All eyes on Patel's growth plan

Cape Town - One of the highlights of the ANC's national general council (NGC) will be the tabling of Economic Development Minister Ebrahim Patel's long-awaited economic growth plan, billed as a response to the country's unemployment problem.

President Jacob Zuma's government has come in for much criticism from its alliance partners for failing to redistribute wealth and create jobs, as was promised in the ANC's 2009 election manifesto.

Zuma and Finance Minister Pravin Gordhan have ruled out the possibility of any new policy shifts at this NGC. However, Zuma promised in his address on Monday that government will guide the economy on a new, labour-absorbing path, while Gordhan said government aims to achieve 7% economic growth per year.

Gordhan said this had to be a "different type of growth" which "stimulates employment" and spreads benefits more widely.

In response to Zuma's speech, trade federation Cosatu said it was "so excited" by the proposals. However, question marks remain over whether the alliance partners will find common ground on tricky issues pivotal to achieving accelerated growth, for instance mininmum wage levels.

Cosatu its own worst enemy

Cosatu released its own economic policy framework last week, which included a collection of radical proposals.

However, Investec analysis and economics professor Brian Kantor said Cosatu's demands were the biggest obstacle to increased growth.

"Cosatu is a barrier to job creation. There seems to be a reluctance to face up to the fact that there is a direct link between unrealistic wages and unemployment and economic growth," Kantor said.

Kantor said that while lower wages have to be monitored, earning some pay is better than none, especially when it comes to young, unskilled people who make up 70% of the country's unemployed.

In contrast, the average age of Cosatu's membership is 43 years, which suggested that Cosatu is protecting a more established worker.

But, as the recession highlighted, the trade federation's attempts to protect its constituency by demanding higher wages in the end had the opposite effect, as the economy shed jobs at a rapid rate. 

Business, said Kantor, will adapt to economic conditions but unless labour adapts as well, unemployment will increase and growth will be hampered.

 - Fin24.com