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Abstract

German

The National Economic Development and Labour Council (NEDLAC) was established as a corporatist institution, defined as a representative and consensus-seeking body coordinating to reach agreement through negotiation and discussion involving the state, organised business, and organised labour. It signalled the equal participation of the state and societal actors in the decision-making process in democratic South Africa. However, after two decades, NEDLAC is facing questions regarding its relevance. The imbalance in the power dynamics diminished the power of labour to bargain vis-à-vis the state and business. Labour's inability to represent a broader constituency beyond the formally employed, the lack of technical capacity within the labour movement, and NEDLAC's organisational inefficiency negatively affected the corporatist institution, which is now on the verge of demise.

Keywords

South Africa state political participation trade unions/associations employers associations corporatism NEDLAC Südafrika Staat Politische Partizipation Gewerkschaften/Verbände Arbeitgeberverband Korporatismus

The burgeoning of corporatist institutions in newly democratised countries was regarded as a social phenomenon. Corporatism is a means to promote social solidarity and cooperation by allowing societal actors to play an important role in the decision-making process (Calenzo 2009; Adler and Webster 1995; Valenzuela 1989). Corporatism in South Africa was initially adopted in order to achieve social stability as well as economic growth. However, the sustainability of corporatism in the post-democratisation period has received little scholarly attention. The case of the National Economic Development and Labour Council (NEDLAC) is instructive to explore the sustainability of corporatism. Contrary to more sustainable arrangements elsewhere, especially Northern Europe, corporatism in South Africa emerged as a response to the state facing political-economic crises in the transition period and became a control mechanism. But so far the analysis of whether corporatism will contribute to the “sustainable inclusive development” of South Africa (Habib 2013) is missing.

The establishment of NEDLAC reflected the increasing power of labour and the fact that the state, business, and labour were considered to be equal, which was different from the pre-democratisation period. The institution was expected to be a platform for the voice of institutionalised labour. However, after two decades, the power of labour has ebbed and flowed. We argue that the imbalance in the power dynamics between the state, business, and labour – as manifested at NEDLAC –negatively affected the corporatist institution in South Africa. In particular, the labour movement faced a series of crises internally and externally. This, in turn, negatively affected the power of labour to bargain vis-à-vis the state and business. Three problems bedevilled corporatism after 1996: first, labour's inability to represent a broader constituency beyond the formally employed; second, the lack of technical capacity within the labour movement; and third, NEDLAC's organisational inefficiency. This article discusses the corporatist tradition and capitalism during Apartheid, the institutionalisation of corporatism as part of the transition to democracy, and finally the conditions that caused the gradual marginalisation of NEDLAC.

The Corporatist Tradition in South Africa

In South Africa, corporatism burgeoned alongside capitalism. Big businesses – particularly in the mining and agriculture sectors, which lay at the heart of the South African economy – played a significant role in the architecture and implementation of Apartheid (Handley 2000). Lipton (1986) suggests that capitalism benefitted from or coexisted with Apartheid. Organised white labour was subordinated and co-opted by the alliance between the state and business (Desai and Habib 1997: 502).

These close ties between the state and the white working class enabled the mobilisation and industrialisation of the economy along the basis often referred to as “racial Fordism”: “mass production and mass consumption by and for white South Africans, with an underclass of low-paid Blacks excluded from the benefits of the industrialised economy” (Desai and Habib 1997: 502). Within this well-regulated corporatist framework, employees under the Apartheid government enjoyed full-time jobs and job security. However, these benefits granted to white South Africans were made possible only by repressing other societal groups, on an explicitly racial basis (Shaw 1994: 248).

Industrial relations entered a critical phase with the emergence of independent Black trade unions during the late 1970s and early 1980s. Along with industrialisation, Black workers gained more leverage by using the capacity to organise and mobilise union members. Simultaneously, business showed interest in engaging labour in a range of issues as early as the mid-1970s (Van der Walt 1997). Business experienced rising costs and increasingly begun opposing the economic restrictions Apartheid imposed, whilst the international community started exerting pressure in the form of sanctions and social isolation (Habib and Padayachee 2000: 247). This became the driving force behind not only the toppling of Apartheid but also the establishment of a corporatist dialogue.

