The South African transition has been marked by a range of major institutional innovations that we believe have laid the foundations for a class compromise. These institutions originated in the class stalemate that emerged during the transition to democracy in which civil society formations were in many instances able to block unilateral restructuring of the economy by the apartheid state and capital. The institutions created new rules of the game compelling the key social actors - government, organised labour, business, and (in some cases) community-based organisations - to negotiate and conclude agreements on major economic and social policies. The institutions were founded on the notion of bargaining, which implies reaching non-zero-sum agreement between independent actors based on mutually accepted rules, and that such agreements can be enforced.
The new institutions encourage new forms of dispute resolution and extended social regulation to previously marginalised social groups, providing workers with an opportunity to engage the state and capital over major economic questions, including the form and pace of adjustment. We call this "bargained liberalisation": liberalisation, because the changes involve opening up South Africa to the global economy; bargained, because agreements are subject to the institutionally structured interplay of societal interests.
A. Foundations of the New Labour Regime
For most of this century South Africa had a dualistic system of industrial relations: a legalistic set of bargaining rights for non-black workers (whites, coloureds, and Indians) while black workers were excluded from the system and subjected to varieties of formal and informal repression. This system received its most fundamental challenge in the 1970s with the emergence of independent shop-floor based industrial unions of black workers based largely in the import-substituting industries stimulated by South Africa’s 1960s economic expansion. These unions concentrated on winning recognition at plant level, which entailed both organisational rights (election of and time off for shop stewards, access for union officials) and substantive rights (bargaining on wages and working conditions, defence of workers in dismissals and retrenchments). Part of the unions’ demands stressed amendment of the then-existing Labour Relations Act which excluded African workers from the category of employee, thus preventing them from participating in industry-based collective bargaining.
The dualistic system began breaking down in the 1970s, under pressure from the growing union movement and its international trade union allies, and from many sections of South African capital who feared increasing and unregulated conflict on the shop floor. In 1977 - in the aftermath of the 1976 Soweto uprising and a system-wide challenge it posed to apartheid - the government set up the Wiehahn Commission of enquiry to investigate the industrial relations system. Two years later, in an attempt to control the emerging unions, the Wiehahn Commission recommended that the LRA be amended to incorporate black workers by encouraging their unions to register, but only if they would confine themselves to collective bargaining issues.
Rather than incorporating these unions into the existing industrial relations system, however, these reforms opened up a process through which the unions were able to transform the system from within. Initially by registering they were able to legitimise their presence and rapidly expand their membership. By demanding the right of recognition at shop floor level - backed up by the disciplined use of collective power - they were able to win extensive bargaining rights that encroached on existing managerial prerogatives: wage setting, punishment and dismissal, retrenchment, work reorganisation. This organisational power enabled unions to shift the "frontier of control" at plant level, thereby providing a base from which to demand industry-level bargaining, which was slowly won in key sectors.
After the mass political resistance of the mid-1980s had been suppressed in successive states of emergency, both capital and the state sought to reverse labour’s gains by amending the LRA. However their efforts provoked widespread union resistance at workplace and national levels. The unions organised three national stayaways in 1988 and 1989 and refused to service their members in disputes under the new LRA’s provisions. Faced by growing disorder on the shopfloor many companies began searching for common interests with organised labour, yielding a series of bilateral negotiations between labour and business that culminated in a tripartite agreement - the Laboria Minute - on the basic contours of a new labour relations system. The three parties agreed that: all labour laws would in future be considered by employers’ bodies and the trade union movement prior to being put before parliament; that the unions would participate in a reconstructed National Manpower Commission (a statutory consultative body on labour relations and labour market issues set up by the Wiehahn Commission and boycotted by the new labour movement); and that labour rights would be extended to those previously excluded from the industrial relations system, including farm workers, domestic workers and public servants.
