This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
13 Oct 1997: Golding, Marcel
POM Marcel is the Executive Director of Hoskin Consolidated Investments which I believe is the investment arm of the National Union of Mineworkers. Since we last talked, Marcel, you have changed positions once again. Now you're officially, your full title?
MG I'm chairman of a public company called HCI, Hoskin Consolidated Investments.
POM Now what does the company do?
MG The company is an investment holding company that has as its controlling shareholders two trade union investment companies. The origin of my ending here as Executive Chairman of this company was that whilst I was in parliament about two years ago as part of an initiative to participate in the unfolding and changes in the economy I established an investment company for the trade union that I used to represent, that's NUM, and made a suggestion to them that they ought to participate constructively in what was called then the black economic empowerment process, that instead of criticising what was taking place that they should participate in the process. By participating in the process they could make a contribution to the changes in the economy first of all, second they could build up a wealth base, and thirdly we could build up a set of assets that could be a platform on which we could develop a range of social benefits back to working people. So essentially the company that I initially chaired, which was called the Mineworkers' Investment Company, was started with a feed capital of about three million rand and has grown.
POM Did that capital come from the pension fund?
MG That capital came from the surpluses held by the union. The money that we used came from - (break in recording).
POM The moneys that you were using, the three million rand?
MG The money that we essentially used came from the surpluses of the union.
POM When you say surpluses, does that mean the fees?
MG The fees, the subscriptions that they received minus the operating costs and there was some surplus.
POM Plus what you would put aside for pensions? Was that separate from - ?
MG Yes, whatever they had to expend these were surplus funds that were used. It was union money, not pension money. The union gave us the money. I as chairman of the company put an executive team together. We then ran the company and got some various acquisitions. One of the first investments we undertook was to buy Mine Stores on the mine. We linked up with some other entrepreneurs who were doing other businesses. We did a joint venture with them. We listed that company on the Johannesburg Stock Exchange. We were one of the first trade union investment companies to take a vehicle to the Stock Exchange. We became a controlling shareholder of this company listed on the Johannesburg Stock Exchange. The company when it listed was about R90 million capitalisation of which we own 20% of that. Since then we did a whole range of what I call horizontal acquisitions. We acquired whatever business we could in whatever area we could if the finances were there. Much of our acquisitions were financed by debt structures, debt instruments, preference share structures and to cut a long story short, over the period between 1994 to 1997 we acquired a lot of assets. We then did what I call vertical consolidation. We took some of the assets that linked together and put them in one area and those that linked in the other area put them together. So we essentially developed three vehicles. One was a retail trading vehicle which was the Matopo Stores of the mines, the second vehicle was Rebel, the food interest, and then the third company was HCI which is the company I'm the Executive Chairman of where we housed all our hi-tech businesses. The company that houses our hi-tech businesses also has another trade union investment company called Sacto Investment Group, they're from the Clothing & Textile Workers.
POM That's your partner?
MG That's my partner, John Copeland. So what we did is we took all the assets that we had jointly and we reversed it into this public company and we took control of this public company and became the controlling shareholder. So between John's company, which is a clothing company, Clothing and Textile Workers Investment Company and the Mineworkers Investment Company we have the joint control and we control this company on the Johannesburg Stock Exchange. We are both former trade unionists, both former members of parliament, both former people linked to the trade union movement.
POM Now we're talking about the manner in which thinking has changed within the trade union movement in relation to the acquisition of assets, wealth creation, and I had mentioned that the Essops were looked on with a lot of suspicion. You made a very good analogy between Crumbs Bread and Bakery.
MG The thing is, I don't remember my exact words at the time, but I think the major issue was rather not the question of Essops, the issue was the control of the process around which the Essop scheme was being done. Anglo at the time had led the process and was dominating how it was done, they determined the board. We had very little say in how much stake you were to be acquiring and the terms and conditions of the acquisition of the Essops. And, as I say, I think the debate very much at the time no doubt was whether we saw the Essops and they were giving us the crumbs and maybe we should have been getting the loaf, although many of us would probably argue we should have the bakery. But either way I think it was a continual opinion on how the wealth creating process and the wealth distribution process should be.