The Growing Power of Labour and the Creation of Corporatism

The state's capacity to sustain its dominance eventually eroded. Fordist production enabled workers to construct a shared consciousness, prompting the formation of trade unions that increasingly agitated for improved workplace conditions and legal recognition. This was inevitably coupled with “labour militancy,” as Seidman (1994) suggests. The discontent of labour finally erupted in the form of collective action in the Durban strikes in 1973, which led to the establishment of the Wiehahn Commission of 1979. The commission legitimised the existence of Black trade unions by de-racialising unfair labour practices in the workplace (Kooy and Hendrie 1979). Even though some critics point out that the Wiehahn Commission tried to bring labour militancy under control, the commission acknowledged African workers as a permanent part of the economy. This became the impetus for the establishment of the Congress of South African Trade Unions (COSATU) in 1985 as an important part of the democratisation process (Price 1991). COSATU played a significant political role when most political organisations were banned during the 1980s. This new alliance of social forces became the driving force in achieving democratisation and building post-Apartheid South Africa.

The growth of labour was associated with increased militancy, and the state realised that African workers had the potential to bring about social change. Also, the South African economy during the transition period was characterised by “stagnation, high levels of unemployment, and an uncompetitive level of productivity” (Maree 1993: 28). The growing power of labour, especially in the metal, mining, chemical, and textile sectors, which were regarded as the backbone of the economy, was seen as a serious threat. Under these circumstances, the state sought collaboration with societal actors; the necessity of creating a social dialogue including actors such as labour was raised. Consequently, the state established the corporatist institution NEDLAC (Adler and Webster 2000: 2).

From the 1990s onwards, there was heated debate over the need to adopt corporatism. On the one hand, corporatism was seen as having the potential to bring about benefits for the working class (Lundahl and Petersson 1996). Labour's participation in policy arenas was hailed since it would help strengthen workers’ control of economic decision-making and democratise the workplace (Webster 1995). On the other hand, there were concerns that corporatism might exacerbate the “dualism” of workers, between those who belong to the formal economy and/or are members of unions, and those who work in the informal economy, which accounts for a large part of the South African economy (Maree 1993). Furthermore, Habib (1997: 69) sees corporatism as a “crisis response” to the adoption of a neo-liberal economic programme in the early 1990s and draws on Stepan's (1978) analytical framework, which highlights the response of the elite to the mass labour movement. Political and economic elites recognised that their neo-liberal economic programme was bound to provoke massive discontent and protest. In order to achieve social peace, these elites adopted corporatism, emphasising social unity and reconciliation (Stepan 1978).

Despite criticism, the state, business, and labour had their own different reasons for favouring corporatism. Especially business and labour needed to be organised vis-à-vis the state in the fast-changing economic environment (Maree 1993; Desai and Habib 1997). These two groups were fragmented along racial and political lines; therefore, they were willing to merge into large organisations in order to exert more influence over others (Van der Walt 1997). Taking all of this into consideration, cooperation was expected, and it came to be seen as crucial to “constitute a long-term structural transformation” through corporatism (Shaw 1994: 244). As a result of this strategy, the National Manpower Commission and National Economic Forum were integrated into NEDLAC by Act of Parliament 35 of 1994. This signalled a change in the decisionmaking environment through the incorporation of various societal actors (Marais 2010). Significantly, NEDLAC highlighted the participation of social actors as equal players at the discussion table (Baskin 1991: 26).

Within NEDLAC, labour was the driving force behind a series of legislative developments to achieve equity at the workplace by promoting equal opportunity and fair treatment. These include the Labour Relations Act of 1995, the Basic Conditions of Employment Act of 1997, and the Employment Equity Act of 1998. The labour-related acts are significant outputs of NEDLAC.

