This was supposed to be the year for job creation. The African National Congress promised to make jobs its uppermost priority. It proposed to fulfil this promise by fiddling with various knobs of the state machinery that would supposedly create millions of jobs within a few decades.
In the short-term, government took on many smaller projects designed to be as labour-intensive as possible so as to absorb some of the unemployment immediately.
The strategy hasn’t worked because it is based largely on South Africa achieving a good economic growth rate. It hasn’t happened, and according to various forecasts, this isn’t going to happen anytime soon either.
Unemployment will become an even bigger political issue in years to come than it is now. It is concerning to note the fuzzy and muddled approach the government and main opposition party seem to have on the issue of jobs. The issue isn’t even being addressed in as clear terms as the muddled service delivery has to date.
In fact, there are differing analyses of what the problem is. Cosatu believes the solution to the unemployment problem should be a government with a massively scaled up delivery capacity. In other words, it believes our government ought to be able to do everything, so there is never a need to contract out any function. The finance minister has been complaining the public service wage bill is too big. It’s tiny now compared to what it’ll be if Cosatu has its way. Also, the trade union federation wants the government to rekindle the manufacturing sector, while still maintaining the high labour costs (or decent living wage, as Patrick Craven might call it).
The National Planning Commission largely agrees South Africa needs to rekindle a labour-intensive and big manufacturing, agricultural and mining industries.
Both the NPC and Cosatu are looking to create a South Africa with a glut of giant industries that produce high-end goods for export. In essence, they’re saying the country’s unemployment problem arises out of a failure on our part to run certain industries at full capacity.
These days I’ve become quite interested in what the young people in politics have to say about these things.
We’ve already heard too many times what the ANC Youth League proposes. Though its position has all-too-often been watered down to the call for the nationalisation of mines, what it wants is actually much broader. The league also calls for the expropriation of land without compensation, under the impression this will deliver instant economic gratification to the huge masses of poor blacks. It calls for control of the banking system and a solidarity tax on high-income earners.
The ANCYL almost completely ignores the issue of small enterprises, entrepreneurship and business education. They have no interest in growing the pie, only dividing it up more equally.
I recently came across a document by the DA Youth on entrepreneurship. Entitled, “Creating A Vibrant Entrepreneurship Culture: Proposals for the facilitation of increased youth entrepreneurship in South Africa: A DA Youth discussion document”, it aims vaguely in the same direction as the NPC’s national development plan, but I doubt anyone could have penned a document more opposed to the Youth League’s plan than this one.
There are some valid proposals, including a youth wage subsidy of sorts, but most of them are untenable – for instance, after calling for life orientation in school to be replaced with entrepreneurship, the DA Youth calls for “opportunity vouchers” for successful matriculants.
“All matriculants who successfully pass matric should qualify to receive an opportunity voucher from government to the value R2,000 which can either be used to fund the costs of further education at a SAQA-registered institution or to subsidize the costs of a small business, subject to that young person attending an accredited business development programme and submitting acceptable business plan,” the document says. “The training should be offered by the Department of Trade and Industry in conjunction with the NYDA, KHULA and SEDA. The training should run for at least 14 days and cover areas like business management, financial management, accessing credit, identifying markets and other core business concepts.”
My immediate feeling is that while the DAY has its heart in the right place, this solution is wrong and too expensive. It’ll place an undue burden on the state. It isn’t quite explained where the money for opportunity vouchers and the free education is to come from.
Also, merely equipping people with the necessary skills to become entrepreneurs while keeping the environment hostile to little businesses isn’t going to change anything. The reason why there are so few entrepreneurs in the formal economy of South Africa (it is a mistake to say there too few entrepreneurs, period. We have a robust informal economy based entirely on small entrepreneurs.) is because the barriers to entry are too high, financing is hard to come by and the cost of failing is simply too high.
Simply put, entrepreneurs ought to be able to fail repeatedly if we are to see a significant increase in the number of small enterprises. Also, there should be a greater focus in devising strategies to allow the numerous informal sector entrepreneurs to scale up.
The DAY and the ANCYL plans both make the mistake of completely ignoring the outside pressures to which our economy is subject. We are completely at the mercy of foreign markets. Any economic plans devised need to take full cognisance of that. A massive capital flight due to silly policies may be South Africa’s biggest economic threat in the coming years.
But not to be too harsh on the kids – there isn’t much clarity from the adults about how we’re supposed to create an economy of 5-million more jobs and an average growth rate of 5% in the next years.Perhaps a jobs riot or two early on in 2012 will help to focus minds. DM
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