Let me say this, notwithstanding the visions that we had of a more equitable wealth distribution, the reality of the matter is that the agenda for what I call social justice for working people has not changed in that sense, the agenda in which working people can have better opportunities in society, in which they can get a better part of the economic cake that they bake is still the major focus. It's really about the institutional distributive mechanisms in which working people can benefit. You can't divide a bread unless it's baked so what we see as our job is to create a wealth base in which the benefits that flow from the investment can be directed at education needs for the dependants of mineworkers and clothing and textile workers, can help paraplegic and quadriplegic miners who have no health care facilities in rural areas.
Thirdly, we can build and contribute to housing programmes that they are interested in. As I said to you earlier, we've acquired in our portfolio, in HCI's portfolio, we own radio stations, we've just bought a niche bank, we own telecommunications interests, we own information technology interests. We are focusing on what I call knowledge based interests and industries that deal in intellectual capital. We think those are industries of the future. We see an increasing convergence, these are international businesses and we believe that we need to be at the cutting edge of these opportunities. The company that we control, these two trade unions control, has a market capitalisation of about R1.5 million.
POM This is beginning from the initial three million?
MG Our three million and John's three million. They started with two million and we started with three million. The total assets we control are about R1.5 billion. I would say our stake in that is probably worth about, each of our stakes are worth about between three and four hundred million.
POM Now how does that come back in terms of, say, income flow?
MG What happens is that as the value of our investments grow you have two forms of potential growth and income. The first is capital growth, that's the value of the share. The second is you have dividend distribution, in other words where you distribute value to the shareholders by dividends. What we have and the way it's structured is that on the top of our company we have a private company called the Mineworkers Investment Company and above that you have a trust called the Mineworkers Investment Trust. The shareholder in the company is the Mineworkers Investment Company, the shareholder in the Mineworkers Investment Company is the Trust. Now when the dividends are distributed, the dividends go through to the Trust and the Trust is controlled by the union that then distributes benefits for education, bursaries, health care facilities, housing, etc. So there is one of two ways, through dividends or if we sell shares we can distribute the value back to the Trust and they then focus on the social programmes. I see my job as maybe growing the assets and their union people focusing on how they can spend the money.
POM Let me relate this to an issue, and I don't know whether it's going to be a big issue or a small issue, but this debate that's going on that was raised in a way by Peter Mokaba on the presence of members, particularly members of the executive of the SACP and on the executive of the NEC, and that here they are wearing two caps. One the one hand they are part of a decision that was made by the NEC, then they go out the door, put on a different cap and criticise that decision from the point of view of a different organisation. His larger point too that I was getting was that he was saying the ANC was never created or envisaged as a socialist organisation per se but you have this tension within the organisation, or the alliance, between those who believe that the way forward is through wealth creation, those who believe the way forward is through the creation of capital and those who believe the way forward is through the destruction of capital. There is a basic dichotomy here between the two.
MG I would say that I think no sensible person would argue that the way to prosperity and a better life is through the destruction of capital. It cannot be. I think the issue is rather how can we control capital resources in ways and means that generate wealth and at the same time create arrangements, social arrangements in the society that generate greater equity in the society. To argue that the way forward is to destroy capital means to destroy your factories and I don't think that's the way forward. The reality of the matter is the nature of capital is changing in our society very dramatically. I think in the earlier periods of early capitalist development the major forms of growth were in primary industries, what was called the traditional industrial proletariat. Today I think knowledge-based industries in the service sectors are the real growth sector of our economies and here the intellectual capital is really where everything is. It's in people's minds, it's in human resources. It's not to say that these other areas aren't important but are of diminishing importance as the convergence of a whole range of technologies take place. I mean the primary sectors are still critical but these sectors are less labour intensive than they used to be and the integration of the world economy is such that really it's a question of how one can maximise the use of capital to maximise wealth and creation and thereby prosperity.
