, especially if owned by black people, can rarely develop productive linkages with the large-scale sector. Most people in the informal sector lack productive and managerial skills plus access to business sites, capital and markets. They face an array of repressive regulations originally designed to undermine black business and farming.

4.1.7A critical cause of inefficiency and inequality lies in the position of labour. Economic growth depended on the centrality of the cheap labour system. Rigid hierarchies and oppressive labour relations ignored the skills latent in our experienced industrial workforce. Apartheid laws denied workers their basic rights. High levels of unemployment and oppressive legislation made it difficult even for organised workers to maintain a living wage. The lack of skills forms a major obstacle to the development of a modern economy able to support a decent living standard for all our people. The apartheid state also systematically excluded workers from collective bargaining and policy-making at national and shop-floor levels. While the struggles of organised workers have reversed this to some extent, the right to strike continues to be limited, farm and domestic workers do not have basic rights, the majority of workers earn low wages, and there are enormous wage differentials.

4.1.8Only a quarter as many women as men hold jobs in the formal sector. High unemployment, the migrant labour system and the difficulties facing the informal sector hit women particularly hard. Within formal employment, women are discriminated against in many areas such as wages, job security, specific needs of women workers, and employment opportunities. The migrant labour system continues to disempower both workers and their families.

4.1.9The agricultural sector and rural economy are also in crisis. Many white-owned farms are deeply indebted and vast tracts of land designated for occupation by whites are inefficiently cultivated. Many thousands of black rural households are, meanwhile, crammed into tiny plots unable to produce or buy affordable food. Government decentralisation policies have failed to channel resources to the rural areas which remain the most deprived parts of the country.

4.1.10The apartheid state's economic agencies have been contradictory and secretive, and were subordinate to apartheid's logic and the siege-economy mentality. Parastatals such as the Industrial Development Corporation (IDC), Development Bank of Southern Africa (DBSA) and the Small Business Development Corporation (SBDC) could be immensely important in driving industrial, socio-economic and infrastructural development. But in recent years, under the cloak of secrecy, the apartheid state privatised or commercialised many agencies in the public sector (such as Transnet, Eskom, Telkom, Iscor, Foskor, SAA, the Post Office, Forestry and others). Often this policy, unilaterally imposed for ideological reasons, harmed basic services to the poor or reduced the ability of the state to mobilise resources for development.

4.1.11The consequences of such undemocratic state policies in a structurally unbalanced economy include a serious fiscal crisis, with high personal tax rates accompanying a large budget deficit. In addition, the country's balance of payments problems, exacerbated by capital flight, have made it difficult to service the foreign debt incurred during the apartheid era. The need to maintain tight controls over economic policy as a result, has had a devastating effect on economic growth and employment.

4.1.12In past years, South Africa's relations with its Southern African neighbours were hostile, and apartheid destabilisation destroyed much of their economic base. Within the South African Customs Union (SACU) there has been no consideration of the differing needs of the participating countries and no common developmental policies.

4.2 VISION AND OBJECTIVES

4.2.1The fundamental principles of our economic policy are democracy, participation and development. We are convinced that neither a commandist central planning system nor an unfettered free market system can provide adequate solutions to the problems confronting us. Reconstruction and development will be achieved through the leading and enabling role of the state, a thriving private sector, and active involvement by all sectors of civil society which in combination will lead to sustainable growth.

4.2.2Our central goal for reconstruction and development is to create a strong, dynamic and balanced economy which will:

4.2.2.1eliminate the poverty, low wages and extreme inequalities in wages and wealth generated by the apartheid system, meet basic needs, and thus ensure that every South African has a decent living standard and economic security;

4.2.2.2address economic imbalances and structural problems in industry, trade, commerce, mining, agriculture, finance and labour markets;

4.2.2.3address economic imbalances and uneven development within and between South Africa's regions;

4.2.2.4ensure that no one suffers discrimination in hiring, promotion or training on the basis of race or gender;

4.2.2.5develop the human resource capacity of all South Africans so the economy achieves high skills and wages;

4.2.2.6democratise the economy and empower the historically oppressed, particularly the workers and women and their organisations, by encouraging broader participation in decisions about the economy in both the private and public sectors;

4.2.2.7create productive employment opportunities at a living wage for all South Africans;

4.2.2.8develop a prosperous and balanced regional economy in Southern Africa based on the principles of equity and mutual benefit, and

4.2.2.9integrate into the world economy in a manner that sustains a viable and efficient domestic manufacturing capacity and increases our potential to export manufactured products.

It is only by addressing the above that our economy will be capable of sustained growth.

4.2.3To carry out programmes to meet these objectives, as well as those outlined in previous chapters, the democratic government must play a leading and enabling role in guiding the economy and the market toward reconstruction and development. Legislative and institutional reform will be effected to enable the implementation of the RDP. We aim to achieve a dynamic balance between government intervention, the private sector and the participation of civil society.

4.2.4There must be a significant role for public sector investment to complement the role of the private sector and community participation in stimulating reconstruction and development. The primary question in this regard is not the legal form that government involvement in economic activity might take at any point, but whether such actions must strengthen the ability of the economy to respond to the massive inequalities in the country, relieve the material hardship of the majority of the people, and stimulate economic growth and competitiveness.

4.2.5In restructuring the public sector to carry out national goals, the balance of evidence will guide the decision for or against various economic policy measures. The democratic government must therefore consider:

4.2.5.1increasing the public sector in strategic areas through, for example, nationalisation, purchasing a shareholding in companies, establishing new public corporations or joint ventures with the private sector, and

4.2.5.2reducing the public sector in certain areas in ways that enhance efficiency, advance affirmative action and empower the historically disadvantaged, while ensuring the protection of both consumers and the rights and employment of workers.

4.2.6The RDP will foster a new and constructive relationship between the people, their organisations in civil society, key constituencies such as the trade unions and organised business, the democratic government, and the workings of the market.

4.2.7We can only achieve our economic objectives if we establish transparent, participatory and accountable policy-making procedures in both the public and private sectors. The democratic government, the trade union movement, business associations and the relevant organisations of civil society must cooperate in formulating economic policy. The democratic government must review the inherited economic departments and agencies to streamline policy-making and implementation and to define appropriate relationships with forums and the various tiers of government.

4.2.8Economic growth is critical for sustainable improvements in services and incomes. We must shape the expansion of the social and economic infrastructure to stimulate industry and agriculture. These policies must be coordinated with the development, on a cooperative basis, of the Southern African region as a whole. On this foundation, we must establish a dynamic, integrated economy able to provide higher incomes, reduce excessive dependence on imports and compete on foreign markets.

4.2.9All of our policies must aim to alleviate inequalities in incomes and wealth and expand productive opportunities. Critical programmes in this area include urban and rural development, industrial strategy, support for small and micro enterprise (including small-scale farming), job creation, land reform and other programmes discussed in earlier chapters. The democratic government must also create laws and institutions to end discrimination in hiring, promotion and training.

