MAY 2010 THE NEW GROWTH PATH - HEDA 2011 - Unisa

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1




THE NEW GROWTH PATH: THE DAWN OF A NEW ECONOMIC ERA OR AN
UNREALISTIC ATTEMPT TO ADDRESS

SOUTH AFRICA'S DEVELOPMENT

GOALS
?


1.

Introduction
1



As part of its environmental scanning activities, DISA monitors key developments in the
higher education policy environment, with particular focus on implications for Unisa.
Appropriately, therefore, this

briefing provides an overview of

government's
recently
released
New Growth Path
(NGP), in order to inform the university community about the
key features of this important policy framework. Among other key policy documents,
this forms an important point
of reference for higher education in

seeking to make a
meaningful
contribution to national development goals.


Towards the latter part of November 2011, the

Minister of Economic Development,
Ebrahim Patel,
released government
’s

strategy for the restructuring of the

South African
economy

in a document entitled:
The New Growth Path:

The Framework
. The
restructuring is
aimed at

address
ing

the key
developmental
challenges facing the
country,
namely

unemployment
,
economic inequality

and
poverty

by improving the
economy’s performance with regard to labour absorption as well as the composition of



1

Prof
George
Subotzky

provided critical comments on the document and made a
substantive contribution
to the
introduction and conclusion.

DEPARTMENT OF INFORMATION AND STRATEGIC ANALYSIS (DISA)

HIGHER EDUCATION POLICY
BRIEFING

MARCH

201
1

YURAISHA CHETTY, DIRECTOR: INSTITUTIONAL RESEARCH


MAY 2010

2


the labour market and its rate of growth. Not surprisingly, the document has elicited
considerable critical response and, in some cases, staun
ch opposition. At the heart of
these contestations lie sharp ideological differences regarding the legitimacy of state
intervention as opposed to market mechanisms. However, the debate is often
obfuscated by the lack of clear understanding of the complex i
nter
-
relationships
between
democratisation, equity, development, growth
,
employment and
poverty
reduction
. These
closely related but distinct
terms provide a point of reference for
critically evaluating national policy initiatives, including the NGP.


Democratisation does not, of course, imply equitable socio
-
economic development, as
the South African case clearly demonstrates. Indeed, many

societies
will endure
undemocratic regimes as long as

reasonably distributed
levels of economic prosperity
and opp
ortunity prevail, as the

case of
several middle and far Eastern nations

shows
.
Likewise, economic growth does not imply equitable distribution of wealth and
opportunity. On the contrary, the global gap between rich and poor has widened
unabated over recent

times, with wealth increasingly concentrated

in
minority elites.

Similarly, economic growth does not automatically generate employment, as

the case of
South Africa's jobless growth

reveals
.
Further, while employment undoubtedly reduces
poverty

(even when
jobs are not "decent")
, it does not automatically imply broader

and
sustained

development

which involves a combination of building infrastructure,

providing efficient services

and
widening
access to

meaningful

economic
, educational,
skills development

and cultural opportunities.


Since 1994, South Africa has achieved democratic government, a globally admired
Constitution and enviable human rights safeguards. It is also enjoyed moderate but
sustained economic growth prior to the recent global downturn.
However, this growth
has been largely jobless with unemployment actually increasing. Moreover, contrary to
all
progressive
intentions,
socio
-
economic
inequalities have actually been exacerbated,
3


as the distribution of wealth and opportunity has become incr
easingly concentrated in
the deracialised middle and upper
class elites.

Likewise, the achievement of national
development goals has been frustrated by a combination of poor service delivery at all
three tiers of government,
by
inadequately co
-
ordinated po
licy formulation, planning
and implementation as well as

by

the ubiquitous problems of corruption and lack of
capacity. As a result, post
-
apartheid South Africa has achieved democratisation and

economic

growth, but has not fared so well regarding developme
nt, employment
creation, poverty reduction and increased equity through redistributed
opportunity and
wealth
.


An underlying assumption in the discourse and policy debates during the

anti
-
apartheid
struggle was that the new democratic government would pri
oritise the development of
a national development path. This would provide a point of reference
, among others,

for
the reconstruction of higher education so that it could fulfil its rightful role in national
development. However, clarity and consensus in t
his regard was frustrated by the
ideological and discursive shifts in post
-
apartheid government policy which occurred in
response to the prevailing global balance of power within the hegemony

of neo
-
liberalism
. The 1994
-
era Reconstruction and Development Programme (RDP) was
premised on growth through development. This was reversed in the Growth,
Employment and Redistribution (GEAR) programme, which assumed that development
would be achieved through growth. Whil
e both the RDP and GEAR also focused on
economic growth and job creation, it is argued that both failed

in particular

to address
the latter

adequately
2
. From a critical perspective
,

therefore, it is interesting to examine
the discursive

and substantive

emp
hasis in the NGP and, in the long run,
to assess
whether thus

conceptualised and formulated
it will contribute meaningfully towards
equitable development.




