JABULANI SIKHAKHANE: Come one, come all, to see the GNU perform high-wire act

The government of national unity (GNU) must perform a high-wire act, not so much in terms of who gets appointed to the country’s executive but in finding a politically sustainable balance between social and macroeconomic goals.

Social policy is about those things a government does to meet human needs for education and health (more broadly, human development), security, work and general wellbeing. 

The approach — or sequencing — that prioritises economic growth, for example, because it generates the resources a government will need to pay for social policies, including education and health, at some point in the future could prove fatal for the unity government and its two major political constituents, the ANC and DA. 

In socially fractured societies there is an inherent conflict between the achievement of social policy and macroeconomic goals, a clash that arises from the tendency to prioritise one over the other. As British economist Anthony Atkinson put it, conflict could also arise from the impact of the structure of social policy design on economic performance. 

“A review of a country’s economic performance cannot neglect the social dimension. In short, we need to return to a situation where macroeconomists are concerned not only with inflation, unemployment and growth but also with the war on poverty,” Atkinson said. 

Thandika Mkandawire, the late Malawian-born economist, addressed the same issue. He called for a rethink of social policy “away from its conception as a residual category of ‘safety nets’ that merely counteract policy failures or development disasters”. This is the trap the ANC has fallen into lately. Its emphasis has been on cushioning the millions of people who have fallen by the wayside in terms of jobs. 

“Social policy should be conceived as involving overall and prior concerns with social development, and as a key instrument that works in tandem with economic policy to ensure equitable and socially sustainable development,” Mkandawire wrote. 

Quoting Atkinson, Mkandawire cautioned against “the persistence of economic policy-making based on a ‘leader/follower’ model, where macroeconomic policy (stability and growth) is determined first, and social policy is left to address the social consequences”. 

Social policy, he added, was a highly political process, touching on power relations, access to resources and ideological predilections about the role of state and markets. “We still need to know what societal variables facilitate the placement of these items on national policy agendas,” he said. Economics remained unclear about how issues are placed on the political agenda. 

A group of economists led by former IMF chief economist Oliver Blanchard and Jean Tirole, which advised the president of France in June 2021, took the same approach: “Unlike the traditional approach, which keeps the productive and distributional agendas of society separate, with separate policy tools that address each respectively, our approach entails the joining of the two.”

That’s the high-wire act SA’s unity government must perform. Its statement of intent commits the parties to a laundry list of things: rapid, inclusive and sustainable growth, the promotion of fixed capital investment and industrialisation, job creation, transformation, livelihood support, and fiscal sustainability. It adds that macroeconomic management “must support development goals in a sustainable manner”. 

This is fine in so far as documents of this nature go. The devil will be in what happens when the new executive assumes office and after the strategy session promised in the statement of intent. The key will be in finding a politically sustainable balance between macroeconomic goals and social policies. This will require that the two major parties to the unity government — the ANC and the DA — find a middle ground.

This is because fixing SA — raising the level of economic growth, creating jobs, reducing poverty and improving everybody’s welfare — will come at a socioeconomic and political price. For example, the ANC has in recent years been preaching social support, a far narrower version of social policy.

A few days before the May 29 election it promised to increase the value of the social relief distress grant from R350 to R750. The grant should be “the foundation for the transition to a permanent basic income support grant” and its coverage net extended. Using the ANC’s electoral performance as a signal, that promise wasn’t persuasive.

The DA tends to lean more on economic growth. Economic growth is important. But as Mkandawire warned, social policies are equally important because they can “enhance capacities for economic development”. 

• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.