The metals and engineering industry is in recession and has been for the better part of the year. The Steel and Engineering Federation of South Africa (Seifsa) held a workshop on Tuesday on the anticipated socio-economic and political trends for 2016 in an attempt to find clues on how to uplift the sector, which Seifsa chief economist Henk Langenhoven believes is still reeling from the global financial crisis of 2007.
In the period since then, the sector has shed 45 200 jobs, 15% of which have been lost in the first six months of 2015 alone. In terms of production, the sector is down 8% since 2007 and 2% in 2015. And much of the decline has been caused by challenges in other industries, like mining, automotive and construction, to which the metals and engineering sector is a supplier. In terms of value-add alone, these industries and their exports make up 17% of GDP, bringing in 80% of the country’s foreign exchange.
Steel and engineering vs manufacturing vs GDP growth
According to political analyst Steven Friedman and director of the International Labour Organisation South Africa Vic van Vuuren, the industry has to understand and commit to resolving the plight of the man on the street before the country and its economy can start to make real progress again.
Friedman said the increased incidence of strikes and protests like the recent #FeesMustFall campaign by university students stemmed from unfinished business during the country’s reconciliation efforts in 1994, where the majority of previously marginalised population have remained so. He said this is only becoming a serious problem now as the failure to meaningfully address economic transformation had been disguised by the GDP growth figures in excess of 5%, which came to an end after the global financial crisis.
Said Friedman: “SA during apartheid was a country run by an exclusive club, consisting only of white people. What happened post-apartheid is that the club has admitted non-white members, but that doesn’t mean the club has dissolved nor has it changed its rules. The rules still make it difficult for non-members of the club to join in on the economic action.”
More empathy needed from business
He said the only way to deal with the issue was to return to the negotiating table. But, he said, there was a misunderstanding among the leaders in this country, be they business, labour or government leaders, on what it means to negotiate.
He also warned against alarmist rhetoric, which had deep-seeded foundations in influential people who inwardly believe the country cannot be efficiently run by black people.
“There’s are common misconception that we have a crop of unsavoury politicians and if only we could do away with them, we would be able to solve all our problems,” said Friedman.
Regarding the hysteria, he said people must stop carrying on as if the world is coming to an end whenever something goes wrong in the country.
“South Africa will still be here in 50 years’ time and there will be no repossession of land and property,” he said.
Van Vuuren said there was a sense that business was not serious about changing the economic environment, and that there was a need for captains of industry to change their mindset if they are going to address key issues holding the economy back.
“We’re very quick to talk about government not delivering, pointing out what is going wrong but have very little to offer in terms of solutions.”
As an example he mentioned the National Economic Development and Labour Council (Nedlac), which many leaders of society were eager to be involved in and comprised of captains of industry like Bobby Godsell, but had lost its gravitas. The strong commitment to social dialogue, which had begun in post-1994, had dissolved and reduced to collective bargaining, he said.
Leadership, he added, was key to moving the country forward. Even if government was failing to get the ball rolling at macro-level, Van Vuuren said it was within the law for companies to start their own associations and panels to deal with critical issues. But, in his opinion, there was nobody doing this effectively.
Said Van Vuuren: “I don’t know who the voice of business is. There are different associations representing various factions but I don’t think anybody can pinpoint one person or body that is easily recognisable as the voice of business in South Africa. It’s so fragmented within the trade union space that I don’t know who is representing the workers… is it (Zwelinzima) Vavi, or (Cosatu President) Sdumo Dlamini, or the Amcu (the Associated Mineworkers and Construction Union)?”.
Van Vuuren said that, for society and the economy to improve, top levels of government, labour and business have to engage each other throughout the year.
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