2

This discussion is the focus of an article in a business publication: “Leadership online”, 30 November, 2010. The
relevant website is:
http://www.leadershiponline
.co.za/articles/politics/1017
-
national
-
growth
-
path
.


4



The NGP

identifies
four

main indicators of success
, which clearly reflect its strategy:
a)

Jobs

(i.
e., the number and quality of jobs created), b)
Growth

(i.e. the rate, labour
intensity and composition of economic growth), c)
Equity

(lower income inequality and
poverty) and d)
Environmental outcomes
. However, the main emphasis remains on job
creation

and economic growth
, despite aiming to achieve a more inclusive (as well as
green) economy and highlighting

South Africa's

notoriously inequitable socio
-
economic
structure
and
the importance of rural development
, poverty reduction

and the
developmental st
ate
. The NGP does acknowledge that work is needed to align growth
and development strategies adopted by different spheres of government. It also draws
attention to the importance of integrating national, provincial and local policies and
would like to see
government departments collaborating around the implementation of
developmental policies. It is significant

that, as with GEAR, development is

somewhat

backgrounded and
that

the above issues
are not given much prominence in the
document,
only
featuring muc
h later. While the NGP is clearly not silent on development
strategies, it
nonetheless falls
short of clearly articulating the

relationships
between
employment, growth
, poverty reduction

and
equitable
development

outlined above
.

With all this in mind, the
key focus areas of the NGP are now outlined.




A key
target

of the NGP

is the creation of
5 million

jobs in the next 10 years. In a
Sunday Times
article (28 November, 2010), the Minister explained simply that the NGP
aims to “set the economy on a new road

that will support growth, but also ensure that
more of our people can participate in the economy” (p8)
.

In discussing the emphasis on
employment creation, the Minister drew a comparison between economic growth pre
-

and post
-
a
partheid.
In the last
15 years

of apartheid, the economy only grew at 1.2%
which was a third as fast as other similar economies around the world. In the 16 years
since the transition to democracy, economic growth was 3.5% per year, which was
almost as fast as other middle
-
income countr
ies such as China and India.

In the article,
5


he stated that despite this growth, the country continues to have a higher rate of
joblessness compared to other countries



thereby
making a strong case for the
emphasis on job creation.

According to the NGP, a

disturbing fact is that in 2010, South
Africa
ranked amongst the ten countries with the

highest
level of unemployment.


In his address to the National Assembly’s Portfolio Committee on Economic
Development, the Minister

stated that the goal of reducing un
employment from
25% to
15%

was dependent on a “
massive investment in infrastructure and people through
skills development, together with smart government and better coordination with the
private sector and organised labour”

(
BuaNews
,

26
November 2010
)
.
Clearly, concerted
efforts to invest in people through
high
-
level
skills development, is where the role of
higher education will feature most prominently
. T
his is

elaborated below
.
I
n his
inaugural State of the Nation Address in June 2009,
which was a prec
ursor for the
release of this important policy framework,
President Zuma

himself

crystallised th
e
central aim of the
economic restructuring
by stating the following: “
Decent
work will be
at the centre of our economic policies

and will influence our investm
ent attraction and
job creation initiatives. In line with our undertakings, we have to forge ahead to promote
a more inclusive economy”
3
.



With this as a backdrop, the remainder of this
briefing

discusses
the

context

of
the NGP,
the

key elements

of the

envisaged

economic restructuring

with a particular focus on the
role of higher education
,

and

concludes
with
critical
views and opinions from various
quarters within South Africa.





3

This quote is from President Zuma’s inaugural State of the Nation Address, which was cited in the
Framework
Document
for the New Economic Growth Path.

6


2.

The
Context


T
he
NGP explains the core challenge of joblessness, poverty

and inequality

by providing
a historical account of the state of the economy.

It also

situates

its strategy
within a
national and global context
. This is now briefly outlined in the following two sections
.


2.1 The state of the economy and associated
statistics

Between 1970 and the early 1990s, the South African economy did not fare very well,
with a growth rate of less than 1% per year, underperforming in relation to its peers. By
contrast, the period 1994
-
2008 was characterised by positive economic g
rowth,
with the
o
verall growth rate
approaching 4%. This growth
, however,

did not
disguise the fact that
the economy continued to be one of the most inequitable in the world (
NGP,
p3).

