Speech by Former President FW de Klerk to Swiss Cham South Africa, Zurich, 22 January 2013:
SPEECH BY FORMER PRESIDENT FW DE KLERK
TO SWISS CHAM SOUTH AFRICA, ZURICH, 22 JANUARY 2013
THE FUTURE OF SOUTH AFRICA
Worrying about the future is - and always has been - a central aspect of being a South African. Since 1652 visitors to our country have generally concluded that “it is a lovely place - but cannot possibly last for another five years.” However, time and time again, experience has proved that the pessimists were wrong.
At the moment, South Africa is once again experiencing serious international perception problems. They arise from the news coverage of a number of recent and current developments in the country. Foreign observers and investors are, in particular, worried about the following news from South Africa:
They are concerned by radical policy proposals that were discussed at the ruling ANC’s National Conference in Mangaung last month - including proposals for
- the establishment of a “developmental state” which would be “capable of intervening effectively to transform economic relations, at the centre of our economic agenda.”
- greater “state ownership, including more strategic use of existing state-owned companies ….”
- greater state involvement in mining, falling short of outright nationalization;
- the utilization by government of the assets of insurance and pension funds for state developmental projects; and
- accelerated land reform that would dilute existing property rights.
Observers and investors are also worried about the role that its being played by South Africa’s radical trade unions under the leadership of the trade union federation Cosatu.
- South Africa has a very poor record in terms of labour relations. According to the World Economic Forum’s Global Competitiveness Report it is the worst of 142 countries assessed in terms of co-operation in labour-employer relations;
- Cosatu has continuously raised labour costs without commensurate productivity increases - which has inevitably resulted in job losses. South Africa’s flexibility of wage determination is the fourth worst in the world.
- Our labour legislation is amongst the most onerous anywhere. South Africa’s hiring and firing practices are the second worst in the world.
- Cosatu has steadfastly opposed proposals to open labour markets to the unemployed - including proposals at the ANC’s 2005 National General Council for a two-tier labour system and more recent proposals for a youth employment subsidy.
Observers are also worried about developments such as the Marikana incident on 16 August, when 34 miners were killed by police - as well as ongoing reports of farm workers strikes in the Western Cape. Ironically, this was not a case of oppressed trade unionists campaigning for a decent wage. Their monthly income of R 11 500 per month already put them on a par with average wages, on a PPP basis, in first world countries like Poland, Israel and the Czech Republic. Their incomes were twice as high as average wages in competitor countries like Chile and Malaysia - and already placed them in the top 20% of income earners in South Africa.
All these developments have undoubtedly had negative implications for present and future foreign investment. According to the UN Conference for Trade and Development, foreign direct investment in South Africa has fallen by 43.6% in the past year - the largest decline among all developing economies. This is serious since South Africa is dependent on foreign investment, not only for growth, but also to cover our large current account deficit.
On 27 September last year Moody’s downgraded South Africa’s sovereign credit rating from A3 to Baa1. Moody’s referred to policy uncertainty ahead of the ANC National Conference in December and noted that “The revision reflects Moody’s view of the South African authorities’ reduced capacity to handle the current political and economic situation and to implement effective strategies that could place the economy on a path to faster and more inclusive growth.”
Nevertheless, I believe that all these stories are creating a distorted picture of South Africa and its potential. I should accordingly like to bring some balance to the picture and spell out the reasons why I remain optimistic about South Africa’s medium and long-term prospects.Read full text HERE...
Published in: FW de Klerk Foundation