The key challenge I think is really not that you have to create wealth, forget one has to accept you have got to create wealth, the key challenge is how can we create a more satisfactory grey equity in the society, justice and equity in the society and that obviously trade unions play a role in moderating the labour market in ways that they can guarantee their equity at the workplace. I think government has a responsibility with respect to taxation policy, to look after those who cannot look after themselves. I think, thirdly, we need a much more compassionate and entrepreneurial class that's much more compassionate in its issues of management of human resources, of capital, of companies. So I think Peter's point - I don't understand that to be his argument. I think really his argument was more about what the organisational representation of people in the party is.
POM I.e. too many Indians and too many coloureds and too many whites in authority.
MG I must confess I read it very quickly but I see two or three points he was making. One, that's the point about representativity and disproportionate representativity. Secondly, I think he was arguing that socialism is not on the agenda, which I think is a fair point to make. It's certainly not on the short term agenda, it may not be on the medium term, it may very well not be in his life, or my lifetime, socialism as traditionally conceived I think. But the agenda of justice, the agenda of equity, the agenda to get greater equity in the society is at best a radical social democratic agenda and the question is how far you can shift that in a way in which the vast majority of people are beneficiaries of the wealth creation process, of how our society looks after those who cannot look after themselves. I think to me those are really the key issues. To argue that the nationalisation of industries is the best way that you can unlock the wealth and potential I don't think is a feasible argument today. I think history has proved that it's not the best.
POM I was just quickly looking at the papers this morning, dashing between all my missing and cancelled interviews, and there was some reaction to the Gencor/Gold Reef proposed merger. Now I remember on Friday when I was supposed to have an interview with Mr Moseneke and he was on the phone to Cyril on one end and Saudi Arabia on the other end and they were trying to get their share, they were trying to get a bit of this deal and I see in the papers this morning that NUM, I think, criticised the deal as one that would result in the loss of jobs for miners. But there is an inevitability in your industry that there's going to be a loss of jobs.
MG Yes, I've always been of that view.
POM So to argue that it's going to mean jobs lost is kind of a false -
MG Put it this way, I think the merger would lead to an acceleration of the job losses because there will be economies of scale reached that would mean that you would require probably less people to mine the area than if you had build separate mines in their own mining areas. But in mining one has to accept and, as difficult as it is, one has to accept the inevitable fact that resource based industries decline. We have seen that globally, all over the world, that as you find better ore deposits in other parts of the world that are more cost efficient those mines that are higher cost producers go out of business. That's like the law.
POM My point would be as you acquire an asset base that you use to filter down to the workers you're creating your own trickle down kind of effect in a way. Since you also know that the industry is going to continue to lose workers is there a function in what you do in the creation of jobs itself?
MG The thing is we are involved in very much new sectors of the economy, they're not the traditional resource based industries. Let me just give you an example, the new areas we are involved in are what I call knowledge-based industries and issues and areas where there is greater convergence, for example, radio and broadcasting. In South Africa until about two years ago there were no private radio stations. Today there are something like 60 community radio stations, there are about, I think, 15 or 16 private radio stations and we are involved in those industries. It's a new sector, a new growth economy, a new set of jobs, a new set of opportunities. The IT, Internet, the area of business, we are involved via a company that we've invested in that's involved in the Internet business. It's a new growth centre. These are not sectors that existed profitably for investment, I would say, ten years ago.
