SPEAKERS NOTES FOR ELECTION SPEECH ON THE STATE OF THE ECONOMY

The legacy of apartheid: Inequality and Slow Growth

The Apartheid economy suffers from serious structural weaknesses which have lead to the country's most serious economic crisis yet:

• stagnated growth - there has been no growth since 1990
• decline in productive investment - total investment in 1992 was lower than in 1980
• falling average real incomes - 18 million people live below the Minimum Living Level which in February 1994 is expected to be in the region of R900 per month
• dramatic decline in employment levels - currently 46% of the Economically Active Population

Economic policies have been contradictory, secretive and subordinate to the aims of Apartheid and the siege economy. These policies have resulted in an economy which:

• Remains dependent on mineral exports for earnings to purchase advanced machinery and technology, in a context where world prices are falling.
• Has failed to develop a dynamic manufacturing industry which can create jobs and compete on the world market
• Has viewed workers and black employees in general as low cost inputs rather than as valuable human resources leading to low skills and low productivity.
• Has developed massive inequalities of wealth and power which are socially unacceptable and economically highly inefficient.
• Has encouraged capital to hoard and speculate for the highest profits rather than invest in new productive areas, human resources, jobs, or research and development - all crucial in sustaining economic growth.
• Has failed to develop a dynamic small-scale and informal sector.
• Has created massive and powerful parastatals which have done little to enhance employment. In contrast to the Nationalist government, the broad Policy Objectives of our Economic Reconstruction Programme are to restructure the economy to:
• create jobs
• provide adequate incomes
• meet the needs of our people

To achieve these objectives we need to:

• democratise the economy and ensure participation in and accountability in policy making;
• reduce inequalities in income and wealth
• reintegrate our economy into the highly competitive world economy.
• develop the South African region on a co-operative basis.

Strategies to achieve our objectives.

1. The Democratic state will maintain and develop the market but intervene in the economy where needed for growth and development.
2. The state will establish an agency to develop and co-ordinate economic policy at all levels. The state will endorse tri-partite structures where different interest groups will co-operate in policy formulation.
3. We will develop policy and intervene in four strategic areas:
   • formal sector trade and industry
   • promoting small-scale business, land reform and democratic economic institutions to reduce inequalities
   • the labour market
   • the financial sector
4. Mechanisms of affirmative action will be employed to address the disadvantages of black people, rural people, women, working class people and the handicapped.

Trade and Industry

In respect of trade and industry the objectives of our policy are:

• Employment creation
• Higher productive investment
• International competitiveness
• Rising productivity
• Human Resource development to upgrade skills and managerial capacity. Our Reconstruction Programme will intervene in these sectors in the following ways:

1. Massive public sector investment in basic needs and services of people. This can push the Gross Domestic Product growth rate up by 5% annually. Together with active labour policies and community this investment can also create 300,000 - 500,000 new jobs.
2. Stimulate growth and job creation in trade and industry.
• Ensure that public investment in social and economic infrastructure stimulates manufacturing.
• Build a job creation focus into all aspects of industrial policy
• Develop the benefication of minerals, i.e. develop locally manufactured goods
• Improve local inputs for large projects, such as infrastructural development
• Enhance competitive advantage in key areas
• Maximise linkages between manufacturing and infrastructural investment, emphasising labour-intensive methods.
3. Develop a stable, effective and targeted incentive structure for investment and export
4. Simplify the existing tariff structure and reduce protection without disrupting employment
5. Create a climate conducive for foreign investors through stable, consistent and predictable policies and a dynamic economy. Foreign investors must abide by our laws, collective bargaining and the environment. The state will ensure that foreign investors create employment, technological development and transfer of knowledge.
6. Restructure public sector corporations to further the reconstruction of the economy. This will include reversing privatisation and extending the public sector in other strategic areas if necessary.