Socio-Economic Inequality in South Africa is Due to the Institutionalised Ideological Mismatch Regarding Labour and Economic Policy

1665 WordsJun 16, 20187 Pages
Socio-economic inequality in South Africa is due to the institutionalised ideological mismatch regarding labour and economic policy Economic growth is shaped by policy context and promoted most effectively when it is consistent with either liberal market or co-ordinated market ideal type varieties of Capitalism. Policy inconsistency dampers economic growth post-apartheid South Africa attempted to adopt a social-democratic and co-ordinated variety of Capitalism. This failed due to the adoption of macro-economic neo-liberal policies. Organised labour protected labour market policies which lead to policy inconsistencies with regard to trade liberalisation. Trade liberalisation combined with labour market protection leads to unemployment.…show more content…
A social democratic or coordinated variety of capitalism seemed like South Africa’s destiny. CME-type coordinated wage setting seemed realistic and major effort was put into developing regional and national-level social democratic institutions. Organised business and labour agreed to discuss the impact of labour relations on the economy. National Economic Development and Labour Council (NEDLAC) According to the leading business representative “ Nedlac was intended to inaugurate a new era of inclusive consensus-seeking and ultimately decision making in the economic and social arenas” (Parsons 2007, 9). Nedlac failed. The first obstacle was the fact that peak- level business organisation was racially divided which made national coordination impossible. BSA turned into BUSA and from it emerged BBC. The second blunder came from government when they only referred some economic policies to Nedlac. The post-apartheid Labour relations act was negotiated in Nedlac before it went to parliament; sadly they neglected to send the 1996 “Growth Employment and Redistribution (GEAR)” macro-economic framework through Nedlac. Even though it would curb government spending, enhance private investment and liberalise aspects of the labour laws to promote job creation, it was still met with great public condemnation

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