4.2.10Our economic policies require human resource development on a massive scale. Improved training and education are fundamental to higher employment, the introduction of more advanced technologies, and reduced inequalities. Higher labour productivity will be the result of new attitudes towards work in the context of overall economic reconstruction and development.

4.2.11Basic to the consultative and interactive approach to economic policy is the protection of worker rights, labour standards and proactive labour market policies. The RDP makes a decisive break with the exploitative cheap-labour policies of apartheid and moves toward education, training, skills, a living wage, and collective bargaining as the basis for enhanced productivity in the economy.

4.3 INTEGRATING RECONSTRUCTION AND DEVELOPMENT

4.3.1One of the basic principles outlined in Chapter One was that of linking reconstruction and development. This is in contrast to the argument that growth is needed before development is possible, an approach which would leave intact the severe regional, racial and gender and structural imbalances that characterise the present economy. To prevent this from happening, reconstruction and development must be an integrated process. Such integration must be basic to all economic policy. This is where the public sector must play a major enabling role, since it cannot be expected that the market will make such a structural transformation on its own. Yet without such a transformation democracy will not survive, because socio-economic stability will not be achieved.

4.3.2The RDP's principles recognise the mutually reinforcing nature of urban and rural development strategies through, for example, the benefits of improved agriculture to the urban economy. Strategies for urban and rural development must be integrated within the RDP to ensure that the needs of all our people are met in a balanced and equitable manner. An integrated strategy is essential for the process of unifying our economy and linking reconstruction and development.

4.3.3In general, the RDP recognises the need to break down apartheid geography through land reform, more compact cities, decent public transport, and the development of industries and services that use local resources and/or meet local needs. In this context, the RDP must seek to help people generate economic wealth in their chosen communities.

4.3.4Macro-economic policies must take into consideration their effect upon the geographic distribution of economic activity. Additional strategies must address the excessive growth of the largest urban centres, the skewed distribution of population within rural areas, the role of small and medium-sized towns, and the future of declining towns and regions, and the apartheid dumping grounds.

4.3.5In order to foster the growth of local economies, broadly representative institutions must be established to address local economic development needs. Their purpose would be to formulate strategies to address job creation and community development (for example, leveraging private sector funds for community development, investment strategies, training, small business and agricultural development, etc.). If necessary, the democratic government must provide some subsidies as a catalyst for job creation programmes controlled by communities and/or workers, and target appropriate job creation and development programmes in the most neglected and impoverished areas of our country. Ultimately, all such projects should sustain themselves.

4.3.6The incentives for decentralisation introduced under apartheid frequently proved excessively discretionary and open to misuse. Still, in many areas simply eliminating them would cause severe job losses. For this reason, the democratic government must establish clear-cut guidelines and procedures for reviewing decentralisation incentives. Where communities and workers can certify that the subsidies are being utilised in a sustainable, non-exploitative manner, the democratic government must maintain the incentives. Otherwise, it must redirect subsidies to ventures that promote linkages within the local economy.

4.3.7The Interim Constitution will have a significant impact on economic growth. Setting up new provinces will affect investment flows, regional assets and fiscal transfers as well as the institutions that make and implement policies. Every province must develop a programme for regional reconstruction and development in the context of the national RDP.

4.3.8Rural development. The RDP aims to improve the quality of rural life. This must entail a dramatic land reform programme to transfer land from the inefficient, debt-ridden, ecologically-damaging and white-dominated large farm sector to all those who wish to produce incomes through farming in a more sustainable agricultural system. It also entails access to affordable services, and the promotion of non-agricultural activities. In the 'homelands', where most rural people live, social services and infrastructure remain poorly developed, and this must be remedied.

4.3.9Development efforts must address the special position of women, as they make up the majority of small-scale farmers, and bear the brunt of poverty, overcrowding and hunger in rural areas. They take responsibility for all aspects of their families' lives, including the need to obtain food, fuel and water, often over long distances, but are excluded from decision-making structures. They are the bulk of the seasonal labour force in agriculture, but receive the lowest wages. Their priorities include accessible water, sewage disposal, infrastructure, land rights, housing, training, local development committees, a disaster relief fund, markets for their production, and good representation in local government.

4.3.10To correct the history of underfunding, misuse of resources and corruption, substantial transfers of funds from the central government to the rural areas will be required, targeted to meet the needs of the rural poor. The democratic government must institute a land reform process that allows people in the rural areas access to land for production and residence. It must support part-time activities, including small-scale farming, which can increase productivity, incomes and household food security. It must end the inequitable and inefficient subsidisation of the large farm sector.

4.3.11Rural communities need practical access to health, education, support for entrepreneurship (including agriculture), financial services, welfare, and police and the courts. The objective of rural development policy must be to coordinate the activities of the relevant democratic government agents, and to pass much of the control of democratic government-funded services to the rural people for whom they are intended, within the framework of national and provincial policy in each sector. This will require fundamental changes to institutions and processes.

4.3.12We must establish democratic structures to control the finances for local development activities. Elected councillors must replace the non-representative Regional Service Councils and Joint Service Boards at the district and local level.

4.3.13Generally, the democratic government must support capacity-building in the District Councils, Local Councils, and voluntary community structures such as local development forums. To advise communities of their options, it must train a cadre of Community Development Officers. Their training must include sensitivity to gender issues. The Community Development Officers must work for the District Councils. Wherever possible, they must come from the areas they serve.

4.3.14Educational opportunities in the rural areas lag far behind those in the cities. Human resource development forms a key component in building the rural economy. It must include the opening up and reorganisation of agricultural schools to meet the needs of the majority. Training and retraining of new and existing extension workers, community development officers and officials dealing with land reform are critical to the success of our rural development and land reform programme. These training and retraining programmes must be designed within the first 18 months of the RDP.

4.3.15The democratic government must include a central Ministry of Rural Development and Land Reform. The Ministry must include a unit for rural data collection and an early warning system for food and water security.

4.3.16Urban development. The importance of urban development strategies within the RDP is based on a recognition that the urban areas account for over 80 per cent of the country's gross domestic product (GDP), and accommodate approximately 60 per cent of South Africa's population. Continuing demographic shifts may increase urbanisation to over 70 per cent of the population by 2000. The three major metropolitan areas (the PWV, Greater Cape Town and Durban) account for 37.7 per cent of the total population and 67.7 per cent of the country's total manufacturing output. The PWV region alone accounts for 40 per cent of the country's total economic output.

4.3.17Even with a strong rural development effort, economic activities will remain concentrated in the cities. Ensuring the quality of life, sustainability and efficiency in the urban areas will thus prove critical for renewing growth and promoting equity. The design of a comprehensive national urban strategy will help serve the cities' rapidly growing populations and address the inequities and structural imbalances caused by the apartheid system. The urban development strategy must also be aimed at fostering the long-term development and sustainability of urban areas while alleviating poverty and encouraging economic expansion.

