The world is facing an uneven crisis of unemployment, particularly third world countries compared with industrialised economies. South Africa has one of the highest unemployment rates in the world, currently measured at 27% unemployment and 60% youth unemployment.
Our policy makers have been misled by mainstream economics that proposes an economy that is controlled by the markets. The façade associated with the markets is that they are fair, free and redistribute the wealth equally amongst a society.
President Cyril Ramaphosa, in this year’s State of the Nation Address, promised that he would host an unemployment summit in an attempt to source solutions from different stakeholders in society, labour, business, academia and government. We have yet to see that summit taking place.
There is much doubt that this unemployment summit will be able to resolve the problem of ever-growing unemployment in South Africa. Rather, the unemployment problem will be resolved by the dissolving of capitalism and the market-led economy which causes the economic exclusion of a large number of the population.
In addition, Statistics South Africa, Quarterly Labour Survey released in July 2018 show that unemployment has drastically increased to 27,2%.
The South African manufacturing sector has been declining since Trevor Manuel and Derek Keys drove South Africa to the premature trade liberalisation and financialisation that allows the WTO (World Trade Organisation) to determine our trading tariffs.
South Africa’s auto-industrial sector was once one of the biggest employers in the country. Around 1996, the South African government envisaged creating a developmental state that focused on building state capacity to discipline capital and promote industrialisation.
But due to the market-led economy, South African tariffs have been controlled by the WTO – this has not been in the interest of South Africans but rather serves the interests of large corporations. In this case, the import duties for completely built vehicles and completely knocked down were reduced from 65% and 49% respectively to 20% in 2012 in order to comply with the WTO rules on liberalisation of trade and investment.
This results in an increase in the unemployment rate. It is erroneous to say that a market-led economy will create jobs with a depletion of the exchange rate determined by the WTO.
It is undeniable that South Africa’s economy is characterised by cheap labour and the continuous increase of unemployment. Furthermore, there is a belief held by big business that South African labour has become too expensive, especially in the mining sector and manufacturing. Hence, last week Impala Platinum announced its intention to retrench 13,000 workers.
Consequently, many employers and industries are leaving South Africa to venture into countries where the labour wage is cheap.
The textile industries have lost thousands of workers since 1994 partly because of competition with Asian countries.
South Africa’s manufacturing sector and supermarket chains are declining due to globalised competition, especially with China producing cheap products.
Mainstream economists with their market-orientated approach forget that today our society is confronted with the perpetual and rapid increase of unemployment because of the self-regulated market. The question remains, if the market self-regulates fairly, why does the invisible hand only work to benefit a minority and exclude the poor majority?
According to an Oxfam International report, 82% of wealth generated last year went directly to the richest 1% of the global population. If the markets are as neutral as purported by mainstream economists – to the extent that they do not want government regulation of the economy – why are markets not distributing the wealth equally to the people? Or, at the very least, why can markets not provide secure employment to even skilled university and TVET graduates?
They lied to us in saying that a self-regulated economy was the best model and that the state must not be involved in the economy. But today we have high levels of unemployment, poverty and inequality with a stagnant and jobless market-based economy.
The building of an industrialised society requires control of the markets. Even President Cyril Ramaphosa’s expropriation of land with compensation needs to be accompanied by the regulation of the markets in South Africa. Markets as the force that determines the value price can just devalue the land in the interest of capitalists.
The markets are a construct created by capitalists in order to facilitate their selling and buying of goods and service.
The Department of Trade and Industry drafted a great policy to involve the state in the industrialisation of South Africa – the Industrial Policy Action Plan (IPAP) 2018 which is the result of the work of Employment and Infrastructure Development (ESEID) cluster.
This policy aimed at building the economy through automotives; clothing, textiles leather and footwear; business process services (BPS); film production; and boat building. However, it is troubling that these policies are not monitored and end up disappearing.
Originally DTI drafted IPAP in 2013 aiming to rapidly reduce unemployment by 2016. This policy vanished because there is no state office that ensures that these policies are fulfilled as the office of Jay Naidoo did in 1994.
If our government commits to tackling unemployment, it must decisively deal with the markets. We can’t have a fully capitalist system and facilitate industrialisation through the state – they are irreconcilable. Our economy must be partially controlled by the state.
In fact, the state must determine the prices of products produced in our country. Under the apartheid government there were maize-boards – structures that determined South Africa’s maize prices and protected the basic food security of the citizens, while today the price of maize is determined outside of South Africa.
We need to dismantle capitalism to end unemployment. DM
Ashley Nyiko Mabasa is YCLSA Wits branch Secretary