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Monday 21 January 2019
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Economic recession and the need for effective social dialogue

According to The Namibian newspaper of Friday, 7 December 2018, the International Monetary Fund (IMF) issued another report on Fiscal Risk Statement.
This is a second Fiscal Risk Statement by IMF this year. Another one was issued on 16 August 2018.
The August Fiscal Risk Statement focused on the fiscal risks posed by certain State Owed Enterprises as well as the potential risk posed by public-private partnership arrangements.
The 23 November Fiscal Risk Statement went further and identified a number of risk factors.
These included high national debt levels, the State Owed Enterprises whose borrowings are guaranteed by the State; some municipalities who depend on Central Government for bail-outs, lack of economic reform and mane other risk matters.
In total 37 risks are identified. More surprising is the fact that the Fiscal Risk Statement found that Namibia has no plan to turn around the economy.
This suggests that our leaders have adopted an ostrich strategy as far as the addressing the impacts of the economic recession is concern.
The country is therefore on cliff hang economically.
The public debt is now around 50%. The country is practically not credit worthy.
If Namibia has to go to lenders to borrow, the cost of borrowing shall be astronomical. Very soon half of the annual national budget shall be spent on servicing debt.
What will happen to social safety nets!
What about public investment and job creation? Government is likely to impose punitive taxes under such circumstances.
The Fiscal Risk Statement identified NAMPOWER, DBN, NAMPOST, UNAM, NAMWATER, NAMPORT, TELECO Namibia, Trans Namib, Air Namibia as high- risk State-Owed Enterprises.
The report said Air Namibia and Namport alone have liabilities amounting to about NAD 4,8 billion.
The report further identified some municipalities as having liabilities amounting to NAD 500 million.
Disturbingly, IMF found that there were no mitigating plans to address such liabilities.
The Fiscal Risk Statement further pointed to high public wage bill.
In 2017 about NAD 28 billion out of a total Budget of NAD 62,5, was spent to pay some 119, 000 public employees.
Such a wage bill is not sustainable under the current economic circumstances.
These extra-ordinary economic circumstances call for a national social dialogue with view of developing a national social contract.
The national dialogue should engage the Namibian society on issues such as labour relations, income insecurity, inequality, unemployment, governance of national assets, taxation issues, national debt management, stimulation of economic growth and similar challenges.
In terms of labour relations, it is important to define the relationship between organised labour and the State.
The idea is to reach a broad agreement which should lead to the emergence of a social agreement that determines the relationship between organised labour and the government.
The aim should be the establishment of principles for building the economic, social and political parameters for mutual engagement.
The media reports attributing to Prime Minister Saara Kuugongelwa- Amadhila of having accused public servants of not performing optimally and therefore not entitled to salary adjustment, are not helpful.
Similarly, blackmail strikes by public servants as witnessed at the Ministry of Education, NBC and UNAM are counter productive under the current economic circumstances.
A social dialogue should establish procedures that shape the common understanding among all the actors.
Job losses since 2016 has created income insecurity among workers.
A social dialogue among the employers, employees and government would enhance a sense of mutual trust.
Unprotected labour unrest as it happened in the fisheries sector is counter- productive.
There is a need to establish a common understanding on how to distribute power and resources among the actors in order to promote income security among the workers.
The governance of State-Owned Enterprises and some municipalities is a matter of concern.
Unless the governance issues are addressed, State Owned Enterprises and some municipalities shall continue to be a drain on State coffers.
To illustrate the point, take the municipality of Rundu.
Local leaders of the ruling Party have expressed reservations about the capacity of their current Mayor.
Clearly the woes of Rundu emanate from the governance of Rundu. Similarly, the governance of State- Owned Trans Namib leaves a lot to be desired. Leadership turn-over at that parastatal has been phenomenal.
This is a parastatal which should enter into public-private- partnership on equity basis for it to benefit from management expertise, new technologies and new resources.
A social dialogue is needed to achieve this objective.
The Minister of Finance has muted the imposition of additional taxes to boost revenue.
The Minister would do well to be open to the public and truthfully inform the citizens on the state of the economy and the imperative need to impose additional taxes.
The public should be honestly engaged for it to accept the sacrifices which need to be made in order to stimulate the 4economy.
All in all, the social dialogue should include the engagement with business.
The role of business in inclusive growth and sustainable development should be appreciated.
Tensions between business interests and the public good should be reconciled.
A social compromise should be forged between employers and workers for the purpose of enhancing mutual trust.
Overall the social dialogue should aim at strengthening social cohesion and collective interests at the time of shrinking fiscal sovereign due to sustained recession.

Happy 2019- the Year of Social Dialogue in Namibia!




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