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Report paints a grim picture of SA’s deep economic crisis, says only a mind-set shift will help address the challenges
The legacy of apartheid, bad policy choices by the democratic government and the corruptive governance of the Zuma years, have combined with global economic forces to land South Africa with the title of having one of the worst rates of growth and the highest levels of unemployment in the world.
And in order to turn this around, President Cyril Ramaphosa’s government is going to have make “politically difficult decisions” and implement them very quickly.
A Centre for Development Enterprise (CDE) report released last week paints a grim picture of unemployment in South Africa, where 10.3 million people of working age are unemployed.
Titled Ten Million Rising: What would it take to address South Africa’s jobs bloodbath, the report also suggests some solutions, many of which would require a major mind-set shift on the part the government and the ANC.
The CDE says while South Africa has endured low rates of growth and employment for the past 40 years, the labour market has “performed particularly badly over the past decade”.
“Between 2008 and last year not only did half the people coming into the working age population fail to find work ... the number of people in the unemployment queues rose by nearly 60%,” it says.
The report argues that “given the depth of the crisis and the potency the forces that have created and deepened it, there is little prospect of its being resolved quickly”.
According to the CDE, South Africa needs to move with haste in getting the unemployed into some form of jobs because “one of the more insidious and damaging consequences of joblessness on the scale that we have experienced it is that ... long-term unemployment reproduces itself as the becomes less and less employment-generative”.
Read : SA’s economic paralysis is a leadership crisis
On the macro-level, the CDE proposes self-evident measures such as ensuring a sustainable energy supply, getting the nation’s finances in order, tackling the skills crisis and encouraging the import of skills.
Launching the report, CDE executive director Ann Bernstein, said the interventions of the past 20 years had not worked.
“Our unemployment level is a devastating signal of failure ... There are no small reforms that will make an impact,” she said.
Bernstein points out that the key could lie in the very phenomenon that is a by-product of poor investment in education and training by both the apartheid and democratic governments: the abundance of unskilled labour.
To this end the country should move away from its preference for capital intensive industries and focus on labour-intensive sectors with a much higher capacity for absorbing low-skilled and unskilled employees.
The state should therefore encourage the growth of new and smaller labour-intensive firms by, among other things, and reform the labour market to make it easier for employers to hire workers.
Such reforms would include loosening the bargaining council noose around smaller and newer firms; de-risking employment decisions by giving employers the ability to fire workers much easier during the probationary period; reconsidering the use of labour brokers for temporary employment; streamlining the provisions of the national minimum wage; and making sure that annual upward revisions of the minimum wage are not just indexed to inflation but take into account the conditions on the ground.
The CDE says labour reforms should not be aimed at changing the working conditions or benefits of existing workers but rather to ease the entry of those who are on the outside into the labour market.
Read : South Africa’s economic woes not unique
“A low wage job is the better first step than no job at all,” said Bernstein.
Other critical steps, some of which have been articulated by lobby groups, include fostering competition by making the regulatory environment more efficient and easier to navigate; creating policy certainty; increasing and expanding the employment tax incentive; and making cities attractive and livable by going for densification and improving public transport.
The think-tank suggests that interventions should be piloted at a generously incentivised labour-intensive export processing zone in the Nelson Mandela Bay in Port Elizabeth which would attract local entrepreneurs as well as foreign investors.
The report says while sections of the ANC and its tripartite alliance would be “deeply sceptical” of these changes “if government allows this scepticism to continue to act as a veto over all progress, then there is no prospect of our changing the dire trajectory along which we are currently going”.
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