Long-term jobs plan not on party radars

After 30 wasted years of ANC misrule, during which the economy performed dismally, SA now has the world’s highest unemployment rate.

During the third quarter of 2023 11.7-million people did not work, and the unemployment rate was 41.2%. SA is now at a crossroads, and as Mark Heywood, head of political strategy at Change Starts Now, says: “The polling we have done shows that the number one issue for every voter in the country way above everything else is jobs.”

As they prepare for the most important election since 1994, political parties must understand the scale of the jobs crisis. Getting 11.7-million people to work is the equivalent of a war effort. We cannot aim a water pistol at a blazing inferno.

Any election manifesto that does not provide a credible path towards full employment, with GDP growth and employment targets that are binding on the National Treasury and Reserve Bank, is wasting our time. To achieve full employment — an unemployment rate of 5% or less — the economy will have to create 1.6-million jobs a year until 2035.

Either we want to solve the jobs crisis, or we don’t.

Unemployment is a macroeconomic policy issue. The policy tools to address it must be large and have an effect throughout the economy. There are three levers we can use to confront the crisis.

First, SA must achieve an annual GDP growth rate of 4.2% just to create jobs for the 800,000 people a year who will enter the labour market until 2035. There must be a binding GDP growth target of 6% to also reduce the number of people who had been previously unemployed. These estimates are based on a labour force growth rate of 2.4% — slightly below the prepandemic average — and an employment multiplier of 0.9. This multiplier measures the relationship between GDP growth and employment over the past two decades.

Second, there must be aggressive industrial policies to increase the employment multiplier. Current annual spending on industrial policies is an insignificant 0.3% of GDP.

Finally, there must be a significant expansion of public employment programmes and all participants must be paid a living wage.

SA has three public employment programmes that have a budget of R17bn for 2023/24. They will create 1.8million work opportunities and 900,000 full-time equivalent jobs, according to my estimate. But none of the party election manifestos has said anything about public employment.

Build One SA (Bosa) has set a lame target of 2-million jobs over five years. But on the current trajectory of low GDP growth of 1.5% a year, the economy will create 1.2-million jobs over the next five years. If Bosa achieves its target the number of unemployed people will increase by 1.6-million over the next five years to 13.3million. Rise Mzansi’s manifesto said nothing about macroeconomic policy. The party is clearly allergic to numbers and its manifesto reads like a reloading of the ANC’s failed economic policies

— without the corruption and with competent people to implement them.

The multiparty charter press conference on the economy was a disgrace. Its leaders saw nothing wrong — seven years after the MeToo movement — with having presentations by 12 men, most of whom were noname brands. It was a comedy show, with a man with a hat saying a national budget is like a household budget.

SA must address the crises at Eskom and Transnet within the short term. But that will only take us back to the low GDP growth we had before 2018, when Cyril Ramaphosa became president. The collapse of Eskom’s plants started in 2018

— not 2007 — and Transnet’s performance started deteriorating at the same time.

The period since 2018 accounts for 95% of the energy that has been shed since 2007. SA urgently needs a long-term plan to reach full employment.