POM The thing I come back to asking people every year, and I inevitably will get around to you to address it, is the question that GEAR, for example, is simply not achieving two of its major goals. It's not achieving, and will not achieve by almost every estimate of every economist from right to left, a 5% growth rate between now and the year 2000. Two, it will not create jobs on the scale it initially envisaged and in fact up to this point there may have been a net loss in jobs because of economies of scale, because of globalisation, the need for rationalisation, industries have got to be more competitive in a global economy. The clothing industry must be a very good example of where people are going to Zimbabwe to manufacture their goods. I go to a flea market every weekend, I pick up goods, they're like for next to nothing. I look at where they're made and it says Taiwan. It doesn't say South Africa. I picked up a scarf that's made in Korea; it doesn't say made in South Africa. How does this whole thing relate to what you're doing, what Cyril is doing, what black empowerment is doing, how does it relate to the most pressing need of all, the need to create jobs for people who don't have them? Or are the two separate?
MG The thing is I would say that our endeavour as an investment company is a very modest endeavour. I must be honest with you, we cannot claim to be one that's going to make a radical transformation of the economy. I think we will make a modest contribution to the change in the economy. Secondly, the jobs that we create will probably be very minor but nevertheless many new jobs in the Internet business, in the radio business, it's a very hi-tech business which requires substantial skills but new jobs are created.
POM But I'm saying that your primary role is not to create jobs as such, your primary role is to generate income and growth so that that goes to the Trust Company and can trickle down to existing workers who need health benefits, who need this or that, and you have to make the trade-off. You're not making enough of a trade-off saying to the poor mineworker, well you're not going to get the health benefits you thought you might get with your pension funds but you're going to create another job for somebody else.
MG Those are the choices but the point is we have capital that we have to invest, there has to be a return on that capital, there's a return on that equity investment, there's a threshold or a hurdle that has to be obtained. So when we invest money we have to make sure that the hurdle rates are achieved. Now by having those growth opportunities we're getting more money for the Trust. One of the consequences could be that we create jobs. Just to give you an example, when we established HCI there was no company called HCI. In the end we created eight jobs in the company. As it went down it created many more different jobs. But someone says, "But you replaced other workers", but we did create jobs. That's what entrepreneurship is about. You've got to create and take risks and get rewards for those risks. But the point I'm making is that GEAR, our contribution to GEAR is very modest, it's not a major contribution to GEAR. The reality of the matter is that the economy will not grow more rapidly with high real interest rates. It can't. With high real interest rates the economy is a bit strangled at the moment. We need probably a relaxing of interest rates. Once interest rates go down it will be major boost to the economy again. But I think we don't style ourselves as companies that are going to create thousands and thousands of jobs.
POM I know that and I think I've got a pretty good picture of exactly what you're trying to do. What I'm trying to make the more general point is that every economist that I have talked to, I'm not an economist, union person, ANC person, SACP person, everybody says GEAR isn't working. Rather than saying OK what we need here is a radical overhaul, the fact is that a new plan perhaps or a radical modification of the plan to take into account the reality of the situation in which we live is needed. In effect South Africa doesn't have a lot of control over its own economic fate.
MG That's true.
POM In a world market.
MG Look I think that's a fair comment to make.
POM Then how do you develop strategies that significantly uplift the working classes, where you can talk of radical transformation of the economy if over time what you're having are less jobs or at least a stabilisation of the situation with regard to jobs, a stabilisation of the degree of inequity between the haves and the have-nots? Many people would say that the people who gain most by black empowerment are the new middle class who can afford to buy the shares, who have moved into professional places in society, the civil servants, the teachers, whatever, but there is limited trickle down.
