Ferial Haffajee: After elections, workers will become owners
FIN24 / 01 MAY 2019 - 12.04 / FERIAL HAFFAJEE
With elite-pact black economic empowerment under the whip, the leading political parties have put their power behind worker ownership.
This form of black economic empowerment of selling or giving stakes to workers is likely to gain ground as economic policy after the election on May 8.
The first generation of BEE deals saw white capital sell off stakes to black leaders it was networked with. This saw people like President Cyril Ramaphosa and the billionaire Patrice Motsepe grow fabulously wealthy as they were cut into deal after deal, but did not impact transformatively on the businesses they were cut into.
Other black business people who benefited from their contacts included the likes of former ANC leaders like Saki Macozoma, Cheryl Carolus and Mohamed Valli Moosa, but the effect was not sufficiently socialised or transformative to get the required buy-in to a market-based economy, because these individuals largely played by the old rules of apartheid monopoly capital.
Others, like Zimbabwean mining magnate, Mzi Khumalo, cashed out early leaving companies in the lurch without the BEE points that secure political influence and commercial success, either through licences or through tenders.
Later on, as black empowerment developed (or regressed, perhaps), it became indistinguishable from rentier capitalism as economic mercenaries like the Gupta family and other patronage networks began to milk the state under the guise of BEE.
The Gupta family’s foray into mining and coal supply to Eskom was disguised as a massive BEE bid to up-end coal supply chains that had always favoured mining capital. This did not work so well, as the country has suffered almost a decade of skittish power supply while Eskom has been so bankrupted that it can easily take the state down with it.
Enter worker ownership as the new method favoured by both the governing ANC and the official opposition DA. The ANC has promised to "introduce legislation for the extension of company ownership to a broad base of workers through an employee ownership scheme and similar arrange arrangements to supplement workers’ incomes and build greater partnerships between workers and owners to build these businesses," according to its manifesto.
"Social partners (government, labour and business) will put together the minimum thresholds and conditionalities to govern the establishment of worker-ownership funds, paving the way to empower millions of workers across the economy."
The ANC says that it will provide public assistance (which means state funding) to help workers buy shares.
The DA has had a torrid time with BEE. A powerful faction wanted the party to drop its support completely, and in the upheaval, the former head of policy, Gwen Ngwenya, resigned in fury. The party’s manifesto is a hash on black empowerment, but it is clear in its support for Employee Share Ownership Schemes (ESOS).
The party, if in government, would change the BEE scorecard (a verified measure of a company’s empowerment standing) to weight Esops. The DA’s manifesto pledges to: "Firstly, award significant weight to ESOS so that employees as a group become substantial stakeholders in the business. This would grow black equity while the company would benefit from the increases in productivity that ownership confers."
It is clear from the manifestoes that employee ownership is going to see a push to stakeholder capitalism. There are a few examples of where the model has worked in South Africa, but not sufficient to make it norm-altering.
If employee ownership is used only as a way of buying workplace peace, then it is valuable, but not as valuable a model as that practiced in Germany and some Scandinavian countries, where workers can impact on strategy, productivity and ultimately on society.
If we are headed for deep stakeholder ownership, it can be transformative black empowerment -which has eluded South Africa for decades.