The NDP journey has completed its first stanza and South Africa awaits the next one. As we wait, we need to be conscious of the fact that this waiting needs to take place in the context of an understanding of the principles underlying the Plan.

One of the key observations of the first Commission is that the challenges facing South Africa are huge – including poor growth, high unemployment, deep seated poverty, low investments and low savings, poor quality education, low skills, an ailing and inadequate health system and uneven public service, corruption and unsustainable inequality that threatens social stability. The list is long.

The solutions cannot be left to the state alone. In this regard, the Plan proposes the development and adoption of a social compact for South Africa.

A social compact is described as an agreement among the members of an organised society or between the governed and the government defining and limiting the rights and duties of each (

From this definition, it is clear that as South Africa waits, it ought to effect this compact whilst identifying respective roles of citizens, towards implementation. We cannot wait for the state or the next Commission. Leadership and ownership is required from all economic players.

However, for South Africans to make the right decision within the framework of a social compact, it is essential to ensure that we start from a common position, in appreciating what this means.

Edging closer to a social compact

Towards the end of 2008, COSATU made an interesting and interventionist statement, at the time of the height of the power crisis in South Africa. At that stage, Eskom had indicated difficulty in raising affordable funding for its capitalisation programme. This continues to be the biggest challenge plaguing the power debate today. In response, the leadership of COSATU, appreciating the negative impact costly finance would have on the economy and in particular the consumer, offered to assist by providing funding through its investment arm (whether COSATU can deliver on this, is an academic question).

In July 2009, COSATU also intervened positively, through pronouncements they made, in the doctors’ strike.

The importance of the interventions, whether they get translated into real commitment or not, originate from the fundamental signalling that we may finally be edging closer to the much desired social compact, for South Africa.

But what does this really mean?

Conceptual understanding

The concept of a social contract is premised on an underlying understanding that the success of any government is rooted in its partnership with society and the upholding of the values and demands of society.

Whether you think of it as a social compact, social contract or even a social accord, the principle remains – the modern understanding of social compacts is an attempt to address problems, in the growth path, that are best resolved through collective action and agreements between various interest groups. An example is the tripartite social accords in the Netherlands, Ireland and Spain.

Economic relevance

With the current slowing-down of the economy, rising unemployment and volatility in the currency markets, coordination, consensus and the formulation of common agendas is critical. It is becoming very clear that some of the constraints that we are faced with as a country are not external to the economy.

A few of these are a result of inappropriate decisions that we have taken and implemented in the past – as well as correct decisions that have not been well implemented. The example of the power crisis is a case in point here.

But what are the lessons to be learned from the other countries facing similar constraints? What lessons, if any, can be learned from countries which have managed to boost productivity and employment through a social compact amongst labour, business and state? Recently, we have observed successful compacts in Europe, directly responding to the crisis, with wage freezes, short-hours and re-skilling.

For a social compact which involves all role players to make a significant economic impact, the following conditions must hold:

• Preparedness by organised labour to make real concessions (income policies and labour-market reforms) in return for productivity-related benefits

• Genuine commitment by employers to an accord process

• Lending structural policy support to the accord process from the government, by ensuring timely and effective reforms in areas of labour, industrial, welfare and tax policy to aid part of the accord

• Productivity growth succeeds in improving profitability, thus encouraging firms to increase their investments

• Discourage the persistence of insider/outsider imbalance and ensuring sustainability

We can learn from some of the successful experiences of social pacts in other countries – and it would appear that a commonly perceived crisis is a precondition for a social accord to be struck.

Filling the trust gap

In all countries that have implemented social accords, some form of a crisis triggered all these processes. Hopefully, the domestically originated structural crisis, as well as the globally originated crisis, will spur South Africa swiftly towards a more formal compact and virtuous circle. Unfortunately, the biggest challenge remains the low level of trust amongst stakeholders in South Africa.

One way of dealing with this gap is to stop pointing fingers – for each stakeholder to take an objective stance to be part of the solution and identify a niche area in which to contribute, without waiting for the next person to make the first move. If each one of us takes this approach, the collective impact will be unprecedented.

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