According to the NGP, and a sobering finding, is that 40% of the nation
al income in the
mid
-
‘00s, went to the richest 10% of households
. Other statistics indicative of the deep
inequalities which

have

shaped the economy
, and still do,

are

as follows

(NGP, p3)
:



In the late ‘00s, less than half of all working
-
age South Africans

had income
-
earning employment, compared to an international norm of two
-
thirds.



In the mid
-
‘00s, about 75% of the population (a third) lived in the former
Bantustans. Here, fewer than one in three adults were employed. Over half of the
households in the f
ormer Bantustans were dependent on remittances or grants,
compared to under a quarter in the rest of the country.



Young people fared even less favourably as the number of available jobs was
incommensurate with the demand. In the first quarter of 2010,
the
employment
rate of young people aged 16
-
30 was 40%, compared to 16% for those aged 30
-
60.




Those who were employed had poor salaries and dead
-
end and insecure jobs.
In
the third quarter of 2008, o
ver half of those employed, earned less than R2500
per mont
h and over a third earned under R1000. The informal sector, agriculture
7


and domestic work contributed to a third of all employment, with one in five
African women
employed as a domestic worker.


The above statistics paint a very dismal picture of the South

African economy, and in
doing so, highlight its shortcomings in creating

not only

adequate employment
opportunities for all South Africans

but also the meaningful reduction of inequalities
.

It
is clear that a
central pillar

in the strategy to overcome pov
erty, reduce inequalities and
address rural development, is the creation of
more

and
better
jobs



an
imperative

strongly emphasised
in the NGP.

In the light of the introductory discussion, it remains to
be seen how effectively employment creation will be
achieved and, crucially, how
effectively this will in turn reduce inequalities.

2.2.
The Global and National Context

At a national level, the NGP is a response to insufficient job growth of the ‘00s and the
need to fast track the creation of jobs, income
growth and the decline in poverty.

This
has
been

made quite clear
in

the preceding sections
, and is a common thread which
runs through th
e NGP and therefore this briefing document
. By comparison, at a global
level, the NGP responds to the significant globa
l economic downturn from late 2008 as
well as technological advancements (NGP, p4).

It explains that South Africa must re
-
think historical patterns of trade and investment, recognise Africa’s importance as a
potential market with 1 billion consumers and on
e of the fastest growing regions in the
world
, and play an integral role in expediting social and economic development through
the effective regulation of markets.

Regarding global efforts to reduce global warming,
the NGP acknowledges that this will be a
costly exercise for carbon
-
intensive economies
like South Africa, however, it also recognises that the control of emissions will lay the
foundation for major new industries. The NGP is positive about technological change
and sees new job opportunities in a
reas such as nanotechnology and biotechnology.
(NGP, p4).

8



3.

The
Role
of Higher Education in the
NGP
: A Brief Account

T
he
NGP identifies an important role for higher education.
Higher education

is seen as
being
an important contributor to the achievement of

NGP targets.

Evidence of this is
that t
he NGP aims to provide greater support for research and development (R&D) and
tertiary education linked to growth potential and developing South Africa

as the
higher
education hub

for the continent (NGP, p13). Higher education is identified as one of
the knowledge
-
intensive sectors together with ICT, healthcare, mining
-
related
technologies, pharmaceuticals and biotechnology for which the NGP is targeting new
jobs

(100 000

jobs

in t
otal
dispersed
across all these sectors
)
.
However, it
is hard to
imagine higher education as a source of more jobs,
given the current fiscal constraints
surrounding higher education funding
.

Growing the knowledge economy is clearly an
important imperative
in the NGP, and mirrors global efforts in this regard.
In an article in
Business Day
4
, Minister Ebrahim Patel

underscored the role of education

(and implicitly
higher education)

when he stated that

improvements in South Africa
n
s


education and
skills levels were “a fundamental prerequisite” for achieving the NGP targets.
Higher
Education’s role as

providers of tertiary education is
discussed

on page 19 of the NGP,
under the fourth of ten programmes which fall under the microeconom
ic package, that
being
“Stepping up
E
ducation and
S
kills
D
evelopment”
.
This

is
discussed in more
detail
below
.
Furthermore, it is clear that other important policy documents
become

significant
points of reference when reviewing the role of higher education as explained
in the NGP. These include the
D
o
HET Strategic Plan

(2010
-
2015)
, the Medium Term
Strategic Framework (MTSF
),
the Human Resource Development
Strategy of South
Africa (HRDSA)
,

the re
cently announced National Skills Development Strategy (NSDS III)
,
the Industrial Policy Action Plan 2 (IPAP2)
and the Perfo
r
mance Agreement of the
Minister himself

see below)
.





