Nedlac summit to shine spotlight on dormant social compact

The lack of a social compact to address SA’s high unemployment rate and the economy two years after President Cyril Ramaphosa announced it, will loom large when social partners meet for the National Economic Development and Labour Council (Nedlac) annual summit, in Johannesburg on Friday. 

Deputy President Paul Mashatile told the 2023 gathering that ideology seemed to be at the centre of the inability of social partners at the country’s policy formulation body to hammer out a social compact to address joblessness and low economic growth. 

This was because the government, business, labour and community bloc at Nedlac all share different ideologies about the trajectory the country should take to tackle runaway unemployment, low economic growth, entrenched poverty, violent crime, systemic corruption and infrastructure development, among other socioeconomic ills. 

The summit — to be attended by government leaders, policymakers, economists, journalists and civic and union leaders — comes as the country's unemployment surged from 32.9% in the first quarter of 2024 to 33.5% in the second quarter, thus increasing the number of unemployed to 8.38-million.

Speaking to Business Day on Wednesday, Nedlac executive director Lisa Seftel said 2024 was the 30th anniversary of Nedlac and as such the council would be honouring its former conveners and past government ministers who had “brought it to where it is today”. 

She said social partners would use the summit to, among others, review the past 30 years of Nedlac’s existence, key achievements, lessons and potential future plans. 

“We are going to hand over a report to the government on what social partners would like see the government focusing on in the next five years,” Seftel said. The summit, she said, would also talk to issues of social dialogue and social compacting. 

There was a need for social partners to have a “narrow window of opportunity in this country to address systemic challenges”. 

She said while there were ideological differences between social partners, those did not block progress on the economic and social justice fronts. 

“There is consensus that we need energy security and energy affordability; restructuring of the freight and logistics sector so that we can get our goods to the harbour for exports; and strong social wage in the interest of social stability. There is also consensus that we need to address the emerging water crisis in our cities [and address] the local government sector,” Seftel said. 

Duma Gqubule, founder and analyst at the Centre for Economic Development and Transformation, said: “I was one of the biggest believers of this social compact. Ramaphosa has been talking about it for six years but nothing has happened.”

In March 2023, Ramaphosa — criticised by former president Thabo Mbeki for making false promises to the nation — sought to explain why the social compact had not been realised, by saying, “We had wanted to have a comprehensive social compact and we had put together a timeline and we were not able to reach that timeline, but what we have seen over time is that we have been able to reach a number of compacts.”

Gqubule said the government was not really interested in formulating the social compact because it had not shown the seriousness such a mission required. He then criticised Nedlac, saying that since its formation in 1995, it had never reached an agreement on macroeconomic policies.

He said the government of national unity, which he described as a coalition between the ANC and the DA, had no interest in discussing macroeconomic policies. “Come budget 2025, there will be no space for discussing macroeconomic policies, we must just forget it.”

Gqubule said social partners at Nedlac ended up discussing what the government considers to be “low hanging fruit”.

“Every single agreement in Nedlac is never implemented or monitored to see what people are doing. That is why for me Nedlac is just a waste of time.” 

mkentanel@businesslive.co.za