The Laboria Minute was a crucial moment in the transition to democracy as a whole. In part the agreement was itself made possible by the transition: by the late 1980s labour repression was not an option for the National Party government, which was already talking secretly to the African National Congress (ANC). The ANC, South Africa’s strongest and oldest liberation movement, had been banned in 1960 and was operating in exile. In 1989 the National Party government had taken the first tentative steps towards regularising politics by unbanning key opposition leaders, and the following year had legalised the ANC, which in 1994 became the leading party in South Africa’s first democratically elected government.
More importantly, in terms of the transition as a whole, the Laboria Minute was the first example of a major policy issue being addressed through a negotiated compromise, where a societal stalemate was processed through institutions. Furthermore, the Laboria Minute was struck prior to the pacting between the political actors on the political, military and constitutional aspects of the transition. It set up a practice of tripartism giving labour an institutionalised voice enabling it to shape the broader transition agenda. As important, it prevented labour’s fate from being solely determined in a constitution-making process between political parties. In practice, political parties could not easily overturn or trade away tripartite agreements. Most of the institutional innovations outlined below grew out of the Laboria Minute.
B. Institutional Arrangements
Labour Relations Act
In 1994 one of the first moves by the new democratically elected government was to establish a legal task team to draft a new Labour Relations Act. After a prolonged consultation process the Act was formally passed by parliament at the end of 1996.
The LRA has four key features. For the first time in South African labour history all workers were brought under the ambit of one industrial relations system. In addition to public service workers this includes the most marginalised, including farm labourers and domestic workers. The new Act promoted collective bargaining by providing for organisational rights for unions in the workplace (thereby entrenching in law what many unions struggled to achieve through private agreement: access to employer premises; meeting rights; union subscription facilities). It entrenched the right to strike with a clear right to picket. The Act encouraged parties to resolve disputes through conciliation and arbitration through a new institution, the Commission for Conciliation, Mediation and Arbitration (CCMA). Finally, and its most significant innovation, was provision for joint decision making and consultation at shop floor level between management and workers through the creation of Workplace Forums, developed in part from South African and western European precedents.
Institutional Engagement at the Societal Level: NEDLAC
As mentioned above in the Laboria Minute the unions agreed to participate in the then-discredited National Manpower Commission, while government agreed to seek consultation on important economic policies. However, little progress was made on either count. Labour’s recommendations for restructuring the NMC made little headway with government, while government did not take seriously the commitment to consultation. These problems came to a head in late 1991 when government announced a new and regressive Value Added Tax (VAT). Labour responded by organising a wide array of formations that participated in a two-day stayaway against the new tax. The protests were led by the Congress of South African Trade Unions (COSATU), the largest and most politically sophisticated labour federation in the country. Since its formation in 1985 it has been aligned with the African National Congress and the South African Communist Party (SACP), the "triple alliance" which was formally inaugurated after the unbanning of political organisations in 1990.
Through their struggles over VAT it became clear to labour leaders that merely delaying the new tax would not achieve their goal of participation in economic decision-making: restructuring of the economy was happening unilaterally. Furthermore, their lack of success with the NMC motivated labour strategists to seek a new general forum where economic and social policy could be debated and negotiated in a more global manner. Thus a macroeconomic forum emerged as a central demand in the aftermath of the anti-VAT campaign, leading to a proposal to establish a National Economic Forum (NEF). (Adler and Webster, 1995:94)
The NEF operated as a tripartite forum between 1992 and 1994, parallel to the main constitutional negotiations, and struck agreements on a number of contentious economic and social policy issues. However, the NEF was essentially a transitional arrangement that emerged in the context of an illegitimate government where negotiated agreements nonetheless had to be reached between the state, capital and labour.
With the election of a democratic government the NEF’s status was uncertain. Would a new government attempt to reclaim sovereignty over economic policy or would some form of bargaining over these issues become a more permanent feature of the new regime? Significantly, the key architects of COSATU’s NEF strategy were now either in ministerial positions or were serving as advisors to government. Taking advantage of their positions - and in the absence of any serious opposition to a bargained approach - they quickly proposed the merging of the NMC’s labour law and labour market agenda with the macroeconomic concerns of the NEF.