4.3.18The urban programme must therefore have several dimensions. It must create a functionally integrated, efficient and equitable urban economy, as well as effective and democratic structures of urban governance and management; enhance the position of women in the cities, and initiate a social environment which contributes to a better quality of life.

4.3.19Sustainable economic expansion must redress the imbalances in infrastructure, transportation and basic services in our cities. Housing, transport, electrification and other infrastructure and service programmes should promote access to employment opportunities and urban resources, and the consequent densification and unification of the urban fabric. In particular, sites for industries and services that will not harm the environment should be located near existing townships. New low-income housing should be situated near employment opportunities wherever possible.

4.3.20The environmental impact of urban reconstruction and development must form an integral part of an urban development strategy. This includes the encroachment of urban development on viable agricultural land, air pollution, water pollution and waste management.

4.4 INDUSTRY, TRADE AND COMMERCE

4.4.1Our economy requires coordinated and effective policies that combine private sector initiatives and government support to address its structural weaknesses. Coherent strategies are required in industry, trade and commerce to meet the challenges of a changing world economy, while at the same time meeting the needs of the majority. We also require broadly accepted, well-designed programmes which minimise the costs of restructuring and change. A five per cent growth rate and the creation of 300,000 to 500,000 non-agricultural jobs per annum can be achieved within five years.

4.4.2Objectives of industry, trade and commerce policy.

4.4.2.1The key goals of our industrial strategy are a substantial increase in net national investment, especially in manufacturing, job creation and the meeting of basic needs. Through the prudent implementation of macro-economic policies such as monetary policies, and in particular such instruments as interest rates and an increase in public sector investment, gross investment in industry will increase. In general, our objective is to enhance our technological capacity to ensure that as part of the restructuring of industry, South Africa emerges as a significant exporter of manufactured goods. The industrialisation strategy aims at the promotion of a more balanced pattern of industrial development, capable of overcoming the acute over-concentration of industrial activities in certain metropolitan centres of the country.

4.4.2.2Trade and industrial policy must respond to the demands of reconstruction and development. In particular, industrial expansion should follow from the extension of infrastructure to urban, peri-urban and rural constituencies. Some of this new demand will be met by utilising the considerable excess capacity that exists within industry. That should lower unit costs, raise productivity and foster innovation, providing a new impetus for international competitiveness.

4.4.2.3While trade policy must introduce instruments to promote exports of manufactured goods in general, industrial policy must support and strengthen those internationally competitive industries that emerge on the basis of stronger internal linkages, meeting the needs of reconstruction and raising capacity utilisation.

4.4.2.4Specific policies aim to expand the competitive advantage already enjoyed by the mining and capital and energy-intensive mineral processing and chemical industries that lie at the core of the economy and which provide the bulk of the country's foreign exchange as outlined in the section on mining and minerals below.

4.4.2.5Policy must address the constraints on those segments of manufacturing that fall outside of bulk steel, metals and chemical production. The recent GATT agreement has necessitated painful adjustment in certain quarters, and policy should aim to reduce and share out the impact of that adjustment while at the same time promoting efficiency. Substantial institutional development on a national and sectoral level is necessary for this process, as discussed in the 'Institutional reform' section below.

4.4.2.6The RDP must strengthen and broaden upstream and downstream linkages between the burgeoning mineral-based industries and other sub-sectors of industry. A broad range of instruments will be deployed, including closer scrutiny of pricing policies for intermediate inputs. Where conglomerate control impedes the objectives, anti-trust policies will be invoked.

4.4.2.7Policies must aim to reduce the gap between conglomerate control of a wide range of activities within the financial, mining and manufacturing sectors and sub-sectors, on the one hand, and the difficulties faced by small and micro enterprises in entering those sectors on the other. As outlined in the section on small and micro enterprise, instruments may include regulatory reform, supportive measures in terms of markets, credit and training, plus measures to prevent the abuse of market power.

4.4.3Trade policy.

4.4.3.1Given the foreign-exchange constraints on growth in South Africa, trade policies assume enormous importance. The agreements that a democratic South Africa enters into with her major trading partners will play a crucial role in future development.

4.4.3.2A democratic South Africa must rapidly restructure the relationships with neighbouring African countries, who import about 20 per cent of our exports. More balanced and less exploitative trade patterns will result in more mutually beneficial outcomes. That will strengthen the Southern African region in its relations with emerging global trading blocs, as discussed in the section on Southern African regional policy below.

4.4.3.3Tariff reductions on imports, which are a GATT requirement, also represent a strategic instrument for trade policy. Presently, they are subject to negotiation within the National Economic Forum. The government must develop democratic and consistent procedures for revising tariffs and export incentives. It must simplify the tariff structure and begin a process of reducing protection in ways that minimise disruption to employment and to sensitive socio-economic areas. National agencies concerned with international trade and tariffs must be sensitive to the interests of the Southern African region as a whole.

4.4.3.4We must develop more cost-effective incentives schemes, designed to improve performance and not just the volume of exports. Trade policy strategies to promote exports must consider ways to reduce the bias against small and medium-sized exporters. They should facilitate the provision of short-term export finance to small business. Any duplication between the trade-promotion arms of the Department of Trade and Industry and the private-sector South African Foreign Trade Organisation should be eliminated.

4.4.4Institutional reform.

4.4.4.1There should be a review of the functions of government departments, particularly those of importance to the RDP, and of the mandates of the various parastatals and development institutions. As they are key structures for the successful implementation of the RDP, such a review must be given priority. The evaluation should identify whether the body is appropriate and should continue more or less in its present form, or whether it should be significantly altered or merged or closed down. For instance, it should be considered whether there is an advantage in maintaining the science councils or whether some or all of them should be merged.

4.4.4.2In order to promote greater accountability in parastatals, lines of funding and reporting must be restructured to ensure that each parastatal is directly accountable to a particular ministry. This means that funding and reporting lines must be the same.

4.4.4.3The processes of commercialisation and privatisation of parastatals must be reviewed, to the extent that such processes are not in the public interest. This will require the elaboration of more appropriate business plans, and publication of those plans for open debate. The democratic government will reverse privatisation programmes that are contrary to the public interest.

4.4.5Negotiating forums.

4.4.5.1The RDP must work with existing forums, such as the NEF, the National Electricity Forum and the National Housing Forum, and must develop a more coherent and representative system on a regional and sectoral basis. These forums must continue to build consensus around industrial and trade policy. In particular, they must: address the needs of industrial sectors forced to adjust and the question of how to share the costs of adjustment; identify new economic sites of competitive advantage; develop aspects of industrial and trade policy, and deal with problems of extending infrastructure and meeting basic needs.

