Check election jobs promises
On the eve of SA’s 2019 general election, the official unemployment rate was already one of the world’s highest at 27.6%. Five years on, the unemployment rate is more than four percentage points higher at 31.9%. That’s a big improvement on the 34% plus unemployment peak in the Covid-19 pandemic’s darkest days. But it was only in the third quarter of 2023 that total employment finally returned to its pre-Covid level of about 16.5-million. Youth unemployment is still sky high at almost 60%. Only four in 10 adult South Africans are in any sort of employment, the official statistics show.
So it’s no wonder that jobs are set to be high on the manifestoes of all major parties before this year’s general election. Sweeping promises will be made by all. We could well see some provincial leaders magic up temporary jobs for youngsters, along the lines of Gauteng’s Panyaza Lesufi’s scheme last year. The state of the nation address might go big on jobs, trumpeting the more than 1-million job “opportunities” the presidential employment stimulus provided for youngsters in the past three years.
But SA needs much more than temporary opportunities funded by taxpayers. It needs an economy that generates many jobs, and it needs them to be sustained. South Africans must look carefully at what all the parties promise before the election, and interrogate those promises. A key question is: are the governing and opposition parties willing to do what it takes to transform the economy in ways that tackle the unemployment crisis.
Crucially, voters should be wary of manifestoes that put the jobs cart before the economic growth horse. No growth means no job creation. SA’s unemployment problem is structural, going back decades. It was only in the few boom years before the 2008/09 global financial crisis, when the economy grew at 5% a year, that SA made a meaningful dent in the unemployment rate. Before they even address the jobs issue, then, we need to know from all the parties — the ANC in particular — whether they are serious about economic growth and willing to make the tough decisions required to vastly accelerate the pace of reform in electricity, logistics, visas, crime and all other disasters weighing on the economy.
SA’s employment problem is not just growth. SA is an outlier globally in how bad its economy is at using labour. Reserve Bank research last year showed that other developing countries with similarly low growth historically have far higher labour utilisation rates, countries such as India, Brazil and Argentina. We need to ask why that is, why SA’s labour market is so dysfunctional. If parties are serious about jobs, they must consider measures to boost the economy’s ability to absorb workers that may not be so obvious — or popular. Informal jobs are one. In most developing countries informal employment, and self-employment more generally, is an important source of jobs for those the formal sector cannot absorb. The World Bank has pointed out that in SA only 10% of adults are self-employed, compared with about 30% in most other emerging markets.
The Bank calculates that SA could halve its unemployment rate if it had the same level of self-employment as peer countries. So instead of persecuting people plying their trade on pavements, municipalities should look to support those informal traders or barbers or caterers. Often they don’t need access to finance as much as they need protection from crime and access to storage, ablution and other facilities, as well as lighter touch regulation.
In other peer countries, too, small businesses employ a much higher proportion of working-age adults than they do in SA. We need much more entrepreneurship in the more formal economy. It needs to create an environment that makes it much easier and more attractive for start-ups, particularly tech-enabled start-ups, to survive and to thrive. It requires the sort of landscape that encourages innovation and experimentation, particularly in labour-intensive services. There is no reason SA could not do that. But it requires a rather different mindset to the government’s archaic localisation and industrialisation-type policies.
SA’s dysfunctional spatial geography, with long commutes for low-income people between home and work, must be addressed for its economy to absorb more labour. That means investing in affordable transport and better urban planning.
There’s no getting away from the need for reform to make SA’s labour market work better. That means taking a brave look at the whole range of policies and institutions that privilege “insiders” with formal sector jobs and access to collective bargaining forums at the expense of unemployed outsiders.
ARE PARTIES WILLING TO DO WHAT IT TAKES TO … TACKLE THE UNEMPLOYMENT CRISIS?