MG I have to be honest it's a very, very difficult area because, I'm just trying to explain it a bit more clearly, the world in which we live is changing rapidly. The mobility of intellectual capital and finance capital is such that they can shift it and they have choices. South Africa is a very minor economy in the global picture although we're probably about 30 or 40 on the list in terms of size of GDP. Let me say this, in a nutshell, I think the transformation of the world economy is such that the investment that we have to make today is such that we cannot create a foundation in our society which believes or trains people to believe that when they leave school they're going to enter a factory and that's how they're going to prosper. We've got to provide people with life skills and education which makes them help themselves and that's a major cultural shift in the society to say that we've got to empower our youth and our students to be entrepreneurs, to be pioneers and people who can do things for themselves. The old way of saying listen, I finish, I become an artisan, I'll then become an electrician working for a big company like Iscor, is out of the question. Those types of situations are not always going to be taking place. We've got to create a new culture and a new ethic of people helping themselves. The second point is that the traditional job that exists in the working class in certain sectors there's going to be shrinkage, as it happens in primary sectors. There's going to be an expansion in the service sectors. As I say, the new areas of growth are knowledge-based industries. What required hundreds of people to do earlier now requires one person to do. That's the benefit of progress.
POM Now you're caught in this kind of dichotomy of where you want to change the ethic of culture where there has been for a long time a culture of entitlement, if you want to call it that, I don't know whether that's a good word or a bad word, but where people expect things to happen for them so that they haven't to go out and do them themselves. Is government doing enough? What has struck me coming here now for seven or eight years is President Mandela would have referred it two years ago when he talked about a new patriotism, I get no sense of everybody saying we're in this together, no sense of national cohesiveness, that maybe in this generation we're not going to do so good but we're laying the groundwork for the next generation and we're free to do that; that you have too many people saying I'm all right Jack and I want to be more all right and I don't really care about the other guy as long as I'm all right. I don't get that. In fact it was Mr Motlanthe who referred to this to me in an interview with him, he said, "One thing I've got to say about the Afrikaners is that after 1948 when they wanted radical transformation they went about it with a vengeance but besides their oppressive vengeance was that they created a cohesiveness among themselves that unless we hang together" - the old survival thing or whatever.
MG I think there is that strong vision today, there is that sense. The speech by the Deputy President that he made in parliament, the well known piece about 'I am an African', I think that demonstrated some sense of pride and the need to stand together and the need to work together. I would say in our area, in the area that we're working in our modest contribution is the following: by providing bursaries to miners and clothing and textile workers we are creating a generation that would in the normal course of events not be able to go for tertiary education but are now empowered to have a better opportunity than their father or mother had. So that is a very small contribution.
POM It's a very real one.
MG It's a very small one but, as you say, it's a very real one that can help thousands of people go to university, skill themselves and help themselves in the future. They're better off than their parents and they can hopefully stand back with some sense of pride and say, look, this is my dad's organisation, this is my mother's organisation that helped me get a better start in life. Now to us that has a radical impact on society, it's a small contribution but has a radical impact on the society. It means that it's not only the privileged few that need go to university but that some more working class kids can have the privilege of going to university. So I think there is that sense of national pride, there is that sense of working together but one has to also understand that there are competing interests in this society. Similar businesses are vying for similar transactions. That's the major capitalist problem unfortunately, that there is intense competition. It's often believed that the competition gets better pricing systems, it gets better deals for consumers. These are some of the trade-offs that I suppose the society has to deal with. But I do believe that there is a patriotism in the country. It may not be as strong as we would like it to be but I think people do believe that they have a unique moment which is true. We have unique moments to radically transform various areas of the society. Our own experience is a typical example. Who would have imagined that we could build a company of such magnitude. Again, it's not very big but it's a small contribution and my view is that all these small little contributions add up.
POM Anything that goes from three million to R400 million is not small.
MG What I'm saying is that all these little small contributions add up and give you a much fuller picture of the diversity and the complexity of the society and I think each one has to work in their own little way with the national objective of saying, I want to make a contribution that makes a difference. I suppose our contribution is that it's modest, it's small, it's focused and hopefully in the sum total can make a contribution.
POM Do you ever line up with other investment companies like NAIL or whatever and talk about developing common complementary rather than competing strategies?