The new body - the National Economic Development and Labour Council (NEDLAC) was located in the Department of Labour and charged with the task of reaching consensus on economic and social policy between organised labour, organised employers and other community-based interest groups. This latter category was an important innovation that gave voice to marginalised groups, such as the unemployed, disabled, youth, and women, thus avoiding a narrow corporatism based on the "golden triangle" of state, labour and capital. (Bird and Schreiner). One of the first pieces of legislation passed by the new government was the NEDLAC Act of 1994. NEDLAC is thus a statutory body, consisting of four chambers: labour market; public finance and monetary policy; trade and industry; and development.
Institutional Engagement at the Meso-Level: Industry Level Bargaining
The hardest bargaining on liberalisation emerged in those sectors of the economy most exposed to the impact of globalisation: mining, clothing and textiles, motor and components, and the state-owned corporations in the public sector. From 1991 unions took the lead in creating institutional forums where bargaining over the terms of liberalisation could take place.
The first of these was the calling of a "mining summit" by the National Union of Mineworkers (NUM) in 1991. Faced by mounting job losses the union called for a social plan to manage the gradual downscaling of the industry. The NUM’s proposed plan included minimising job losses by prolonging the life of marginal mines; generating alternative forms of employment by encouraging beneficiation; and cushioning the effects of retrenchment through counselling and retraining. (Pillay, 1998) Little progress was made on these ideas until 1998 when the steeply declining gold price put job loss and the need for a follow-up summit back on the agenda. A new Gold Crisis Committee was launched to manage downscaling.
Similar summits took place in the motor and in the clothing and textile industries. In the latter, the South African Clothing and Textile Workers’ Union (SACTWU) understood that in the face of liberalisation it would be unable to sustain its members’ jobs and wages unless these were linked to an industrial policy oriented towards growth and adjustment. In a context where the government was illegitimate and clothing and textile employers fundamentally divided, the union became the bearer of the public interest in industrial regeneration. Their package included defensive measures to protect those threatened by job loss, such as retraining and wage subsidies to those retrenched; active policies, including incentives to industry to develop and deploy new technology, modernising management, and small business development; and policies oriented to the extension of union power, such as a commitment by employers to centralised bargaining. In this context - and only in this broader context - SACTWU was willing to negotiate on phased reductions in tariff barriers and "stability" in the workplace. (Patel, 1996; Hirschsohn et al., 1998)
The third example of meso-level bargained liberalisation is labour’s response to the ANC government’s announcement in December 1995 that it intended privatising important state assets. The unions organising workers in parastatals demanded the right to negotiate the terms of restructuring. After intensive discussions between labour and senior government ministers both parties accepted a National Framework Agreement (NFA) on the restructuring of state assets. In terms of the NFA all specific instances of restructuring must be negotiated between government and the relevant parties according to broad principles. Furthermore, the government agreed that restructuring would not be done at the expense of employment, and where there were job losses, a social plan would be negotiated. (NFA, 1996; Rix and Jardine, 1996; Rix and Lloyd, 1998)
The final example of industry-level restructuring comes from the public service where centralised bargaining was established for the first time in 1993. Importantly, the functions of the Public Service Co-ordinating Bargaining Council go well beyond traditional collective bargaining to include qualitative non-distributive issues such as work organisation as well as the restructuring of the public service itself. To the extent that the public service is a central actor in liberalisation - either to be "downsized" or restructured - workers therefore have important influence over the character of change in the institution. (Patel, 1998)
Each of the institutions discussed above provides labour with the access to shaping fundamental development policies at the micro, meso and macro levels. In terms of their content and their breadth these institutional innovations are remarkable in comparison with other countries undergoing the "double transition". As such they provide part of the basis for a broad class compromise in which development policies are not defined on the terms of local and global capital alone, but instead are the outcome of genuine bargaining. Indeed, the Labour Market Commission, appointed by President Mandela, proposed a social pact in 1996. In Part 3 we identify - through an analysis of the key actors who would be party to such a class compromise - the opportunities and constraints of achieving such an agreement.