Ann Bernstein has a radical, but not totally unique proposal: Create an experimental economic zone where workers can be hired on different terms than the rest of South Africa. Here’s the idea.

Imagine an experimental economic zone where South Africa’s labour laws are rewritten – not to exploit workers but to lift South Africans out of poverty.

This is Ann Bernstein’s idea: an experimental zone at Coega in which some regulations, particularly in the labour market, are modified to stimulate the growth of export-oriented firms that can compete in labour-intensive manufacturing sectors.

“We’re saying, let’s try this experiment. If we’re wrong, we’re wrong,” the head of the Centre for Development and Enterprise says.

It’s not a revolutionary idea, after all, South Africa already has dedicated special economic zones (SEZs). Yes, she says, and “most of the zones don’t work. Why? Because they’re not special.”

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Bernstein says that South Africa and other countries’ SEZs fail because it is thought that “if you can just demarcate an area and you provide some subsidised infrastructure, that will attract investors. Overwhelmingly, it doesn’t.”

So what would make Bernstein's Coega zone idea special? In a word, focus.

The Bernstein Zone

“Start by manufacturing very simple things, like basic t-shirts, then graduate to basic toys,” she says, beginning to flesh out her idea.

This different kind of zone – let’s call it the Bernstein zone – needs a clear purpose, different labour rules, voluntary participation, specific location and ease of governance.

The Coega SEZ in Gqeberha would be a good location for the Bernstein zone because it has vacant land and an underutilised port.

“It is also located in a region with one of the highest unemployment rates in the country,” she says, which provides the perfect opportunity to think “out of the box”. There’s a willing labour force waiting for opportunity, she adds.

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The port would be perfect for export market firms she’d like to attract.

Creating flexible labour laws that differ from the rest of the country would be one of the defining features of this idea.

Bernstein says:

She goes back to the t-shirt example and says that if a factory gets an order for a million shirts in a certain time frame, workers will need to work overtime. “But the manager can’t pay overtime rates. So you need consultation and flexibility. That’s what’s required.”

She is clear that these rules would only apply in that zone, a testimony to the experimental idea and an appeasement to labour unions.

“Laws would only apply in this zone and not the rest of the country, so it doesn’t affect long-fought for labour rights,” she says.

Considering the unemployment rate that keeps increasing and the fact that more and more people are unemployed, Bernstein is convinced that there will be people who would take up the offer.

She says:

And if you’re worried that these products will compete with the local market, the ‘Bernstein zone’ is an export-only zone. This protects the local industries and, crucially, expands South Africa’s global supply chain markets into new frontiers.

“The benefits of manufacturing for the rest of the economy, the externalities are enormous,” Bernstein says. Entrepreneurs would learn to run modern factories and take advantage of global shocks that disrupt supply chains.

Hard sell

If this idea has all these advantages, with the risks mitigated by a strict time period to ensure its experimental status, then why has it not been implemented?

“You need local support. We need politicians who are prepared to say, ‘I think we should try this experiment’, who are prepared to take a risk and to make the case for such an experiment,” Bernstein says.

Questioned about the long-standing union power and ideological commitment to high-standard, formal jobs, she admits that this is a hard sell.

“This is a difficult idea to sell and we haven’t succeeded in selling it yet. However, unemployment is also a difficult thing to sell,” she says, referencing political parties – particularly the ANC – and the election campaigns that promise jobs for all.

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“If we keep doing the same thing, we’re not going to get results,” she reiterates.

Bernstein is a powerhouse in the field of development economics; she has shaped national discourse for at least three decades. Her insights are grounded in rigorous data and a pragmatic, pro-growth philosophy that prioritises long-term results over “crowd-pleasing” rhetoric.

So when she challenges, you best lend her your ear:

This is how we make a dent in unemployment, particularly if you want to create five million jobs in 10 years, she says.

“The choice is no job at all, or a basic job that could be a stepping stone.”

This idea, and examples of how this worked (and didn’t work), is expected to be part of Bernstein’s pitch to influential leaders at News24’s On the Record Summit this week in Cape Town.

She will be taking the stage on day 2 (Friday), as part of panel 4: To BEE or not to BEE?

Find out more about the On the Record summit here.

If you are interested in attending the On the Record summit in-person, please contact us here.