4.4.5.2The democratic government must work together with organised labour and business in the NEF to ensure coordination between macro-economic policies and trade, industrial and technology strategy. If necessary, it must restructure the NEF to ensure appropriate participation and powers.

4.4.5.3Coordination of issues around energy may be facilitated by a National Energy Policy Council, as an advisory body, to oversee financing in the energy sector and to set out national policies on all aspects of energy, including liquid fuels, coal, gas, electricity, nuclear power, and other forms of energy for rural and urban consumers.

4.4.6The corporate sector.

4.4.6.1Business can profit hugely from the new opportunities offered by economic and social changes, especially the increased engagement with regional and international trade and the development of social and economic infrastructure. To help bring about a more dynamic business environment, the democratic state must develop measures to encourage increased productive investment, greater investment in research and development, cooperation with small and micro enterprise, workplace democratisation, and more open and flexible management styles.

4.4.6.2The RDP will introduce strict anti-trust legislation to create a more competitive and dynamic business environment. The central objectives of such legislation are to systematically discourage the system of pyramids where they lead to over-concentration of economic power and interlocking directorships, to abolish numerous anti-competitive practices such as market domination and abuse, and to prevent the exploitation of consumers. Existing state institutions and regulations concerned with competition policy must be reviewed in accordance with the new anti-trust policy. The democratic government should establish a commission to review the structure of control and competition in the economy and develop efficient and democratic solutions. It must review existing policy and institutions with the aim of creating more widely spread control and more effective competition. To that end, it must consider changes in regulation or management in addition to anti-trust measures.

4.4.6.3The domination of business activities by white business and the exclusion of black people and women from the mainstream of economic activity are causes for great concern for the reconstruction and development process. A central objective of the RDP is to deracialise business ownership and control completely, through focused policies of black economic empowerment. These policies must aim to make it easier for black people to gain access to capital for business development. The democratic government must ensure that no discrimination occurs in financial institutions. State and parastatal institutions will also provide capital for the attainment of black economic empowerment objectives. The democratic government must also introduce tendering-out procedures which facilitate black economic empowerment. Special emphasis must also be placed on training, upgrading and real participation in ownership.

4.4.6.4Stable, consistent and predictable policies as well as a dynamic economy should create a climate conducive to foreign investment. The democratic government must ensure treatment of foreign investors equivalent to treatment of national investors. They should abide by our laws and standards (especially with respect to labour), and obtain the advantages available to all investors. The democratic government must develop policies to ensure that foreign investment creates as much employment, technological capacity and real knowledge transfer as possible, allowing greater participation by workers in decision-making.

4.4.7Micro, small and medium-sized enterprise.

4.4.7.1Small businesses, particularly those owned and operated by black entrepreneurs, must form an integral part of the national economy and economic policy. Micro producers should develop from a set of marginalised survival strategies into dynamic small enterprises that can provide a decent living for both employees and entrepreneurs. Policies to that end must focus on women, who are represented disproportionately in this sector, especially in the rural areas.

4.4.7.2Government agencies must provide infrastructure and skills to raise incomes and create healthier working conditions in small businesses. They must protect the rights of workers, both family members and others, and provide training in productive and managerial skills.

4.4.7.3Experience shows that four major constraints face small and micro enterprise: the lack of access to credit, markets, skills and supportive institutional arrangements. In collaboration with small-scale entrepreneurs themselves, the democratic state must develop an integrated approach to all four problems.

4.4.7.4In the context of a supportive industrial strategy, all levels of the democratic government - central, regional and local - must where possible foster new, dynamic relationships between large, small and micro enterprises in ways that do not harm the interests of labour. As discussed in the chapter, 'Implementing the RDP', the government must require financial institutions to lend a rising share of their assets to black-owned enterprise. All levels of the state should also, as far as possible, support joint marketing strategies and technological development within the small-scale sector.

4.4.7.5The democratic government must rationalise and restructure existing parastatals to support small enterprise as far as their underlying purposes allow. It should reorganise the SBDC and reform the lending criteria of other agencies such as the IDC and the development corporations so that they incorporate small and micro enterprise in their plans as far as this is feasible, and end corruption and nepotism in their lending programmes.

4.4.7.6Local governments must review zoning and licensing regulations to end discrimination against micro and small enterprise.

4.4.7.7All levels of the democratic government must review their procurement policies to ensure that, where costs permit, they support small-scale enterprise. In particular, we must explore new policies on the procurement of furniture and school uniforms, which micro producers might supply. Procurement regulations must, however, require appropriate labour standards for suppliers.

4.4.7.8A specific programme must be established to ensure government support for women entrepreneurs. It must be easily accessible and include skills training and access to credit.

4.4.7.9In addition to policies to support small-scale producers in general, the micro enterprise sector requires special attention. It will benefit from measures ranging from welfare support to activities that directly enhance competitiveness. Since the majority of informal sector workers are women, all agencies set up to support the informal sector should address their needs.

4.4.7.10The development of social and economic infrastructure, including pre-schools, water supplies, roads and electrification, will go a long way to improving productivity. Infrastructural programmes must therefore take the implications for micro enterprise into account.

4.4.7.11To better serve micro enterprise, the democratic government must double the existing number of local service centres and satellites. These satellites must enable the democratic government to provide for rural women involved in small, micro and medium-sized enterprises. All training programmes for micro enterprise must provide appropriate child care.

4.4.7.12A variety of other measures should lower the barriers to micro enterprise. Laws should be improved to allow people in this sector to collect debts. Market sites must be established and access to existing sites facilitated. Land reform initiatives must reduce the land hunger which drives more and more people into the informal sector. Finally, as a basis for sound policy-making in future, the statistical system must incorporate micro enterprises.

4.4.8Science and technology policy.

4.4.8.1Technology policy is a key component in both industrial strategy and high-quality social and economic infrastructure. It is critical for raising productivity in both small- and large-scale enterprise.

4.4.8.2Science and technology policy should pursue the broad objectives of developing a supportive environment for innovation; reversing the decline in resources for formal science and technology efforts in both the private and public sectors; enabling appropriate sectors of the economy to compete internationally; ensuring that scientific advances translate more effectively into technological applications, including in the small and micro sector and in rural development, and humanising technology to minimise the effect on working conditions and employment.

4.4.8.3Technology policy must support inter-firm linkages that facilitate innovation. In research and development, the democratic government should support precompetitive collaboration between local firms and public-domain efforts combining enterprises and scientific institutes.

4.4.8.4Incentives should support expansion in technological capacity in both existing firms and new start-ups. A greater share of government initiatives which facilitate technological development, knowledge acquisition and training must directly benefit small and micro enterprise.

