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Helped the position of exporters and prepared them for the full application of the agreement in 1999.The government has now, to an extent, taken the initiative on economic policy with the release of its major policy statement on Growth Employment and Redistribution. Apart from acting as a statement on fiscal prudence, it has also sent the message to its labour allies that it is prepared to differ on key aspects of policy. The labour movement seems also to have indicated that it will go along, albeit with public protest, on certain issues as long as it obtains its goals on issues that are closest to its interests, such as the recently passed Labour Relations Act.On issues that are of real importance, as it did in making cuts in the deficit to GDP and the aim to gradually lift exchange control regulations, the government is not prepared to be stalled by labour. However, the government has hesitated in its privatisation programme in response to union demands and has entered into a National Framework Agreement (NFA) with labour on the restructuring of state assets. Labour is not given a veto over the process and the NFA does not grant job security. It rather calls for efforts to redeploy workers between state enterprises. While there might be hurdles for labour on individual privatisations, particularly those with a public policy or strategic value, the government has so far only announced that relatively small public corporations are up for sale, and has gone for the strategic partner approach, as with Telkom prior to a privatisation.Fiscal and monetary policy has support from markets, the international financial institutions, and is firmly within a "Washington consensus." But the major problems lie more at the local level where development is not being delivered on a sufficiently rapid scale to meet expectations. The major challenges are now more in the areas of building effective local government and delivery of housing.South Africa's problem remains jobless growth. The rigidity of labour markets in the face of massive unemployment is one of the country's great paradoxes. The recent Labour Relations Act has probably increased the total cost of labour and bolstered the position of unionised labour. Whether the standards imposed by minimum wages in industries and those under the Act are widely applied outside larger firms is not clear.Drawing LessonsThe agendas for reform in India and South Africa occur in widely disparate environments. India had a far more restrictive investment and trade regime. However, some further questions might be asked and some preliminary lessons drawn.While the gradualist consensus approach may have its benefits in that the opposition of key groups can sometimes be softened, it is also slow and can be derailed. The uncertainty as to whether or not it has been derailed has serious consequences as occurred with the fall in the rand. It may also entail other payoffs to groups. Reform, even of the shock therapy sort, is very often also negotiated at some stage. A comprehensive shock therapy approach inflicts the pain suddenly, but may bring about union opposition at every turn on second stage measures. Sequencing of policies can be better as demonstrated by the Indian approach. The appointment of expert panels, opening matters for public comment can be an avenue for delay and undermine decisiveness when most required. Even then the report of a commission may not bring about a resolution of a policy issue.Another widely expressed concern over the consensus approach is very often the narrowness of the consensus and the exclusion of those without lobbying power. The often asked question is, where are the unemployed and rural poor represented in "the golden triangle."Professor Ajit Singh of Cambridge University has advised India to liberalise reluctantly. Indian policy makers should "drag their feet" as monetary and real instability occur simultaneously if the pace is too fast, he said at a recent conference in New Delhi on "Globalisation and Liberalisation in the Nineties."5 The slow integrators argue that the case of East Asia favours a strategic integration of favouring exports rather than imports and the Mexican crisis of 1995 and the subsequent Tequilla effect demonstrate the danger of trade liberalisation while depending on volatile capital flows. There is also a cost to liberalising too slowly in terms of the protection that is maintained and the confusing signals it may sent to markets.The stimulus given to labour intensive exports by India's reform programme bears certain similarities to the East Asian pattern of development. With an unemployment rate of close to one-third and the scant possibility of the formal sector creating jobs on a sufficient scale to absorb new entrants into the workforce,....
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1. Market of spices 2. Mining of gold 3. Faced British rule and caste prejudices