4

The
Business Day
article was cited in an article

by DefenceWeb, 24 November 2010.

9


It is fitting to

briefly

discuss
the

key features

of the NGP b
efore

elaborating in more
detail

the envisaged role of h
igher education
. Where relevant,
this

role

will be aligned

to
priorities in the key policy documents mentioned above
.

This is covered under
Programme Four: Stepping up Education and Skills Development (p1
3
-
1
5
).


3
.1
The Key Features of the
NGP

The key features of the NGP will be
summarised
in separate sections below, for easy
reference, and
follows the
overall structure of the NGP Framework.

For more detail, refer
to the actual Framework document.

3.1.
1

Opportunities

for Employment Creation
: Job drivers

With regard to employment creation, a
3
-
pronged approach

has been propos
ed,
identifying short, medium and long term steps to be taken in a phased
-
in manner. In the
very
short term
, it is proposed that the State fast
-
track employment creation by
targeting direct employment schemes, targeted subsidies and/or a more expansionary
macroeconomic package.
Over the
short to medium term
, it is proposed that the State
can support labour abso
rbing activities particularly in the agricultural value chain, light
manufacturing and services in order to generate large
-
scale employment. According to
the NGP, while the State must focus on areas which are capable of generating large
-
scale employment, i
t must not neglect more advanced industries which are crucial for
sustained growth. While the State will encourage both the public and private sectors to
invest
heavily in employment creating activities, it will also maintain and incrementally
improve the
county’s core strengths in sectors such as capital equipment for
construction and mining, metallurgy, heavy chemicals, pharmaceuticals, software, green
technologies and biotechnology.

Finally, in the
long
er

run
, following full employment,
the State would n
eed to play an increasingly supportive role in the knowledge
-
and
capital
-
intensive sectors in order to remain competitive (NGP, p7).

10


The NGP identifies
5 job drivers

and explains these are “
areas that have the potential
for creating large
-
scale employment
” (p8). Most of the projected new jobs will come
from the private sector. The
job drivers

are
bulleted
below:



Substantial public investment in infrastructure both to create employment
directly, in construction, operation and maintenance as well as the prod
uction of
inputs, and indirectly by improving efficiency across the economy.



Targeting more labour
-
absorbing activities across the main economic sectors


the agricultural and mining value chains, manufacturing and services.



Taking advantage of new opportu
nities in the knowledge and green economies.



Leveraging social capital in the social economy and the public services.



Fostering rural development and regional integration.

The NGP states that in each of these areas, a particular effort will be made to crea
te
opportunities for young people, who face the highest levels of employment.
Furthermore, it also draws attention to the fact that each of these job drivers is not set in
stone and that a critical element of the NGP is to ensure that the drivers “leverage

and
reinforce each other based on their inter
-
linkages” (p10). The full implementation plan
for the proposed mass job creation effort can be found on pages
34
-
36

of the NGP, and
is not discussed in detail here. For each job driver/sector, the plan identif
ies the
employment target, where the jobs are, the main changes required and the core actions.
One of the NGP’s shortcomings, however, is that it does not identify specific timelines


and one hopes that this is clearly spelt out in a subsequent version of

the NGP
.



As a
first step
, the NGP aims to prioritise

employment creation

efforts in
a few
key
sectors

which are reflected below
.
This briefing will highlight

some of the
employment
targets, with more detail in the
NGP
.




11




Infrastructure

o


250 000 jobs
per year in infrastructure (energy, transport, water,
communications) and housing through 2015
.




Agricultural value chain

o

300 000 households in smallholder schemes by 2020; agro
-
processing
anticipates the creation of 145 000 jobs.



Mining value chain

o

140 00
0 additional direct jobs in mining only by 2020 and 200 000 direct
jobs by 2030.



Green economy

o

300 000 additional direct jobs by 2020, of which 80 000 will be in
manufacturing and the rest in construction, operations and maintenance,
rising to over 400 000

by 2030.



Manufacturing sectors

o

350 000 by 2020



Tourism and certain high
-
level services

o

275 000 direct jobs
.


The NGP
goes

into more detail on each of these the key sectors.
It is quite evident that
the above employment targets, and others in the NGP, are
very ambitious
. While this
may be the case, it can be argued that setting the bar high is warranted given the dismal
unemployment rates in our country compared to other similar economies.

The NGP is
optimistic about achieving the goal of 5 million jobs ove
r the coming decade.

3.1.
2

Package of Interventions to support the New Growth Trajectory


Achieving the ambitious targets discussed
in the previous section will require the State
to adopt a
range of developmental measures to support South Africa on the new
growth path.
In this regard, the NGP identifies both macro
-
economic and micro
-
economic interventions
, and emphasises that a crucial issue is their inter
-
relationship
12


and the trade
-
offs
whic
h need to be managed
. These

interventions

are discussed in

the
following two

sections.