The Diminishing Role of NEDLAC in Post-Apartheid South Africa

Despite its initial accomplishment, NEDLAC faced various challenges over time. According to a former labour movement activist (now working in government),

[NEDLAC] helped improve policy responsiveness and reduced policy conflict. However, it is often portrayed as a failure because it has not led to the big social pact that will reduce workplace and social conflict while ensuring more rapid growth and employment creation. (Interview with a government official and former labour unionist, 25 March 2014)

NEDLAC is now considered as having failed to aggregate the state and societal actors’ interests, promote democracy, and develop the socio-economic conditions of the country. The interests of labour, particularly, have not been met, and the corporatist institution has gradually lost ground.

Within macro-economic policy, the influence of COSATU on the African National Congress (ANC) was originally strong when the Reconstruction and Development Programme (RDP) – the primary socio-economic development blueprint of the first democratic government – was adopted. The ANC and COSATU collaborated to develop the RDP, envisioned as a comprehensive economic and social programme (Schmidt 2003). However, the RDP survived for only two years. Instead, a more neo-liberal economic-development programme, Growth, Employment, and Redistribution (GEAR), was adopted without consultation or consent from other societal actors. The state unilaterally pushed forward GEAR within the NEDLAC framework without further negotiations. Taylor (2007) and Parsons (2007) point out that there was a “reform coalition” between incoming political actors and big business, and as time went by, the ANC departed from ideological positions based on the Freedom Charter and took a reconciliatory approach towards big business.

NEDLAC failed to create an environment where the three actors could cooperate. The unilateral attitude of the state, the lack of consultation, and business's lack of interest in NEDLAC contributed to the weak outcomes attributed to the council. Trade unions’ proposals were often not even discussed. According to Bassett (2004: 552),

the ANC government never saw NEDLAC as an institution to develop policy or even to influence it significantly, but, rather as a means to generate support for the government's programme.

A study by the Centre for Development and Enterprise (CDE 2000: 48) confirms that NEDLAC's influence was restricted to the initial stages of decision-making and had no impact on the process of finalising a policy, passing a law, or implementing the law or policy. The Human Sciences Research Council found that labour's influence in terms of policymaking regarding job creation, in particular, had largely diminished (Houston et al. 2001: 56).

The Collapse of NEDLAC

The following section dissects the various reasons that NEDLAC failed to play the key role of intermediating interests between the state, business, and labour. Four issues are highlighted: the asymmetrical balance of power between actors; the inability of labour to represent the interests of a broader constituency beyond labour itself; labour's lack of technical capacity at NEDLAC; and NEDLAC's own organisational inefficiency.

Asymmetrical Balance of Power between Actors

One of the most significant aspects that weakened the status of NEDLAC is the different dynamics of the relations among actors over time. In the process of achieving democratisation, labour became one of the most influential societal actors vis-à-vis the state. The economy provided the state and business with an “important new lever” (CDE 2000: 51). Along with the pressures of globalisation and demands to liberalise the economy and attract foreign investors, it was imperative for the state to incorporate various actors’ macro-economic demands and their prescriptions into policy. The state had to give way to the demands of capital, which tilted the balance of power away from labour and their demands.

The state has played a leading role in coordinating agendas at NEDLAC, with the state's pro-business approach not necessarily representing labour's position.

The participants including secretariats at NEDLAC are pro-business. In this context, it is difficult to make a law advantageous to labour. There are continuous disagreements among the actors; NEDLAC does not seem fair to labour. (Interview with a former labour unionist 25 March 2014)

In practice, the state and business dominate at NEDLAC, with labour being placed in an inferior position.

