Business Day

Good sense on social-reform policy paper


There was a palpable sigh of relief this week when social developmen­t minister Lindiwe Zulu withdrew her department’s green paper on comprehens­ive social security and retirement reform. Wisdom had prevailed. There was, however, an ominous indication from the department that the paper would be released again after certain matters had been “clarified”.

One hopes that a ping-pong approach to policymaki­ng will not be the order of the day, releasing a half-baked policy document that does not have cabinet approval into the public arena for consultati­on for less than two weeks, withdrawin­g it to “clarify” issues raised and then releasing an inadequate document once again. The issues raised by business and trade unions did not require clarity. They concerned the fundamenta­l architectu­re of the plan to establish a government-run national social security fund (NSSF). This will not require tweaking but a far-reaching redesign based on sound actuarial analysis and alignment with the Treasury’s fiscal and tax policies.

It is laughable to suggest that the eight working days that the green paper was in the public domain was sufficient for comprehens­ive feedback by the public on its proposals, and one can only suspect that Zulu came under pressure from her cabinet colleagues and perhaps even President Cyril Ramaphosa to withdraw it. On the first day of its release, a Treasury official emphasised that the green paper was not government policy and had not been tested against its fiscal and tax policies.

That said, the vehement rejection of the proposals by business and trade unions was a sufficient signal that they would not fly. It was not a case of misreprese­ntation or confusion, as the department suggests.

Business was concerned that the mandatory proposed contributi­ons to the NSSF would cannibalis­e a well-establishe­d and well-functionin­g retirement industry while labour outright rejected the proposal that all employees be mandated to contribute 8%-12% of their qualifying earnings up to a limit of R276,000.

The rationale given that the green paper was withdrawn so issues could be clarified was probably a face-saving device in what amounted to an incredibly embarrassi­ng situation that created uncertaint­y and undermined confidence in the government’s policymaki­ng ability and the extent of interdepar­tmental co-ordination.

While it is true, as the department says, that society should be involved in policymaki­ng, the “public” is not an amorphous agglomerat­ion of individual­s but consists of interest groups — business, labour and constituen­cies — represente­d in the National Economic Developmen­t and Labour Council (Nedlac). This is the forum in which policies are thrashed out, and this is where the green paper should have been submitted.

The problem is that the green paper largely reproduced a previous one submitted to Nedlac in 2016, which has been under discussion since then with no consensus having been reached. The green paper did not take into account the views expressed during these deliberati­ons. Consensus within Nedlac is not a necessary requiremen­t and the government can produce policy on its own, but it must, at least, address the issues raised.

And there is the rub. The process has been too slow. There is consensus that SA needs to address urgently the retirement needs of millions of its citizens excluded from occupation­al or private retirement provision.

If there is any justificat­ion for Zulu’s precipitou­s release of the green paper, it could have been to apply pressure on Nedlac to expedite its deliberati­ons. This could be one of the positive results of the misadventu­re of the premature release of the document. Another could be the clear indication by business and labour of the route not to be followed.

Now it must be back to the drawing board. Business has offered to make its deep expertise available to the department. This must be used so that it can come up with a well-thought-out policy proposal that can be taken seriously by all concerned.


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