3.1.2.1
The
Macroeconomic Package


According to the NGP,
this package involves a “careful balancing of more active
monetary policy interventions to achieve growth and
job targets, inter alia through a
more competitive exchange rate and a lower cost of capital, with a more restrained fiscal
stance and reprioritisation of public spending to ensure sustainability over time” (p15).

A
summary of what this
package entails

is
as follows

NGP,
p
16)
:



A monetary policy stance which continues to target low and stable inflation,
doing more to support a more competitive exchange rate and reduced interest
rates.



Additional and larger purchases of foreign currency as a result of foreign

direct
investment and portfolio inflows to counter appreciation of the rand. An Africa
development fund is to be created to invest in African infrastructure.



Greater restraint in fiscal policy to slow inflation despite easier
monetary policy.



Mobilisation

of resources to finance growth path priorities, particular
ly

jobs, skills
and infrastructure.


3.1.2.2
The
Microeconomic Package

According to the
NGP, this package entails targeted measures to “control inflationary
pressures and support competitiveness an
d increased equity” (p15). It states that this in
turn will make the macroeconomic strategy sustainable and viable.
This package

includes policy reforms in the areas of skills, competition, industry, small business, the
labour market, rural development, African integration and trade policy.

It consists of
ten
programmes
, which are briefly discussed below
:



13


Programme 1:
Industrial
Policy

Under Apartheid, industrial policies relied on subsidies and tariffs for existing industries
in the context of low
-
wage policies like migrant labour and suppression of trade unions.
Given the new global and domestic context, there needs to be a shar
per focus on new
sources of competitiveness that lie in innovation and productivity with an adequate base
in skills, infrastructure and efficient state action. Furthermore, the focus should also be
on measures to enhance domestic and regional demand, which

need a competitive rand
to succeed. The NGP refers to the Industrial Policy Action Plan 2 (IPAP2) which aims to
ramp up South Africa’s active industrial policy. Important
ly, the State needs to
“significantly increase the capacity and impact of the develop
ment finance institutions
(DFIs), especially the IDC, for industrial financing” (p18). In turn, these DFIs must support
employment creation and equitable and green growth.


Programme
2
:
Rural Development
Policy

According to the NGP, the former Bantustan and commercial farming areas are the
poorest regions and have the highest rates of unemployment. It proposes
three

specific
rural development measures:
1)

Addressing rural backlogs by reprioritising budgets for
ho
using and social services


this will require managing trade
-
offs and rectifying gross
inequalities in municipal revenues;
2)

Providing support for market and financial
institutions that enable small producers to enter formal value chains; and
3)

Identifyi
ng
workable opportunities such as smallholder schemes to improve the standard of living
(NGP, p19)
.


Programme
3
: Competition Policy


This policy attempts to address the high levels of
economic concentration and collusion
on price and market
-
sharing which
result in lower output, investment and employment.
It identifies specific measures

to stimulate competition,

which include

support for new
market entrants to secure more competitive outcomes and developing guidelines for
14


granting exemptions in terms of the

Competition Act for cooperation between
producers where it will benefit job creation and expansion into export markets. Refer to
the NGP

for more detail on other measures

(NGP, p19).


Programme
4
: Stepping up Education and Skills Development

An important
emphasis in the NGP is that improvements in education and skills
,

is a
critical precondition for achieving the many goals in the NGP. This was discussed earlier
in the first paragraph
under

Section 3

and will be expanded on at this point.


The NGP clearl
y

identifies a role for both general and higher education


general
education must equip all South Africans to participate in our economy and democracy
while higher education must do much more to meet the needs of broad
-
based
development

(NGP, p19). Import
antly, it acknowledges the dire need to review the
entire training system in order to address artisanal and technical skills.
The NGP
proposals only focus on meeting shortfalls in the important economic skills (artisans,
engineers, ICT skills, on
-
the
-
job s
kills improvement programmes, etc).


At this point it is necessary to

pause and

critically reflect on the perceived role of higher
education as described in the NGP



wh
ere
higher education

is primarily seen

as
producing graduates with key skills for the economy.

While this is a critical dimension of
what higher education has to offer, it is a somewhat parochial

and narrowly
instrumentalist

view of the broader contribution of higher education.

Perhaps this is

not
surprising, given that the context is a new
economic

growth path and that higher
education’s contribution to this
becomes

important. Furthermore, it might be that the
NGP is not the right platform for going into any detail about the broader role of hi
gher
education.

