Infrastructure Investment Catalyses Social Accord

Photo: Hannelie Coetzee,

Towards an infrastructure investment social accord

In the last session of the second annual Economic Development Programme conference hosted by the Economic Development Department, a series of remarkable commitments emerged from business and labour leaders, on government’s Infrastructure Investment Plan.
The session chair and convener of the Economic Development Conference, Minister Ebrahim Patel posed a series of questions to the panelists focused around commitment to the plan and the commitments sectors were willing to make . The panel consisted of:

  •  Bobby Godsell, President, Business Leadership South Africa
  • Zwelinvima Vavi, General Secretary, Congress of South African Trade Unions,
  • Ndaba Ntsele, President, Black Business Council

Bobby Godsell representing Business Leadership South Africa argued that the long term nature of the infrastructure investment framework provided the space for business to think about the next twenty years as opposed to the next quarter. In turn, he argued that the private sector should “seek a realistic and sensible” rate of return. The rate of return he ventured would be a real return, but would be in single digits.

In turn, Zwelinzima Vavi, General Secretary of COSATU provided an indication that labour relations agreements could be reached to support the infrastructure plan.  Noting that strikes preceding the  World Cup 2010, were led by non-unionised workers, he argued that unionisation provided a way to structure the relationship. Furthermore, he provided a commitment to negotiating wage rates to pursue the aims of the infrastructure investment plan. Vavi argued that wage rates in sectors such as the motor industry, could not be replicated in the infrastructure  investment programme, and indicated a willingness to reach agreement in this area.
The President of the Black Business Council, Ndaba Ntsele, indicated that his constituency would be aiming to create a black owned and operated construction company. The approach being advanced from the Black Business Council is one of creating larger companies, with strong links to smaller enterprises.
The public positions of the leaders of business and labour provided the strongest indication yet, that a national accord on infrastructure investment plan could be reachable.

Debates on funding and empowerment

Despite, the substantive commitments to supporting the national infrastructure plan, three important areas of debate emerged.
First, the utilisation of pension funds to support the infrastructure investment plan was debated. Whilst, no panelist opposed the usage of pension funds to fund infrastructure investment, the slow pace of reform on social security reforms was raised as a key stumbling block. In addition, the business representatives   indicated a preference for financing using existing instruments. The funding mix is thus likely to be a key area of debate going forward.
Second, the primary objective to build infrastructure was emphasised. Vavi, argued that the primary objective of building infrastructure is the primary objective. The point being made, was that several government programmes – especially the school nutrition and scholar transport programmes in the Eastern Cape – were hampered by seeking multiple objectives, including advancing black economic empowerment.  The building of infrastructure was however according to the panelists central to building a manufacturing base, and through that creating viable enterprises and employment.
Third, the anti-competitive practice of the construction value chain was raised. Vavi raised it directly indicating that import parity pricing and collusive practice in the construction industry were a central obstacle. Godsell and Ntsele, indicated that trust between industries in the construction sector and government needed to be rebuilt.
Minister Ebrahim Patel in conclusion indicated that work towards an infrastructure accord would need to be undertaken, given the broad principle commitments from labour and business during the session.
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