4.4.8.5Girls and women should be encouraged to obtain technical and scientific skills. The Ministry of Education must establish targets in the study of science and technology in educational institutions it subsidises. Research in the science and technology arena by the democratic government, parastatals and educational institutions must cater equally to the needs of women in this area.

4.4.8.6New legislation must ensure that agreements to import foreign technology include a commitment to educate and train local labour to use, maintain and extend technology. Appropriate technology for small and medium-sized enterprises must be purchased where necessary and applicable from other developing countries. The democratic government must limit excessive payment of royalties and licence fees.

4.4.8.7The democratic government must develop programmes to make university-based science more responsive to the needs of the majority of our people for basic infrastructure, goods and service. Scientific research should link up with technological advance in industry, commerce and services and in small and micro production. In particular, there must be research into appropriate and sustainable technologies for the rural areas.

4.4.8.8The democratic government must redirect military/strategic production to civilian production. Policies should encourage former employees to develop spin-offs.

4.4.8.9The democratic government must develop extensive institutional support and enhance government capacities to ensure successful research foresight. Because science and technology play a crucial role in the RDP, a strong coordinating agency in government must maintain on-going consultation with key stakeholders.

4.4.9Commerce and distribution.

4.4.9.1Distribution patterns have been severely distorted by apartheid and, in the last two decades, by particular investment patterns. Problems have emerged, including the biased location of distribution outlets, a distorted relationship between property investment and shopping malls, and excessive concentration of ownership, particularly in the link with the large conglomerates and in racial composition.

4.4.9.2These issues must be addressed in order to achieve more geographically balanced and accessible distribution, lowered costs of distribution, modernised linkages between production and distribution, and greater participation by black people in the distribution chain.

4.5 RESOURCE-BASED INDUSTRIES

4.5.1Mining and minerals.

4.5.1.1South Africa is one of the world's richest countries in terms of minerals. Up to now, however, this enormous wealth has only been used for the benefit of the tiny white minority.

4.5.1.2The minerals in the ground belong to all South Africans, including future generations. Moreover, the current system of mineral rights prevents the optimal development of mining and the appropriate use of urban land. We must seek the return of private mineral rights to the democratic government, in line with the rest of the world. This must be done in full consultation with all stakeholders.

4.5.1.3Our principal objective is to transform mining and mineral-processing industries to serve all of our people. We can achieve this goal through a variety of government interventions, incentives and disincentives. Estimates suggest that the establishment of a government minerals marketing auditors' office and the national marketing of certain minerals would enable South Africa to realise greater foreign-exchange earnings. The management and marketing of our mineral exports must be examined together with employers, unions and the government to ensure maximum benefits for our country.

4.5.1.4Minerals and mineral products are our most important source of foreign exchange and the success of our RDP will in part depend on the ability of this sector to expand exports to avoid balance of payments constraints in the short to medium term.

4.5.1.5Mining and minerals products contribute three-quarters of our exports and the industry employs three-quarters of a million workers, but this could be much higher if our raw materials were processed into intermediate and finished products before export. Our RDP must attempt to increase the level of mineral beneficiation through appropriate incentives and disincentives in order to increase employment and add more value to our natural resources before export. Moreover, this policy should provide more appropriate inputs for manufacturing in South Africa.

4.5.1.6Minerals are a vital input for numerous mineral-based industries. These industries, however, have difficulty in becoming internationally competitive due to the fact that the refining companies usually set higher prices for the domestic market than their export prices, a practice known as import parity pricing. A democratic government must consider mechanisms to encourage companies to sell to local industries at prices that will enhance their international competitiveness.

4.5.1.7Existing tripartite structures such as the Mining Summit must be strengthened in order to facilitate national development strategies for the mining and mineral-processing industry.

4.5.1.8Democratisation of the mining sector must involve new laws to build workplace democracy for miners by requiring employers to negotiate the organisation of work with their employees and their unions. Programmes must be established to allow financial participation by workers in mining companies in a meaningful way (including measures to influence the policies of financial institutions, especially insurance companies and pension funds, which hold significant stakes in the mining sector and in which our people have substantial investments). And anti-trust legislation and other measures must be implemented to permit the monitoring and appropriate control of mining, mineral processing and marketing.

4.5.1.9International demand and supply patterns for metals and minerals have undergone fundamental changes in recent years that necessitate the restructuring of this major industry. In the medium term, this probably means a continued decline in the number of people employed in the mines. Up to now, the heaviest burdens associated with down-scaling have been borne by miners, one third of whom have been retrenched. The RDP must put into place mechanisms to ensure orderly down-scaling of our mines so as to minimise the suffering of workers and their families. Measures should include the reskilling and training of workers for other forms of employment.

4.5.1.10Mining is a hard and dangerous job, and mineworkers labour under stressful conditions, often deep under the earth. The RDP envisages a new set of minimum standards for the mining industry that ensure fair wages and employment conditions for all workers and a health and safety system that recognises the special hazards related to mining.

4.5.1.11Most mineworkers are forced to live in single-sex hostels and remit part of their salaries. In future all workers must have the right to live at or near their place of work in decent accommodation and shall have full control over their after-tax salaries. In addition, the mining companies must take some responsibility for the education, training and social needs of miners and their families as an integral part of labour policy on the mines.

4.5.1.12Mining can be extremely destructive of our natural environment. Our policy is to make the companies that reap the profits from mining responsible for all environmental damage. Existing legislation must be strengthened to ensure that our environment is protected. Before a new mine can be established there must be a comprehensive environmental impact study.

4.5.1.13The Southern African region also has enormous mineral resources that have not been mined, due in part to the destabilisation policies pursued by the apartheid state in the last twenty years. In the spirit of mutual cooperation, the RDP should extend across our borders by using our considerable expertise in mineral exploration and exploitation to rehabilitate and develop the mineral potential of our neighbours. In this regard a special facility should be created to promote investment in the sub-continent.

4.5.1.14The government must consider ways and means to encourage small-scale mining and enhance opportunities for participation by our people through support, including financial and technical aid and access to mineral rights. However, standards in respect of the environment, health and safety and other working conditions must be maintained.

4.5.2Agriculture.

4.5.2.1A vibrant and expanded agricultural sector is a critical component of a rural development and land reform programme. Agriculture contributes five per cent of GDP and over 10 per cent of employment. Sixty-six per cent of its output is in the form of intermediates and its forward and backward linkages are high. The industry is characterised by a high degree of concentration in the hands of 60,000 white farmers who own over 87 per cent of the land and produce more than 90 per cent of its product. Agriculture in the bantustans is starved of resources.

4.5.2.2For every additional unit of capital invested, agriculture ultimately yields a larger number of job opportunities than all other sectors, with the exception of construction. The RDP aims to create a restructured agricultural sector that spreads the ownership base, encourages small-scale agriculture, further develops the commercial sector and increases production and employment. Agriculture should be oriented towards the provision of affordable food to meet the basic needs of the population and towards household food security. The pursuit of national food self-sufficiency proves too expensive and will not meet these aims. Moreover, it could undermine trade with neighbouring countries better able to produce foodstuffs.

