For South Africa to succeed in achieving its developmental objectives, a new pact needs to be forged between the government, employer organisations and unions, according to Minister for Development Cooperation of the Netherlands, Bert Koenders. Omano Edigheji reports.Koenders was the keynote speaker at a workshop, titled ‘Enhancing state capacity through partnerships: Lessons of the Netherlands' experience for South Africa', hosted by the HSRC's Centre for Africa's Social Progress (CASP) and the Policy Analysis and Capacity Development unit. The current global economic crisis has led to the demise of the Washington Consensus with its reliance on market forces, said Mr Koenders, making a compelling case for an active and strong role for the state in development. ‘Market forces by themselves can no longer be seen as the solution to economic growth, and governments are no longer the stumbling block,' he said. Consequently, what is required is to build effective and efficient states and markets. In every successful country, governments play a critical role by complementing and regulating the market. South Africa is a case in point: successful regulation of the financial sector prevented financial institutions from running amok. The balance between markets and state should be based on an analysis of the country-specific bottlenecks for social and economic development. This consequently calls for reinventing ‘the building of strong, but necessarily large institutions, based on a social contract which links the planners at the top to the people on the ground'. We need a delivery state, he said, which is based on input and signals from the poor and disenfranchised, and on a broader set of clear objectives through which a national consensus is built. He drew attention to how the Netherlands used partnership between government and non-state actors to resolve its developmental challenges, pointing to the 1980s when the Dutch government, employers' organisations and unions forged a national consensus to resolve problems of negative growth, high and increasing unemployment, and a lack of trust. All three parties were willing to abandon long-established policy positions in a forum called the Social Economic Council (SER). As an example, unions agreed to the relaxation of hiring and firing laws; employers agreed to create several hundred thousand new jobs; and government agreed to the relaxation of regulation and the fiscal burden on both companies and consumers. This compromise led to a long period of growth. Koenders then suggested South Africa can learn from the experience of the SER, for example, by building a national consensus through NEDLAC that would promote flexibility and security for workers, and at the same time ensure national competitiveness. He pointed out that the importance of a social contract is already recognised in South Africa. Accordingly, he drew attention to the Dinokeng Scenarios which were the product of a broad group of South Africans. Some of the critical success factors articulated by the authors of the Dinokeng Scenarios were that all these parties engage and cooperate to increase accountability, build the capacity of the state, deliver core public services, and develop a common identify and nationhood. He said a country like South Africa with its developmental challenges requires a ‘delivery state', underpinned by strong partnerships among the South African stakeholders. He also referred to the panel of Harvard economists who identified several structural constraints to economic growth in South Africa, including low market participation, lack of skills, poor service delivery, uncertainty about land reform, strict labour laws and the fact that BEE does not benefit enough people. Koenders raised some critical issues and while commending the labour laws, he suggested that it might be useful to strike ‘a better balance between insiders and outsiders in the labour market', especially in the current economic crisis. Without such a balance it might be difficult to hire new people, hampering efforts at job creation. He further raised the issue whether the quality of education suffers in the context of strong teacher unions trying to protect the interests of teachers rather than those of the education sector as a whole. Dr Omano Edigheji, who coordinated the workshop, is a director in the Policy Analysis and Capacity Development unit.
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