Though SA’s competitiveness has regained momentum after the recent shift in its political landscape, it is still being held back by a lack of labour market flexibility, says the Global Competitiveness Report, which was released on Wednesday.
The election of President Cyril Ramaphosa to lead the ANC and the country has largely been heralded as the beginning of a new dawn in SA after the rot that grew during the nine years former president Jacob Zuma was in office.
“For instance, flexibility of wage determination is limited and hiring foreign labour is difficult,” the report reads.
Labour flexibility has long been cited as one of the main hindrances by foreign investors wanting to come into SA.
“SA’s sensitivity to exports of mineral resources is likely to hit the country’s economic outlook and will make reducing unemployment, projected above 27%, challenging.
Structural reforms needed
“Against this backdrop, structural reforms are needed to reignite the economy and offer better opportunities to a larger share of SA citizens,” the report says.
SA jumped seven places up to 60 in terms of competitiveness in the report rankings.
“The country is a regional financial hub, with well-developed equity, insurance and credit markets, all achieving a score of 100.
SA has also developed “one of the most advanced transport infrastructures in the region and is among one of the top countries in Africa for market size”.
Health conditions — though starting from a low base — have improved, adding 3.3 years to the average healthy life expectancy since the last assessment.
“Institutional quality has also improved, but unevenly. Some aspects of this category have achieved remarkable progress, including restored balance of powers across different state entities, enhanced administrative efficiency of the public sector and corporate governance.”
But this hope is gradually beginning to dim as low growth, unemployment and factionalism in the governing party continues unabated.
Security remained one of the main constraints to SA’s competitiveness, while transparency and “government adaptability to change” were also below par.
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