Nevertheless
, it is
worth noting

that t
he reductionist and instrumentalist view
of the purpose of higher education serving the labour market and economic
development,
must be
offset by the view that

the purpose of higher education
is to
15


produc
e

graduates with the attributes of
democratic and participative citizenship



fully
rounded citizens
.

The criticisms levelled against the perceived role of higher education
as producing graduates for the workplace
,

has featured prominently in variou
s

international

literature on graduate employability
5
.

Further, a narrowly vocational and
labour market focus

is likely to miss the complexities of the graduate attributes required
in the contemporary workplace, which include generic and transferable compe
tencies.


The NGP refers to the Draft Human Resource Development Strategy for South Africa
(HRDSA) which addresses the skills goals more comprehensively.
T
he HRDSA is an
important framework which should be read in conjunction with the NGP.

Annexure A

in

this framework details the implementation plan and identifies eight key commitments.
The first two commitments identify a critical role for higher education
.
Commitment

1
in
volves

overcoming the shortages
in the supply of people with priority skills neede
d to
successfully implement the strategies to achieve accelerated economic growth. For
example, this involves increasing the annual output of engineering and design
graduates, and increasing the number of appropriately qualified people to meet HR
demands i
n the areas of ICT, the capital/transport equipment and metal fabrication
industries, the automotives and components industry and the chemicals, plastic
fabrication and pharmaceutical industries.
Commitment

2
involves increasing the
number of appropriately

skilled people to meet the demands

of our current and
emerging social and economic development policies. For example, this involves
ensuring that enrolment planning for HET is guided by a coordinated master skills list,
and that enrolment and graduation r
ates are responsive to social and economic skills
demands

(HRDSA
,

p31
-
34,
).

Clearly, this is a very broad and ambitious goal

in the light
of the
global challenge
to achieve neatly dovetailed

labour
market needs and planned
higher education outputs
, which
was the aim of now
-
discredited "manpower" planning
initiatives
.




5

This is discussed in a Literature Review on Graduateness prepared by

Ms

Y Chetty and available

from
DISA
.

16



O
ther

key

policy document
s

which
are important points of reference
at this point
are
the

Medium Term Strategic Framework, 2009
-
2014
(MTSF)

which was
adopted by
government in 2009
, and the
DoHET Strategic Plan, 2010
-
2015
.

The DoHET Strategic
Plan
draws attention to Strategic Priority Number 4 of the MTSF which is to “strengthen
the skills and human resources base, while the particular responsibility of DHET is to
“develop a skilled and capab
le workforce to support an inclusive growth path”

(p41).
It
clearly outlines the role of government, and
higher education

specifically, in
achieving DHET’s key priority.
The country’s third
National Skills Development Strategy
(NSDS III) echoes this commit
ment and wants public

FET
authorities, universities and
universities of technology to have the capacity to deliver skills for the new economy


resonating with the NGP in terms of the role of higher education.

While it sees a role for
private providers, it

gives prominence to public providers on the skills agenda. It

aims to

specifically

focus its attention on upgrading public colleges, universities of technology
and universities to ensure that quality provision is made accessible to a larger number of
learners (p9).
A final point of reference

for
higher education
, in addition to

the key
policy documents discussed above, is Minister Nizimande’s performance agreement. In
particular, outputs 4 and 5 require a significant contribution from higher education.
Output 4 relates to increasing access to occupationally
-
directed programmes in needed
areas such as
engineering
, health, natural and physical sciences and increasing
the
graduate output of teachers. Output 5 pertains to growing the knowledge economy
with particular focus on
postgraduates
, deepening industry
-
university partnerships and
incre
asing investment into research development and innovation, especially in science,
engineering and technology.



Programme
5
: Enterprise Development



Promoting small business and entrepreneurship and removing unnecessary red tape is
an important
priority. Before 1994, smaller producers lacked production, financial and
17


management skills to operate within the
entrenched regulatory frameworks,
infrastructure and financial institutions). Some examples of strategies identified by the
NGP include
integrating small and micro enterprise support systematically into all sector
strategies, addressing smaller businesses’ concerns about access to and the cost of
space in shopping malls and simplifying regulation procedures to eliminate bias against
smalle
r producers

(NGP, p21).


Programme
6
: Broad
-
based Black Economic Empowerment (BBBEE)

It has become
abundantly
evident that BEE has benefitted a small group of black
investors instead of empowering all historically disadvantaged people. The current BEE
fram
ework is therefore acknowledged as

being

problematic. As a result, Government
has adopted the Broad
-
Based BEE Act to expand opportunities for workers and smaller
enterprises and to ensure more representative ownership and management. The NGP
identifies the

need to substantially revise the BBBEE codes to incentivise employment
creation
, to consistently implement BBBEE and to continuously monitor and evaluate its
impact (NGP, p22).


