Business Report
*Labour and business need pact, says Davies* *Ann Crotty, Business Report, Johannesburg, 23 September 2011*The country needed "some sort of pact between labour and business" that would ease the tension between the two groups, Trade and Industry Minister Rob Davies told a meeting of investors in Cape Town yesterday.
He said such a pact would inevitably involve a discussion that would see the "higher paid group taking more pain than the lower paid group".
Davies added that manufacturers that called for the relaxation of labour laws and fewer strikes would have to learn that they could not have both.
Although the country faced considerable constraints, he noted, it was not without many opportunities. In order to realise these opportunities, however, stronger partnerships had to be built between the government, business and labour.
He said the government wanted to ensure that at least 21.4 percent of Sishen's iron ore was available to support a "developmental steel price".
Davies was addressing a Wesgro Investor Luncheon where he highlighted the incentives that government intended to provide to manufacturers, in terms of its Industrial Policy Action Plan, in a bid to boost economic growth and employment. He stressed that in future, incentives would be highly conditional and would focus more on job creation.
In terms of the new, more aggressive incentive policy a number of products, including buses and rail rolling stock, will soon be designated for local procurement. In terms of this designation all levels of government will be required to procure their requirements of the designated product locally. Davies said the necessary law was in place and that the first group of designations would take effect in December.
He added that designation and procurement rules had to be developed to ensure that local suppliers did not "take us to the cleaners". Davies stressed that the designated procurement was designed to create "real opportunities for manufacturers and not to encourage rent-seeking".
An industrial analyst said that the designations would only be undertaken by the minister after detailed research ensured that there was sufficient local capacity to meet the demand of the various government agencies.
"Unlike Brazil, which allows local manufacturers to charge a 20 percent premium, in South Africa suppliers will not be allowed to charge a premium," said the analyst.
He added that the SA Bureau of Standards had created a standard for local production and would also provide verification that the product is locally manufactured. "Government will want to avoid a situation where a product is imported from China and three buttons are added locally."
On the issue of increasing port charges and steep hikes in electricity prices, Davies said that these were issues the government was committed to addressing but he noted that businesses could no longer assume they would have cheap electricity.
Davies said that it was imperative that the government address the "de-industrialisation" challenge facing the country. Not only had the process cost the country hundreds of thousands of jobs, but according to Davies: "No country has gone from an undeveloped to developed stage without manufacturing."
He said countries suffering most from the current global economic crisis were those that had abandoned their manufacturing sectors and specialised in trading financial derivatives.
*From: http://www.iol.co.za/business/business-news/labour-and-business-need-pact-says-davies-1.1143209*
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