South Africa’s ticking time bomb

South Africa’s Deputy President, Paul Mashatile, has warned that the country needs to summon enough bravery to discuss its challenges openly “to prevent the ticking time bomb of poverty, inequality, and joblessness from going off”.

Mashatile issued this warning during his keynote address at the summit of the National Economic Development and Labour Council (Nedlac). 

President Cyril Ramaphosa, during the 2022 State of the Nation Address 18 months ago,  pledged to forge a social compact within 100 days to fire up the economy and tackle rampant unemployment. 

Since then, Nedlac has been through 11 drafts of a social compact without success. Mashatile admitted the deadlines for establishing a written declaration of commitments and actions have not been met.

In March this year, Ramaphosa sought to explain why the social compact had not been realised. 

“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.”

Mashatile said the most significant obstacle appears to be ideological differences between social partners concerning how to grow the economy. 

“These ideological positions have not shifted despite the enormous crisis the country faces,” Mashatile said. 

“We must summon enough bravery to discuss this matter openly in order to prevent the ticking time bomb of poverty, inequality and joblessness from going off.”

Business Unity South Africa CEO Cas Coovadia agreed with Mashatile in saying the country is confronting an “existential crisis” after failing to agree on how to turn the economy around. 

Nedlac executive director Lisa Seftel said the council faces an “existential risk” as social partners “could not agree on a systemic long-term programme to turn the economy around” and “do not have the same economic vision for the future”.

The country had sought to follow the examples of social democratic countries that agreed to trade off wage increases for job stability, Mashatile said.

“However, in South Africa, where unemployment is so high, and those who work support many of those who do not, this type of trade-off may be difficult to attain.”

Mashatile said he had witnessed “encouraging moves” towards social compacting, “such as the recent commitment of more than 115 CEOs to work with the government to reconstruct the economy”.