4.5.2.3The present commercial agricultural sector will remain an important provider of food and fibre, jobs and foreign exchange. The RDP must provide a framework for improving its performance by removing unnecessary controls and levies as well as unsustainable subsidies.

4.5.2.4Support services provided by the democratic government, including marketing, finance and access to cooperatives, must concentrate on small and resource-poor farmers, especially women. This requires a shift from the current pattern of expensive and inefficient support for commercial farmers, as well as reform of the marketing boards and agricultural cooperatives.

4.5.2.5Comprehensive measures should be introduced to improve the living and working conditions of farm workers. All labour legislation must be extended to farm workers, with specific provisions relating to their circumstances.

4.5.2.6Efficient, labour-intensive and sustainable methods of farming must be researched and promoted. To this end, extension workers should be trained and retrained and the agricultural education and research institutions restructured. The RDP must support effective drought management by providing agro-meteorological advice to farmers rather than subsidising losses, which in the past encouraged environmentally destructive farming methods.

4.5.2.7Increased attention must be paid to additional processing and value-adding activities derived from agriculture. This is linked to modernising marketing and exporting activities, and to the considerable potential for supplying a growing tourist industry.

4.5.3Fisheries and forestry.

4.5.3.1The marine resources along the South African coastline form the basis of a fishing industry which employs some 26,000 persons. The industry, however, is concentrated in the hands of a few major companies which own not only the harvesting rights, but also the processing and marketing concerns. In general wages are low, work is very often seasonal and provides little security, and it is dangerous. In addition, some fish stocks have been overexploited.

4.5.3.2The primary objective of fisheries policy is the upliftment of impoverished coastal communities through improved access to marine resources and the sustainable management of those resources through appropriate strategies.

4.5.3.3The administration of fisheries should be transferred from the Department of Environmental Affairs to a Department of Agriculture, Forestry and Fisheries. The Sea Fisheries Advisory Committee and the Quota Board should be retained, but their membership and functions should be revised. For inshore fisheries and monitoring of catches, there should be greater community involvement in enforcement. For offshore resources, consideration must be given to establishing a regional 'Coastguard' involving the Southern African Development Community countries.

4.5.3.4Policies must also enhance the potential for inland fisheries to improve the livelihood of rural communities through fish farming.

4.5.3.5The RDP recognises the vast potential of the wood-based industries in South Africa. Given that the state owns almost a third of South Africa's commercial forests, the democratic government has a special responsibility to manage the development of this sector. Forests use important tracts of land, they limit the water supply in some areas, and there are potential environmental hazards in single-crop plantations such as commercial forests. The current usage of timber resources is wasteful, and we are opposed to the massive and growing export of raw wood-chips.

4.5.3.6For these reasons the RDP promotes the tightening of regulations governing land use in sensitive areas. There is enormous scope to add value to our raw timber materials prior to export. The local pulp and paper industry can meet the growing need for paper, especially as education expands. But the price of paper products must be lowered to the benefit of local consumers as well as to enable more effective competition in international markets for value-added paper products. To achieve this, we must improve efficiency and make substantial investments. The trade unions have a significant contribution to make in restructuring this industry and enhancing its performance.

4.5.4Tourism.

4.5.4.1Tourism in South Africa has been geared essentially to the local white and overseas markets, and has been adversely affected by apartheid and the resultant sanctions. All aspects of tourism were provided on a racial basis, including infrastructure, lodgings, and even national parks, game reserves and recreational areas. Natural resources are part of our national patrimony and we must develop a culture of appreciation.

4.5.4.2A process of reconstruction and development must take place within tourism in view of the distortions created by apartheid. In the process of restructuring, a vast potential could be realised, both in terms of the local mass market, and in terms of increased foreign exchange. This would also result in the creation of large numbers of sustainable jobs in tourism and allied industries, and would take advantage of South Africa's extraordinary human and natural resources.

4.5.4.3To achieve the desirable results, sound planning is needed, which should be predicated on thorough research and consultation. With respect to the local mass market, education, access to facilities and the support of black entrepreneurship are critical. In addition, promotion of ecotourism and enhancement of South Africa's unique cultural and political heritage must be prioritised. These afford opportunities for integrating traditional knowledge into tourism.

4.5.4.4Community involvement in tourism projects must be encouraged, stressing partnerships with other agencies and initiation and ownership of enterprises. Communities must be given access to finance, management skills, upgrading of tourist service skills, language proficiency and connections with marketing infrastructure. Training institutions should be located in areas accessible to local communities to prevent leakage of skills from the area. This could be combined with other extension services and development training programmes at regional and local level.

4.5.4.5The Southern African dimension offers enormous tourist potential. A coordinated, mutually-beneficial policy within the region could offer some of the world's greatest natural and recreational tourist attractions.

4.5.4.6Tourism is potentially a major source of employment and foreign exchange, and could ease balance of payments constraints in a short period of time, provided that resources required for the tourism industry are locally sourced. This requires tourism to be carefully integrated into provincial and local-level development programmes.

4.5.4.7Without effective support from the democratic government, communities and hospitality industry workers, however, there is a danger that tourism will have potentially damaging effects on our rich and diverse cultures and natural resources. Full and transparent environmental impact assessments should be conducted for all major tourism projects. The tourism industry could be a major industry, and thus should receive greater priority at national and provincial levels.

4.6 UPGRADING INFRASTRUCTURE

4.6.1The link between meeting basic needs through an infrastructural programme and reviving economic growth in manufacturing and other sectors is the essence of the link between reconstruction and development. However, it is more than just providing electricity, water and telecommunications. It is a programme that integrates and upgrades infrastructure at the same time.

4.6.2The infrastructural programme must ensure an integrated approach to the provision of various services so that we upgrade our infrastructure in a manner that both meets basic needs and enhances new and effective economic activity. This is particularly true in areas of information technology. Upgrading in these areas can facilitate an upgrading of education, health care, recreation and other services, by improving the quality of information available and providing communities throughout the country with access to expertise and usable data.

4.6.3The use of information technology provides a major challenge in linking basic needs with information highways in innovative ways that improve the capacity of industry to successfully reintegrate into world markets. Southern Africa could lead the way in providing this link so vital to the developing world.

4.6.4In addition to upgrading infrastructure in existing areas, its extension to all parts of the sub-continent will both break down apartheid and colonial geography, and open up new economic potential in the areas of production and tourism.

4.6.5Electrification. In addition to meeting basic energy and lighting needs for households, specific attention must be paid to making electricity available to micro, small, medium-sized and agricultural enterprises in both urban and rural areas. The benefits of cheap electricity presently enjoyed by large corporations must be extended to all parts of the economy.

