DARYL SWANEPOEL: End the social compact tug-of-war: lessons from Denmark

The SA economy is being slowed by a muddy tug-of-war. Business is pulling at one end, seeking expansion of enterprise coupled with investor-inducing profits. Meanwhile, labour has kicked in its heels on the other end, fighting, it says, against worker exploitation. The state is caught between the two, left trying to appease both sides to ensure a stalemate does not bring the economy to its knees.

Much can be pondered as to how SA reached slow economic growth, high levels of inequality and record unemployment, but that is the country’s reality. And whether you are a supporter of Ramaphosa the owner of Phala Phala or not, Ramaphosa the statesman is correct in calling for co-operation to move the country forward. It will require a shift from the tug-of-war to a pulling of the rope at both ends and in the same forward motion, in so doing operating in a similar fashion to fishing with a net.

How do we remedy this? First, the state will have to clear its house of corruption and release its grip on limping state-owned entities to help limit fiscal wastage. Some government authorities will also have to forego long-held ideologies about state control of economic activities and adopt a more laissez-faire approach.

SA can further draw inspiration from Denmark’s requirement for the unemployed to participate in working programmes through which they can upskill themselves. It could serve as a blueprint for a future basic income grant. In Denmark, business further benefits from the welfare programme in that the programme develops skilled individuals through the country’s highly ranked free education system. These all support the argument for higher taxes, since the additional funds raised are channelled to supportive measures that benefit all.

Key to effective bargaining by Danish labour authorities are sectoral negotiations, where the more export-orientated manufacturing sectors set the wage norm other sectors then use as a basis for their own wage talks. Social conflicts are resolved in a flexible and nonconfrontational manner.

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