Economic reform delays and regulatory hurdles hinder job creation
I refer to ‘Survival mode’: IDC warns growth engine is collapsing, August 7, and ‘Beyond depressing’: GNU gets the blame as youth joblessness spirals, August 12.
One of the central problems of the South African economy is that the structure of costs and prices relative to that of our trading partners is seriously misaligned. One indicator is that our industry policy is largely based on subsidies, which is hardly sustainable without causing significant economic damage in the longer term.
Productivity growth is similarly out of kilter. These and other imbalances, such as our less-than-sophisticated regulatory architecture, limit the capacity of the floating exchange rate mechanism to perform the economic heavy lifting.
The often long time taken to implement economic reforms is also of concern. The nature of the problems of maritime ports, for example, has been well known for over a decade, and leaders in the export and related industries have presented the solutions. Yet only recently have some halting steps been taken to address the issues.
Economic researchers, of which South Africa has some excellent practitioners, have argued that significantly increased gross fixed capital investment is a key to faster real per capita economic growth and thus to a reduction in South Africa’s appalling level of unemployment.
A note of caution is important here, though. There is no iron-clad positive relationship between a growth of output and a growth of employment. To assert otherwise is to embrace a weakness in Keynesian economics.
A major stumbling block here is an imbalance between the technology of production and the skills of the available workforce. Any investment policy must necessarily address this fundamental deficiency. “Build it and they will come” might be fine for soccer stadiums, but it’s a high-risk policy for economic growth.
Dr Doug Blackmur
Table View
It is shallow to blame GNU for employment crisis
It is very shallow for anyone to blame the government of national unity (GNU) for the country’s unemployment problem (‘Beyond depressing’: GNU gets the blame as youth joblessness spirals, August 12). It is important to understand that we are struggling with our negative labour legislation and, even more horrific, onerous regulations.
The political parties making up the GNU have enormous differences, in particular about job creation. While all parties agree that unemployment is not acceptable, the ANC, MK and EFF are all pushing for more central control and the government creating the jobs.
This centrist, communist ideology has failed the labour market for almost 100 years. The interpretation of Marxist philosophy has gone far beyond what Karl Marx himself said. In a conference in France, Marx even said: “I am not a Marxist”.
At least most parties are now starting to agree that unattended service delivery has a negative effect on job creation. It is therefore important to see which political party enhances service delivery and for the voters to get out there and vote for jobs.
Michael Bagraim, MP
DA employment & labour spokesperson
Ballot box is the place to start changing SA
Given the depressed national mood, it was inevitable that Women’s Day would be a moment to decry the country’s failings. Sophie de Bruyn, the last surviving member of the 1956 Women’s March, eloquently referred to the “cruel suffocation of entrenched poverty, lack of clean drinking water, homelessness and systemic corruption” — a far cry, she noted, from the hopes invested in the democratic order (Women’s March leader Sophie de Bruyn calls for new mobilisation against gender-based violence, August 9).
This is correct. But this distressing state of affairs is in large part the consequence of choices made, not just by crooked politicians and opportunistic “business people” but by millions of ordinary people who exercised ― or failed to exercise ― the political agency that democracy makes possible.
Governance pathologies in evidence at the time of the transition were subsequently compounded by the open and deliberate politicisation of institutions meant to be nonpartisan, by a lacklustre approach to corruption and incompetence, and by a political culture that often romanticises violence and feeds off toxic division.
It’s hardly surprising that the South African economy chronically underperforms its potential and that annual economic growth of 1%-2% falls behind the 5%-plus other middle-income countries manage. Or that a third of South Africa’s workforce is unemployed, with the immiseration that implies.
Democracy guarantees neither good governance nor prosperity ― merely the possibility of making the appropriate choices and removing from office those who fail to do so. No amount of outrage or anguish or civic protest can compensate for this.
As long as a critical mass of the country’s voters refuse to punish this at the ballot box, South Africa’s woes are certain to continue.
Terence Corrigan
Institute of Race Relations
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