SA is in the wrong place in terms of the structure of the economy," Zwelinzima Vavi, general secretary of the Congress of South African Trade Unions (Cosatu), says. He made the remark on Thursday at the CNBC Africa "Great Economic Debate" held at the GIBS business school in Johannesburg. His view echoes that of Trade and Industry Minister Rob Davies at the same forum. He says SA's economy needs "big structural change". It must improve its skills and technological base to underpin industrial development and the beneficiation of SA's mineral wealth. But Mr Davies makes no reference to the role of business in SA, despite the private sector driving 70% of economic activity. Instead he speaks of the imperative of the "strong developmental state", citing its success in emerging economies, especially China's economic model. Public enterprises, he says, need to perform "strategic developmental functions". Observers are left wondering if government policy is premised on a vision of commerce only being a servant of the state. "Not the state — the people," Mr Vavi says on the sidelines of the debate. "In making money you can help the country develop, and deal with inequalities." Mr Davies wants more harmonious and co-operative interaction between economic actors and says the "democratic revolution" envisages a mixed economy. But Herman Mashaba, chairman of the Free Market Foundation, says SA needs to remove inflexible labour laws and fix education. Our labour law encourages the view that business is the people's enemy. "You go into business to make money" and "must not mislead anyone that you go into business to help others". The ruling alliance's stated economic intentions are to implement a "jobcentred economic framework".

This places the creation of "decent work" at the centre of poverty alleviation. Mr Davies says SA needs to understand its place in the global economy, "and not compete in a race to the bottom over wages and (working) conditions". This goes to the heart of the debate over SA's political economy. The government, in many of its political shades, wants to direct and implement poverty alleviation, using the purchasing power of state-owned enterprises. It wants to use infrastructure to drive job - creating economic growth, and places the re - industrialisation of the economy at the heart of its efforts. To this end, the private sector is expected to fulfil a raft of obligations under procurement and labour legislation and new economic empowerment codes in order to compete for state tenders. But Jabu Mabuza, president of Business Unity SA, says: "You can't legislate where money should go."

While SA's industries must add value, they cannot do so at the expense of making a return. He does not agree that SA's problems are caused by the free market, and South Africans "must recognise 85% of jobs are generated by the private sector". However, he also says it is not "business as usual" in SA. This leads to questions about how SA will reconcile empowerment with competitiveness. Mr Vavi says business cannot just "hire and fire", and Mr Mabuza says strong unions must ensure workers are not exploited, but must also acknowledge the need for flexibility in a cyclical economy. Nedbank senior economist Nicky Weimar agrees there is a role for the state in developing infrastructure but says it has not performed. She also agrees apartheid has left a Legacy of structural problems, but says the existing labour market is an "impediment to growth". SA needs "to establish a labour market that rewards excellence and productivity".