4.6.6Telecommunications. Under apartheid, telecommunications were not developed in a manner cognisant of the possibilities for expanding the economy to the lives of all South Africans. As a result, massive inefficiencies and missed opportunities characterise the sector. Information is today considered a commodity of great significance, and South Africa must now catch-up in order to take advantage of the changing technological and economic roles that telecommunications can play.

4.6.7The development of an advanced information network should play a crucial role in facilitating the provision of high-quality services to all the people of South Africa. It must provide a significant advantage to the business sector as it reduces costs and increases productivity, and serves as an integral part of financial services, the commodities market, trade and manufacturing.

4.6.8The basic infrastructural network must remain within the public sector. Certain value-added services could be licensed within the framework of an overall telecommunications programme. An integrated system of groundline, microwave, fibre-optic and satellite communications must substantially enhance the overall system.

4.6.9The RDP aims to bring telecommunications closer to all potential users. A telecommunications regulatory authority must be established, which should be separated from policy and operating activities.

4.6.10The development of telecommunications must be underpinned by a strong telecommunications manufacturing sector. The democratic government must encourage this sector to work closely with the network operators in developing suitable systems for possible export to Africa and other developing areas.

4.6.11Transport. There is an urgent need to develop an integrated and rapid transportation system that links the domestic economy, Southern Africa, and world markets. This entails the upgrading of road and rail networks and their extension to the whole area, but also a rapid interface between road, rail, air and sea.

4.6.12A review of the current situation within all transportation systems must be undertaken in order to assess the capacity of these systems and how they could enhance the development of other sectors of the economy and contribute to the RDP. The structure of the railway network and its operating system was badly distorted by our colonial and apartheid history. A comprehensive review of both the network and operating system is needed to increase their contribution to the RDP. A similar review is required in road freight with particular attention being paid to ownership patterns and barriers to entry. Particular attention must be paid to the regulatory structures of the transportation systems.

4.6.13A Southern African transportation network enhanced by information networks could play a major role in underpinning the socio-economic reconstruction of the sub-continent.

4.7 REFORM OF THE FINANCIAL SECTOR

4.7.1The apartheid system severely distorted the South African financial system. A handful of large financial institutions, all linked closely to the dominant conglomerates, centralise most of the country's financial assets. But they prove unable to serve most of the black community, especially women. Nor do they contribute significantly to the development of new sectors of the economy. Small informal-sector institutions meet some of the needs of the black community and micro enterprise. They lack the resources, however, to bring about broad-scale development.

4.7.2The regulatory framework. The democratic government must modify regulations and support innovative financial institutions and instruments which mobilise private domestic savings to help fund the RDP, while not reducing incentives for personal savings. The democratic government must enhance accountability, access and transparency in the financial sector. In cooperation with other stakeholders, it must review both regulations and regulatory system to determine which aspects prove an unnecessary impediment to the RDP, and more generally to greater efficiency in the mobilisation and subsequent allocation of savings. Government must encourage the private sector to cooperate in extending financial services to those who presently do not have access to these services. The establishment of a smoothly functioning and inexpensive payments system, assuring safety of consumer deposits, must be considered a high priority. To improve flexibility in the legal environment, parliament should establish an oversight committee for the financial sector.

4.7.3Prohibition against discrimination. The democratic government must introduce measures to combat discrimination on the grounds of race, gender, location and other non-economic factors. The democratic government must, in consultation with financial institutions, establish prudent non-discriminatory lending criteria, especially in respect of creditworthiness and collateral; reform the laws on women and banking to ensure equality; forbid blanket bans on mortgage bonds to specific communities ('redlining'); require banks to give their reasons when turning down a loan application; establish community liaison boards; develop simpler forms for contracts and applications, and create an environment which reduces the risk profile of lending to small black-owned enterprises and requires banks to lend a rising share of their assets to small, black-owned enterprise. The law must also require that financial institutions disclose their loans by race and gender; their assets and liabilities by subregion and sector; their staff by race and gender; the location of their branches and defaults by neighbourhood. To enforce laws against discrimination, the democratic government must establish an ombuds for the financial sector. At the local level, ombuds structures must include community representatives. Where anti-discrimination measures do not generate enough credit for housing, small enterprise and other RDP programmes, the government must provide appropriate kinds of financial support. The democratic government should consider reapplying the Usury Act to small loans (in addition to loans above R6,000, as presently applies), and should enforce the Act more effectively.

4.7.4Housing bank and guarantee fund. The democratic government must establish a Housing Bank to ensure access to wholesale finance for housing projects and programmes. A Guarantee Fund will protect private sector funds from undue risk. Approximately half the Bank's funds will come from the government in the form of recurrent housing subsidies, in order to ensure affordable bonds.

4.7.5Community banking. Community banks of various types have proven able to finance informal entrepreneurs, especially women. The democratic government must encourage community banking. It must reform regulations to foster the development of community banks while protecting customers. Where possible, government structures at all levels should conduct business with these institutions. The government must encourage the established banks and other financial institutions to help fund the community banks.

4.7.6Pension and mutual funds. Pension and provident funds should be made more accountable to their members, and insurance companies to their contributors. The democratic government must change the law to ensure adequate representation for workers through the trade unions and compulsory contributions by employers, and move towards industry funds. It must also legislate a transformation of the boards of the Mutual Funds to make them more socially responsible. The RDP must embark on a review of financial institution legislation, regulation and supervision to ensure the protection of pension and provident funds and other forms of savings and investment.

4.7.7The Reserve Bank. The Interim Constitution contains several mechanisms which ensure that the Reserve Bank is both insulated from partisan interference and accountable to the broader goals of development and maintenance of the currency. In addition, the law must change the Act governing the Reserve Bank to ensure a board of directors that can better serve society as a whole. The board must include representatives from the trade unions and civil society. In future, a stronger board of governors should emerge through the appointment of better-qualified individuals. The new constitutional requirement that the board of governors record its decisions, publicise them when feasible, and account to parliament should help in developing a more professional and credible executive, with greater ability to exercise its mandate than the present board of governors.

4.7.8The democratic government should immediately increase the resources available in the Reserve Bank and other appropriate agencies for combating illegal capital flight. Furthermore, the democratic government must enter into discussions with holders of wealth in an effort to persuade them of the harmful effects their actions are having on our economy.

4.8 LABOUR AND WORKER RIGHTS

4.8.1Over the years, workers have won many struggles and made many gains in the workplace. The fundamental principle of the RDP is to safeguard these rights and extend them. Organised labour must be empowered to act as a strong force in the reconstruction and development of our country.

4.8.2There must be equal rights for all workers, embodied in a single set of labour statutes.

4.8.3Basic organising rights. The following rights of workers must be in the Constitution:

4.8.3.1the right to organise and join trade unions;

4.8.3.2the right to strike and picket on all economic and social matters, and

4.8.3.3the right to information from companies and the government.

