Fatal Embrace: How Relations between Business and Government help to explain South Africa’s Low-Growth Equilibrium

South African Journal of International Affairs

South Africa has experienced slow growth and growing unemployment in recent years. This article argues that the slow growth outcome is in significant part a result of the form of the compromise achieved between government, business and labour at the time of the political settlement in the 1990s. A commitment to open markets for goods, services and capital and a tightly structured labour market resulted in an arrangement where firm owners, government and organised labour are in the words of Sandeep Mahajan, ‘locked in a continual, rambunctious public tussle over the distribution of the rents generated under the system’. A further outcome has been the internationalisation of business and a growing gap between business and the state. The ‘political settlement’ will need to be reconstituted if South Africa is to embark on a growth-oriented employment generating growth path.

Related Content