MG Sometimes. Sometimes one has that opportunity, sometimes one does. Sometimes you're competing in the same markets. For example, we compete in radio in certain markets. They're buying a stake in Goldfields, the mines. We already have a stake in JCI. So there are different interests, different shareholders that are represented. The distinguishing feature about shareholding is that it's two big unions that are the major shareholders. I don't think there is any company on the Johannesburg Stock Exchange that has two unions run by former trade unionists that are controlling shareholders. I think it's a unique feature.
POM Have you been able to make any leeway in selling that model to COSATU on a larger basis?
MG Padraig, if you've been following the press in South Africa we get a lot of criticism. Johnny and myself we've been under a lot of criticism but we're still firm in our belief that what we're doing is the appropriate way to go and notwithstanding all the criticism every single trade union barring three have established investment companies. So even though they criticise they've done exactly what we're trying to do. The only distinguishing feature is that we have racked it up to the next scale, we are no more private companies, we're now public companies. We're listed on the Johannesburg Stock Exchange and we run as a company that is rigorously subjected to the rules of the Johannesburg Stock Exchange. This is our company's annual report. This year it's a very modest one, no colour photos or anything, we're just keeping it plain and simple. Next year it will be much more colourful, let's put it that way. We've only been in office for six months so our ... are fully over counting we'll be able to do a bit more razzmatazz in it, but for the moment it's just plain and simple.
POM Have all these changes affected - where have you come in your thinking from when I met you first to where you are today?
MG I'm older.
MG A few more grey hairs.
POM Do you see it as a natural outgrowth of what you were doing or do you see yourself as having undergone a transformation with the realisation that if South Africa is to make it, if there is to be this upliftment it must see itself in a different context, not the small context of South Africa but the larger context of - ?
MG I've always been a reasonably pragmatic person, experience has always been the greatest teacher for me, practical activity. I think obviously my ideas in some areas have been tempered very much by the constant realities of what's possible and what's necessary, what the constraints of the moment are and as much as I desire to do other things the realities that are imposed upon one are such that you have to deal with the problems at hand. What we're doing is very much, I think, an outcome of our trade union activity in this sense, we always had to strike a deal to solve the problem. You couldn't have an intractable war, you had to have a peace settlement at some point. I suppose business is the same. You've got to do the transaction, you've got to solve the problem, you've got to build, you've got to take it to the next phase.
I think I've changed in the sense that I think that the complexities of the economic activities that one is presently engaged in are probably much better understood now from my point of view. Not that we didn't understand it when we were trade unionists. I think that when you're in opposition you can promise, when you're in government you have to decide or you have to rule and I think the same thing applies in business. In the trade union you're fighting mainly an oppositional battle to stem the tide, where we're now sitting as investment managers. We have to make decisions that have certain consequences.
I think we've all been impacted by the change and the dramatic process of the change and I think a lot of our ideas that we may have had about the possibilities for more radical change have been tempered just by the realities of the moment and that is that change is a constant process but it's a slow process. You cannot build a society of immense prosperity when millions of your people have no basic education. You cannot create a skilled labour force when millions of your people have no basic education. So you've got to build that platform on which you can create a skills base, educated working people who can contribute to the society in a way that makes sure that they get the full fruits of their labour.
POM Do you think there has been a change, I'm not just talking about the Mineworkers Union in particular, but a change in the relationship between business and labour, that business is far more sensitive to the needs of labour and that labour is less adversarial in its relationship and sees business or capital as the opposition?
MG The thing is, I would say it's wrong to say, we mustn't classify all businesses as the same. Some businesses are very, very progressive, they've taken cognisance of some of the issues the unions have raised, they have gone way beyond what was initially anticipated. Some businesses have Essop schemes, some have productivity sharing schemes, some companies have worker/directors in their companies. They have a whole range of things, they've gone very, very far down the track. Other businesses are still reactionary and slow and tardy and repressive but given the diversity of business itself they also have competing interests, they compete in certain segments of the market, they're cutting costs and things like that. I just think that business's response has been uneven, it's not been a common response. I think what business has been mainly concerned about has been the bottom line which is understandable in a general respect, that it's the pension and provident fund moneys.
