Six weeks after South Africans voted for change, the new coalition government had a cabinet lekgotla at the weekend to develop a programme for the next five years. This programme will be based on election manifestos that do not provide plans to confront the unemployment crisis, and a National Development Plan (NDP) that has not informed macroeconomic policy since it was published in 2012.
The ANC and DA manifestos — the two parties account for a combined 87.5% of the seats that the 10 members of the coalition have in parliament — do not have GDP growth targets. For the ANC, this is strange since the NDP has a GDP growth target of 5.4% a year. Every year since 2012, the Treasury has blue-ticked this target without ever providing a plan on how to achieve it.
After 16 years of falling average living standards, the most recent Budget Review forecast average annual GDP growth of 1.6% a year from 2024 to 2026. In other words, by 2026 GDP per capita will be lower than it was in 2007. We cannot continue like this, but the cabinet lekgotla will pay lip service to the NDP and not provide a plan to achieve the 5.4% GDP growth rate. If nobody is responsible for achieving the NDP’s most important macroeconomic policy target, the government may as well throw it away.
The ANC’s manifesto did not have a jobs target. The DA’s had a target to create 2-million jobs over five years. On the current trajectory — an annual GDP growth rate of 1.5% — the labour force will increase by 3.5-million during the next five years, and the economy will create about 1.2-million jobs. The DA target is only 800,000 higher than the jobs the economy would create with low GDP growth, and the number of unemployed people will soar by 1.5-million to 13.6-million under this lame scenario.
The ANC’s manifesto has a target to create 2.5-million “work opportunities” within the country’s three public employment programmes (PEPs). But the 2024 budget made cuts of almost R10bn to these programmes, which will slash annual work opportunities by about 50% to 900,000. The ANC also pledged to introduce a basic income grant (BIG) within two years. To meet the ANC’s commitments, the 2025 budget must include increased funding for PEPs and the introduction of the BIG.
The NDP had a target to create 11-million jobs and reduce the unemployment rate to 6% by 2030 using the official definition. (The above analysis is based on the more realistic expanded definition). But SA hit the NDP’s 2030 forecasts for the working age population and labour force in 2020 and this year respectively. With new projections slightly lower than the five-year prepandemic average growth rate, the labour force will increase to almost 28.9-million by the end of 2030.
The economy will therefore have to create 10.4-million jobs from the fourth quarter of 2023 to the fourth quarter of 2030 to achieve the 6% target for the unemployment rate, according to my modelling. This is equivalent to almost 1.5-million jobs a year, which will require an annual GDP growth rate of 8%.
Over the past week I have been reading horror stories about the devastating effects of 14 years of austerity under Tory rule in the UK. Nobel laureate Paul Krugman wrote in the Guardian about the new Labour government: “I hope to be proved wrong. But right now it looks as though the shadow of austerity policies adopted in error 14 years ago will continue to darken Britain’s prospects for many years to come.” Krugman could have been writing about SA.
The people of Mzansi voted for change but there will be no change under this right-wing ANC-DA coalition. The government of national unity will continue with the farce of pretending to implement an NDP that should have been tossed in the bin long time ago.
• Gqubule is research associate at the Social Policy Initiative. He writes in his personal capacity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.