Lacking a proper medium, labour has chosen another option to exercise its power by using the tripartite alliance between the ANC, COSATU, and the South African Communist Party (SACP), which has, in turn, weakened the status of NEDLAC. COSATU, the biggest labour movement, with 2.2 million members (as of 2012), used to be a significant pillar in the tripartite alliance of the ruling party and played a decisive role in politics. However, the influence of labour within the tripartite alliance is not regarded as equal. The tripartite alliance is seen as an “ANC-led alliance,” and COSATU and the SACP have been outpaced by the ANC. According to the labour activists, COSATU seems to be consulted and considered a true partner only in the run-up to elections; thereafter, it enjoys very little policy influence in the ANC. One interviewee, a former labour unionist (now working within government), agrees that “the ANC does not represent workers despite workers having remained strong and dominant in civil society.” The interviewee further noted,

Workers have become politically conscious and their patience reaches limits; there is no fundamental change in the society. Nevertheless, at the moment, there is no alternative institution that can represent workers in this country. (Interview, 25 March 2014)

The demands of labour have been constrained and absorbed in the name of national unity, and COSATU has become marginalised in the course of decision-making. Labour has been expected to discard its own interests in the name of national development (Webster and Buhlungu 2004).

Labour Unable to Represent Broader Constituency

Corporatism provides a platform for organised labour, and other community members are also included; the participation of community members and NGOs is, in practice, limited to the Development Chamber of NEDLAC (Musgrave 2014). Collaboration between the labour movements and society forged a form of social-movement unionism across race and class (Von Holdt 2002; Seidman 1994). Thus, unions have been expected to represent their members’ interests and, furthermore, the interests of the working poor and the unemployed (Habib 1997; Southall and Webster 2010).

However, unions have failed to forge longer-term strategies for them. Along with the high unemployment rate, the South African labour market has become fragmented, now consisting of “insiders” and “outsiders.” The union density has begun to decline steadily, going from more than 50 per cent in the 1990s to 24.4 per cent in 2013 due to massive job losses (Bhorat and Oosthuizen 2012; COSATU 2012). Large numbers of the population remain outside of corporatist institutions, and they do not benefit from agreements made under corporatism. Under these circumstances, commentators question the representativeness of COSATU (Buhlungu 2008: 37).

Moreover, the 2013 suspension of COSATU's general secretary, Zwelinzima Vavi, eroded labour's credibility, creating a leadership void. By withdrawing electoral and political support for the ANC, the National Union of Metalworkers in South Africa (NUMSA), one of the most influential affiliates, showed its dissatisfaction with COSATU's “aristocracy” and the fact that it has become supportive of the state's neo-liberal agenda. This breakaway of NUMSA shows that the labour movement in South Africa is in conflict with political, ideological, and organisational divisions, exacerbating the lack of coherence within the labour movement.

Lack of Technical Capacity of Labour at NEDLAC

Labour lacked a clear strategy toward business and government at NEDLAC. A labour unionist acknowledges the problem:

Labour does not see policy as its core function. Among labour there is often no clarity about what they can compromise on. Under the circumstances, it is easier for labour to say “no” since government will go forward anyway. (Interview with a former labour unionist, 25 March 2014)

Compared to labour, representatives from government tend to have “technical depth, dedicated policy capacity, and legitimacy” (Interview with a former senior coordinator at NEDLAC, 29 April 2014). Business was viewed as having technical expertise including committed leadership, knowledge of the economy, and experience.

A considerable number of labour unionists were incorporated into government positions, which had the potential to engender favourable conditions for labour. However, as soon as they joined the government, they were expected to toe the party line:

As soon as unionists are incorporated, they are tamed and not able to represent labour. The situation is described as “The party puts you in a position, therefore you have to abide by the ANC ‘ticket’ and their rules.” Only the brave criticise. (Interview with a senior official from NUMSA, 1 April 2014)

Moreover, the growing influence of technocrats in policy circles has reduced the scope of consultation with, and even at times, tolerance for the role of labour. Their perspective is that the government should not be constrained by an obligation to reach consensus with labour (Interview with a government official, 25 March 2014).