I always spend a lot of time trying to explain to workers how they are linked into the system whether they like it or not. Their collective savings which are taken at the end of the month are deposited with the life assurance company, that life assurance company invests it in companies which they very often work in. If they strike it affects the profit which in turn affects the dividends which in turn affects the long term savings. So it's a whole circle in which you're intertwined into the system and one has to be circumspect when one says that you are trying to destroy, when you say you want to destroy the system. You actually destroy your own wealth which is tied up in your pension and provident fund, your retirement savings, so that's why the issue is not to destroy the system but to change the system in ways and means that benefit and grow beneficially for all in society. That's why social justice and social equity or socialism probably to me means that. It seems to me that it will have to be done in the confines of the capitalist society. That's the frame we're going to have to work in.
POM I've been going between the US and Britain and Ireland for a bit and they all know the kind of work I'm doing over here and I've got to educate them a bit. But one thing that comes up is this Basic Employment and Conditions of Employment Bill. Americans, their mouths are agog in the sense that the legal number of holidays they get, the annual legal leave they get is ten days. There is unpaid maternity leave. That's it. I don't think there is, except for children, a legal age or the maximum of hours that can be worked per week. The same in Britain, they're saying this is a developing country and they're looking for standards of employment that don't exist in first world countries. They're just competing themselves out of the markets. Foreign investors will look and say I'll put my money elsewhere. Have you run into that? Were you asked about it?
MG Yes, but the thing is you have to take a decision on what your standards are, that's a decision which each society has to take. The reality of the matter is that the United States is a much more liberal market and a much more unregulated market.
POM It's a much more harsh market.
MG I agree, and in certain parts of the United States, certain states have a much harsher set of conditions. I suppose in South Africa what we get is what we fought for and it's not necessarily bad to have acceptable standards. We cannot have a society with any dignity based on poverty. You can't base it on having children working in mines.
POM Oh no, this is more, again, like striking a bargain, saying the way ahead here is - it's realistic to talk about - well let's set a goal at about the year 2005, we'll be down to 40 hours a week and that'll put us among the best of the best in the world.
MG I think at the moment hours haven't changed, hours remain very much the same which is what normal industrial nations have, but it's left very much to industries to decide. If they shorten the working hours it doesn't necessarily mean that you have to earn the same wages. They could cut wages commensurate with the number of hours, they could create more jobs as a consequence. I think our Employment Standards Bill, barring one or two points, seems to me a fair bill, it's not a radical piece of legislation. Some may feel it's not appropriate for a developing country but I think that's what we believe ought to be the norm.
POM What would your own view be? Is it for South Africa at this stage of its development?
MG I do believe that what we have to do as a developing country is work harder and work longer, invest more for the future, provide the sacrifices. But I think for working people the question will always be, if I am sacrificing, what is in it for me and my family? And if the response of the employers is that these are the benefits that flow to you in terms of the reciprocity, wages, these are the benefits that flow to you in terms of your family, I think working people are very sensible. They're not unpragmatic. I've worked with workers for many years and they make hard choices and difficult decisions because every day is a grind for them. If they had a choice to get a job which pays, keeps debtors from the door and gives bread on the table they'll do it. That's what sensible people do. And I don't think the Employment Bill will stop that. I don't think there is anything in the Employment Bill, probably barring maybe the addition of maternity leave.
POM I'm just throwing that out, it's not that I'm against any of these things, I'm just saying that others could argue, again, as far as I can gather from the surveys done of the amount of real foreign investment coming into the country it's been far below what was originally anticipated and it's modest by international standards and, again, it's partly because of the fact that capital can move overnight from here to Malaysia to Thailand to Scotland to wherever and that therefore one has to be competitive. In your view why is more foreign capital not coming into South Africa with its immense natural resources, its good infrastructure?