Programme
7
: Labour Policies

Racially
-
based inequality and exploitation were
the hallmarks of apartheid labour

market policies.
Now, the labour market is regulated to protect vulnerable workers,
support employment equity, ensure on the job health and safety and assist workers to
find employment and training opportunities (NGP, p22)
. The NGP plans to build on this
foundation by establishing ways to increase productivity through fair rewards and
employment creation. Some proposed efforts include
a national Productivity Accord and
workplace productivity agreements, limiting the abuse o
f the CCMA by senior managers
and professionals and expanding the role of the Unemployment Insurance Fund to
create employment and assist unemployed people to find jobs.


18


Programme
8
: Technology Policy

This policy aims to achieve targets for increased
research and development, rapidly
extend access to and use of ICT, adapt and diffuse technologies in targeted sectors to
support employment creation and maintain our technological edge (NGP, p24).

This
policy does require some basic research.


Programme
9
:

Developmental Trade Policies


This policy aims to promote exports while addressing unfair competition against
domestic producers and assisting activities to achieve competitiveness. Some strategies
include maximising the benefits of trade relations with I
ndia, China and Brazil and active
support for new trade opportunities such as specialised industrial products and ethical
and organic goods (NGP, p24). Significantly,

this appears to fall short of adopting
explicitly
protectionist measures.



Programme
10
:

Policies for African Development

According to the NGP, South Africa should be the “driving force behind the
development of regional energy, transport and telecommunications infrastructure”
(p25). It commits government to working with its African partners
to identify mutually
beneficial opportunities for trade and development, being cognisant of regional
difference in resources and development. Some priorities include developing and
implementing proposals by 2012 to improve the road/rail/ports system servin
g southern
and central Africa, strengthening regional integration on energy and developing
proposals to improve telecommunications and internet connectivity across the region.


This concludes
the discussion of the ten programmes which make up the
Microeconomic Package.


19


3.1.3
Social Partner Commitments


Not all of the strategies and steps

to secure employment and growth outcomes

discussed in the previous sections

can be undertaken by government alone.
The NGP
acknowledge the important role that
social partners

and social dialogue

have to play

in
shaping the final package
.

Some initial proposals include
:

moderating wage settlements
for workers earning between

R3

0
00 and R20 000 per month, possibly to inflation plus a
modest real increase, with inf
lation
-
level increases for those earning over R20 000;
capping pay and bonuses for senior managers and executives earning over R550 000
per year; moderating price increases on inputs and wage goods; and maintaining the
real value of social grants and impro
ving the “social wage” in poor communities
including housing, healthcare and education (NGP, p26).


3.
2

Resource Drivers
, Institutional Drivers, Spatial Dimensions and
Implementation


Resource Drivers

According to the NGP,
South Africa is a middle
-
income country which is well resourced
and has well
-
developed financial markets. Savings and investment should be redirected
towards productive and infrastructure projects in support of employment and sustained
growth (p27).
It states that t
he
growth path
will be supported by Government’s MTEF,
with appropriate spending on skills, infrastructure, rural development and economic
programmes.
It recognises that a

vast amount of resources lie with public institutions
such as universities, science councils, DFIs and state
-
owned enterprises


and

states that

these should be aligned with growth path prioritie
s
. However, precisely what this means
substantively is not c
lear.

A state
-
owned bank is being considered, which will provide
services in rural areas (largely historically marginalised households and communities)
and support the development of community and cooperative banking. Refer to the NGP

for more detail on re
source drivers.


20


Institutional Drivers


While the
developmental state

has to articulate well with market institutions, it cannot
be held hostage
to market forces and vested interests.

According to the NGP, i
t is
possible to ensure that market outcomes are

aligned to development needs



through
leveraging of resources and regulatory capacity and careful alliances (NGP, p28).

Critically though, it remains to be seen how achievable or realistic this is

in the light of
innumerable attempts to strike a mediatin
g path between the opposing ideological
poles of the interventionist developmental state on the one hand and free market
principles on the other
.

The NGP highlights a
key

challenge facing the state, i.e. an
improvement in “efficiency, effectiveness and res
ponsiveness in the face of new
opportunities and risks” (p28). However, it signals that the new outcome
-
based
performance monitoring and evaluation system provides a significant means to achieve
these aims.



The NGP identifies
business, organised labour
and other civil actors

as key
institutional drivers
outside

the state.