It is urgent that labour build the “technical capacity” if it seeks to influence the decision-making process more effectively. Also, the importance of coordination within labour is imperative: “All COSATU people in Parliament need to speak with one voice, but it's not like that now,” according to one labour activist (Interview with a senior NUMSA official, 1 April 2014). According to many interviewees, a “popular alliance” with civil society needs to be created in order to strengthen labour's voice. However, in reality, labour has chosen mass mobilisation among workers, which labour opponents have characterised as a tactic relying on violence, which has only widened the gap between the state, business, and labour, as well as labour and other societal groups that might otherwise give broader support to labour (Buthelezi 2002: 6–7).

Organisational Inefficiency within NEDLAC Itself

Interviewees from government and labour confirmed that NEDLAC facilitated the democratic transition and contributed to improvement in legislation and regulations related to labour issues, in addition to helping improve policy responsiveness and reducing policy conflict. NEDLAC has now come under pressure, and many question its relevance and effectiveness as a social dialogue forum (Maswanganyi 2012).

NEDLAC regained some impetus in 2003 with the creation of the Growth and Development Summit when all societal actors were asked to commit to rebuilding the economy. The importance of the corporatist framework was reconfirmed by the state, business, and labour (Bassett 2004: 554). Despite this opportunity to refurbish itself, NEDLAC continued to face crises. Interviewees frequently lamented the poor implementation:

At NEDLAC chambers, there are detailed discussions of policies and legislation and these have led to visible legislative improvements. However, these efforts have been overshadowed by poor implementation. Agreements are reached every three to five years, and are often either vague or not on a requisite scale, and mostly poorly implemented. (Interview with a senior COSATU official, 1 April 2014)

NEDLAC itself has failed as a social dialogue mechanism and faced challenges at an organisational level. Interviewees pointed to various issues, ranging from the necessity to strengthen the position of the secretariat, to shortcomings in the management committee's administration, including delays in convening meetings, the non-sharing of minutes, and insufficient information-gathering. It was suggested that NEDLAC itself should increase its negotiation capacity vis-à-vis government actors by strengthening its organisational capacity (Interview with a former coordinator at NEDLAC, 29 April 2014). Interviewees suggested that NEDLAC reposition itself as a corporatist mechanism and come up with agendas that can address the more fundamental problems facing South Africa, such as poverty and inequality.

Conclusion

According to the scholarly literature, corporatism plays a role in ensuring the maintenance of political stability in a liberal democracy and improving the effectiveness of economic policies through coordination between state, labour, and business. However, in South Africa, NEDLAC failed to forge a comprehensive social pact addressing inequality, poverty, and unemployment.

The influence of labour has diminished over time, aggravated by the high unemployment rate and the growing number of casual workers. Furthermore, labour has been unable to represent a constituency beyond the formal labour sector, due to the fragmentation of the labour market, lack of technical capacity within the labour movement compared to other social counterparts, and the organisational inefficiency within NEDLAC itself.

During the transition period, corporatism was one of the few viable options to bring about socio-economic stability by means of cooperation between the state, business, and labour. For societal actors such as business and labour, the fact that they initially had access to the decisionmaking process and could affect policy outcomes was the biggest motivation for them to participate (Lundahl and Petersson 1996). Through corporatism, the state gained domestic legitimacy and increased its effectiveness in the implementation of policies. For example, in Western European countries that have adopted this model, corporatism brought about economic prosperity and social harmony based on the environment created by corporatism. In other words, the state maintained social control over other societal groups indirectly through the corporatist institution (Lundahl and Petersson 1996). The adoption of corporatism in South Africa was a crisis response to the challenges of democratisation. Nearly two decades after its inception, corporatism has become little more than a label.

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Why Corporatism Collapsed in South Africa: The Significance of NEDLAC

Abstract

Keywords

The Corporatist Tradition in South Africa

The Growing Power of Labour and the Creation of Corporatism

The Diminishing Role of NEDLAC in Post-Apartheid South Africa

The Collapse of NEDLAC

Asymmetrical Balance of Power between Actors

Labour Unable to Represent Broader Constituency

Lack of Technical Capacity of Labour at NEDLAC

Organisational Inefficiency within NEDLAC Itself

Conclusion

References