MG I think it's less to do with our Asian markets than what we do with things like foreign exchange controls. It probably has more to do with the question of perceived currency risk in South Africa, probably security risks. These would be some of the other considerations.
POM When you say security you mean crime?
MG Crime, the perception of crime, and secondly also perception problems. Many people have views on South Africa who never even visited the country. Everyone used to say that New York was the murder capital of the world. When I went to New York I was stunned, I couldn't believe this was the murder capital of the world. It's obviously changed a bit. Now in the same way they say Johannesburg is the murder capital of the world. Sure Johannesburg has muggings like Brazil, Rio de Janiero has muggings, but a lot of investment decisions are often taken by people behind screens. Entrepreneurs actually come out to South Africa, they're investing and there's a lot of money coming from some. Malaysia is investing substantially in the country. Obviously we need more and more foreign investment but I think the surest sign of confidence in the country is when domestic capital invests inside South Africa.
POM That is still not happening is it?
MG It's slow but it's not happening at the rate that it ought to be happening, but government is doing its role by increasing its share of fixed domestic investment, the infrastructure, making it easier for businesses to invest so that they have the adequate facilities from an airport point of view, from a transport point of view, from a tariffs point of view. Change is a slow process.
POM I travel from Johannesburg to Pretoria, it's like one long construction site. The traffic jams are now two hours and trying to get a seat on an airplane you've got to book days in advance.
MG You can't find an hotel in Cape Town.
POM That's right.
MG The thing is things are happening but they're slow, they're not as fast as they ought to be and I'm informed of many, many people out in areas that had no water that today have water, that had no health care who now have health care. A major impact has been made on their lives. It's probably for those who have had lots or may have had a job and now don't have a job or that may before have been privileged to get to a clinic and be helped immediately and now have to queue, they're a bit upset by this, by this new order.
POM So why do you think, just to finish up and thanks for your time, why is domestic business still so slow to reinvest? What is it waiting on? Government is now almost neo-Thatcherite in terms of fiscal responsibility, in terms of the deficit down to 4% of GDP. What makes it so slow to take the risk of investing here when it can see internally the changes that are taking place, the fact that there has been successful political transformation?
MG I think business is also having choices now. There's a bit of relaxation on foreign exchange. They're also having choices whether they should invest here or invest abroad. Many of our mining companies are becoming very internationalised and diversified. I think the other problem is capital is expensive in South Africa, high real interest rates and it makes it difficult for people to invest. You get a better return on your money, a fixed rate return on your money in bonds or other things than to invest in other more risky opportunities. I imagine if capital is slightly cheaper you could very well get more of a spurt, a spurt of growth.
POM So one out of ten, going into the fourth year of change, one being the country not doing so well and ten being it's doing splendidly, where would you put things?
MG Seven. I think we're going well. There are problems I think but that's the problems that we inherit. Seven, seven and a half, I think we're doing OK. We'd like to be eight or nine but I think we've been seven and a half, maybe slipped to six but back to seven. I think it veers between that but I think we're on the right tracks in the right direction. It's not as though we're on the right tracks in the wrong direction. I think South Africa has still got immense opportunity. It will only come through hard work and really what we've got to do is create the environment and the culture and the spirit in which people can help themselves. America has done that in many respects. People see it as a land where they can achieve things, the government doesn't stand in their way but is there to aid them to get there.
POM Just to finish up, Ireland from 1920 to the 1980s, nothing much happened, but from the beginning/late 1980s it began to move into a cycle of sustained economic growth. It's now called the Celtic Tiger, it has the highest growth rate of any economy in Europe, it's up to 8% a year. Money is pouring in and it's suddenly become the place. I can remember growing up and saying this place, my God, it's so depressing.
MG I'm very optimistic.
POM Thank you ever so much for the time.