4.8.4The Constitution should not prohibit the conclusion of union security agreements, including closed and agency shops. The right to lock out should not be in the Constitution.

4.8.5Living wage. All workers should be entitled to a living wage and humane conditions of employment in a healthy and safe working environment. The interlocking elements of the RDP, in particular the promotion of collective bargaining, minimum wage regulation, affirmative action, education and training, technological development, and provision of services and social security, must all be combined to achieve a living wage for rural and urban workers and reduce wage differentials. The required levels of growth for the successful implementation of the RDP can only be achieved on the basis of living wage policies agreed upon by government, the labour movement and the private sector.

4.8.6Reconstructing and developing the economy require far-reaching changes in employment patterns and labour market policies. The democratic government must set up institutions and mechanisms to facilitate this process in order to avoid unnecessary hardships while utilising our human resources to their full potential.

4.8.7Collective bargaining. Effective implementation of the RDP requires a system of collective bargaining at national, industrial and workplace level, giving workers a key say in industry decision-making and ensuring that unions are fully involved in designing and overseeing changes at workplace and industry levels.

4.8.8Industrial bargaining forums or industrial councils must play an important role in the implementation of the RDP. Agreements negotiated in such forums should be extended through legislation to all workplaces in that industry. There must be enhanced jurisdiction for these forums to negotiate:

4.8.8.1industrial policy including the implementation of the RDP at sectoral level;

4.8.8.2training and education programmes;

4.8.8.3job placement programmes in the industry, and

4.8.8.4job creation programmes.

4.8.9Workplace empowerment. Legislation must facilitate worker participation and decision-making in the world of work. Such legislation must include an obligation on employers to negotiate substantial changes concerning production matters or workplace organisation within a nationally negotiated framework, facilities for organisation and communication with workers on such matters, and the right of shop stewards to attend union meetings and training without loss of pay as well as to address workers.

4.8.10In addition to the reform of labour law, company and tax law must be amended to ensure that the rights of workers are protected and extended, for example in relation to workers' access to company information.

4.8.11Instruments of policy such as subsidies, taxes, tariffs, tenders etc. must all be utilised to encourage stakeholder participation in the RDP and promote worker rights, human resource development and job creation.

4.8.12Since human resource development is crucial to the successful implementation of the RDP, the democratic government must support programmes to upgrade skills on a broad basis in terms of a national education and training policy negotiated between unions, employers and government. Further details are set out in Chapter Three.

4.8.13Affirmative action. Affirmative action measures must be used to end discrimination on the grounds of race and gender, and to address the disparity of power between workers and management, and between urban and rural areas. Those measures must:

4.8.13.1entail a massive programme of education, training, retraining, adult basic education and recognition of prior learning, to overcome the legacy of apartheid;

4.8.13.2empower not only individuals, but communities and groups, under conditions which promote the collective rights and capacity of workers and their representatives to negotiate workplace issues;

4.8.13.3establish principles for the hiring and the promotion of workers with similar skills/jobs which will prevent discrimination against people previously disadvantaged by apartheid or gender;

4.8.13.4accelerate, through collective bargaining programmes, the eradication of discrimination in each and every workplace;

4.8.13.5provide job security for pregnant women and promote the provision of child care, as discussed in Chapter Three, to further women's equality in employment;

4.8.13.6ensure that the development of special expertise among South Africans takes priority over the import of outside personnel (this policy should not, however, prejudice foreign investment or cooperation in the Southern African region), and

4.8.13.7establish legislation and a strong ombuds to monitor and implement affirmative action measures.

4.8.14Legislation must prohibit sexual harassment, and education programmes must be launched to make workers and employers aware about the issue and about how to lodge complaints.

4.8.15International conventions. The international labour conventions of the International Labour Organisation (ILO) concerning freedom of association, collective bargaining, workplace representation and other fundamental rights must be ratified by the South African government.

4.8.16Restructuring of labour market institutions. The Department of Manpower and labour market institutions related to it, such as the Unemployment Insurance Board, and the Workmen's Compensation Board, must be restructured in consultation with the major stakeholders in the tripartite labour market forums such as the National Manpower Commission.

4.8.17All of the above, coupled with a democratic political dispensation, improvements in the living standards of workers and a programme of human resource development will release the resources of the nation's workers and significantly improve productivity in the economy.

4.9 SOUTHERN AFRICAN REGIONAL POLICY

4.9.1In the long run, sustainable reconstruction and development in South Africa requires sustainable reconstruction and development in Southern Africa as a whole. Otherwise, the region will face continued high unemployment and underemployment, leading to labour migration and brain drain to the more industrialised areas. The democratic government must negotiate with neighbouring countries to forge an equitable and mutually beneficial programme of increasing cooperation, coordination and integration appropriate to the conditions of the region. In this context, the RDP must support the goals and ideals of African integration as laid out in the Lagos Plan of Action and the Abuja Declaration.

4.9.2Whilst South Africa's trade with its neighbours in Southern Africa constitutes a relatively small percentage of its total trade with the world, this trade has been growing rapidly over the past few years. In addition, a significant percentage of South Africa's exports to African countries that are not members of the Southern African Customs Union (SACU) consists of manufactured goods. Various studies have shown that there is a great complementarity between the types of goods imported by Southern African Development Community (SADC) and Preferential Trade Area (PTA) countries and the goods that South Africa is exporting.

4.9.3However, the current trade pattern between South Africa and the sub-continent is unbalanced, as regional imports from South Africa exceed exports to South Africa by five to one. A democratic government must develop policies in consultation with our neighbours to ensure more balanced trade.

4.9.4Developing the capacity of our neighbours to export manufactured goods to South African markets requires the democratic government, in consultation with neighbouring states, to encourage and promote industrial development throughout the region. A democratic government must contribute towards the development of regional and industrial strategies for specific sub-sectors, such as mineral beneficiation, auto components and textiles.

4.9.5A democratic government should also encourage the development of joint, mutually-beneficial projects to develop our regional water resources, electricity and energy supply, transport and telecommunications, and agricultural and food production.

4.9.6One element of regional policy, defended particularly in the call for a Southern African Social Charter by trade unions, is that minimum standards with regard to rights of workers to organise be established across the region as a whole. This will allow a process of greater integration to become one of levelling up rights and conditions of workers, rather than of levelling them down to the lowest prevailing standard.

4.9.7A democratic government should encourage technical and scientific cooperation with our neighbours to enhance the development of expertise in the region in areas such as agricultural research and development, environmental monitoring and protection, health and other research.

4.9.8A democratic South African government should apply for membership in the SADC and possibly the PTA, and should support reforms in the SACU to enhance democracy and equity. Within these structures we must enhance our capacity as a region to effectively interact with international financial and trade institutions.