It strongly acknowledges that private business is a
core driver of jobs and economic growth.
It
also
recognises the importance of
establishing a more
constructive and collaborative rela
tionship between the state and
business. Specifically, government undertakes to reduce unnecessary economic costs
such as unnecessary regulatory requirements and delays, inadequate infrastructure, and
weak education and training. Business on the other han
d must respond by supporting
important initiatives, particularly projects which can generate large
-
scale employment
(NGP, p29). The NGP also sees broad
-
based organisations and NGOs as having an
important part to play in contributing to rural development, t
he green economy,
education and training and the co
-
ops movement.


Finally, the NGP commits to
social dialogue

as critical for economic policy. According to
Minister Ebrahim Patel, “social partners need to
a)

work with government to achieve the
21


jobs target,
b)

collaborate to improve competitiveness and achieve greater equity, and
c)

drive projects and programmes for sustainable and inclusive growth"
6
.

These social
partners include Nedlac and sectoral and local forums.


Spatial Dimensions

The NGP
draws attention the spatial divergence between the economic centres of the
country as result of
apartheid
. The rural areas of the former Bantustans have limited
economic resources and even within the metropolitan areas there are major disparities
and
spatial challenges. Given this scenario, the NGP commits to developing a “coherent
approach to spatial development backed by strong investment in infrastructure and the
identification of viable and sustainable opportunities for historically disadvantaged
r
egions” (p30).


Implementation

The NGP identifies a series of steps to be undertaken to kick
-
start the implementation
process. Without going into too much detail

in this briefing
, it includes finalising the
developmental policy package

on wages, bonuses, p
rices and increases with input from
key social partners
, initiating a social pact with key stakeholders and submitting Cabinet
Memoranda to ensure clear decision
-
making and oversight. Refer to NGP

for more
detail.







6

Sunday Times
, 28 November 2010, p8

22


4.

The NGP: Views
,
Opinions

and Concluding Remarks


The NGP has been the main topic of current public

debate
since its release
, with strong
critical and supportive voices alike
.
At this point it is worth referring to a
Sunday Times
article
7

by
Prof
Adam Habib, Deputy Vice
-
Chancellor
: Research, Innovation and
Advancement at the University of Johannesburg
. He very succinctly provides an
overview of commentary from various quarters, including his own perspectives.
This
briefing draws from his article and highlights various

critical and supportive

views and
opinions below:

Criticisms



In the business arena, some business leaders have expressed concerns about the
remuneration caps while others worry about the autonomy of the Reserve

Bank
.



Unions are of the view that the wag
e freeze would affect workers negatively since
it relied on business for its implementation.



On the political front, the Democratic Alliance has criticised both the
remuneration cap and the fact that the NGP envisages an increased role for the
state.

Suppo
rt



Leon Campher

of the Association of Savings and Investment SA welcomed the
NGP. He acknowledged its call for more constructive and collaborative relations
but also its desire to transform the structure of savings, investment and
production. He made a commitment to part
ner with government to make the
proposals workable.



Geoffrey Qhena, CEO of the IDC
,

sees the NGP as pioneering a necessary
alternative approach to economic growth and development


while
acknowledging the challenges and identifying potential solutions.





7

Sunday Times
, 19 December 2010, p5

23


Habib has also defended the NGP. In the cited article he states that he has argued that
“its advancement of a bifurcated strategy that enhances livelihoods at the bottom of the
class spectrum and constrains remuneration and enrichment at the top would pos
itively
reduce inequality”.

Habib

also
cites Joseph Stiglitz, president
-
elect of the International
Economic Association and a Nobel Laureate in
E
conomics, who describes the NGP as a
promising set of policies to set South Africa on a path of “sustainable, e
quitable and

economic

development”.

While criticisms about the NGP abound, Habib is of the view
that achieving consensus around some of the policies (which Stiglitz was hopeful about)
might be possible. He argues that most commentaries have recognised the
valuable
elements of the NGP and that business leaders have signalled their willingness to
engage with it. He mentions that even Cosatu president, Sdumo Dlamini
,

has hinted that
there should be progress with the NGP once sufficient consultation has taken p
lace.


In conclusion,
it is clear

that the NGP has to weather the storm of criticism which has
been
levelled against it
.

On a positive note, there has also been support for it.
The
debate will no doubt continue to be robust
.

It is
without doubt
an ambitiou
s plan

involving a range of critical stakeholders, and requiring exceptional coordination by
government departments.
Undoubtedly it is here to stay
,

at least in the short

to medium

term, as it clearly constitutes the point of reference for current government policy
initiatives
, the
2011 budget

and, in turn, higher education
.

As indicated, it remains to be
seen how

effective the NGP will be in reversing the trend of jobless growth i
n its

emphasis on employment creation
and ultimately whether it will meaningfully
contribute towards the broader transformational

goals
of equitable development

and
poverty reduction
.