Harsh lessons for job cre­ation

Ed­u­ca­tion is the key

Finweek English Edition - - FRONT PAGE -

THE STORY WASN’T on the fi­nan­cial pages of the news­pa­pers – it was on the news pages. But it’s one of the big­gest eco­nom­ics sto­ries of this year: the fail­ure of South Africa’s grade 3 and grade 6 pupils at lit­er­acy and nu­mer­acy. Ed­u­ca­tion is the only way out SA has of its un­em­ploy­ment and in­equal­ity crises. And what the lit­er­acy and nu­mer­acy tests showed was that SA is a dis­mal fail­ure at ba­sic ed­u­ca­tion.

The tests showed the na­tional av­er­age per­for­mance in grade 3 for lit­er­acy was 35% and 28% for nu­mer­acy. The West­ern Cape scored the high­est, with 43% for lit­er­acy and 36% for nu­mer­acy. Mpumalanga did worst, with pupils scor­ing an av­er­age 27% and 19% re­spec­tively.

In the grade 6 tests, pupils achieved an av­er­age 28% in lan­guages and 30% in math­e­mat­ics. The West­ern Cape was again top scorer, with 40% in lan­guages and 41% in math­e­mat­ics; Mpumalanga scored 20% and 25%.

The poor re­sults don’t au­gur well for fu­ture ma­tric re­sults and for ter­tiary ed­u­ca­tion. They sug­gest SA’s big­gest prob­lem – a large pool of un­skilled labour un­able to find work – will con­tinue for a long time. Dur­ing the boom years be­tween 2004 and 2007 SA’s econ­omy grew at an av­er­age rate of 5,3%/year. The un­em­ploy­ment rate de­clined from a peak of 31,2% in March 2003 to 25,5% in March 2007 – still very high.

Iron­i­cally, de­spite a re­ces­sion that ate away 1m jobs, SA’s cur­rent un­em­ploy­ment rate is a tad lower at 25%. The key point is the boom didn’t cre­ate jobs on the scale re­quired to make a mean­ing­ful dif­fer­ence to un­em­ploy­ment, de­spite a fall in the un­em­ploy­ment rate. Dur­ing the boom, high rates of con­sump­tion growth stim­u­lated high rates of cap­i­tal ex­pen­di­ture growth and cre­ated a de­mand for skilled work­ers.

De­spite re­al­is­ing a high growth rate for SA – more than 5% – the short­age of skills in­hib­ited growth from ris­ing even higher, so that SA could truly com­pete with its BRIC (Brazil, Rus­sia, In­dia and China) coun­ter­parts. Then came the re­ces­sion, dur­ing which SA haem­or­rhaged jobs de­spite a rel­a­tively small de­cline in gross do­mes­tic prod­uct. The drop in jobs was on a scale that sug­gested a very deep re­ces­sion in SA rather than the rel­a­tively shal­low one that was the case.

Now the econ­omy is again in an up­swing, with a re­peat on a smaller scale of what hap­pened dur­ing the boom years. How­ever, this time jobs aren’t re­ally be­ing cre­ated, with a loss of 14 000 jobs in first quar­ter 2011 from last quar­ter 2010. The un­em­ploy­ment rate rose. It’s im­por­tant to note the first quar­ter usu­ally shows a rise in the un­em­ploy­ment rate due to school leavers and univer­sity grad­u­ates en­ter­ing the job mar­ket. They patently don’t have the skills SA needs to grow the econ­omy.

Gov­ern­ment has set job cre­ation at the cen­tre of its agenda. To that end it has cre­ated a R9bn jobs fund (over three years), ex­tended the pub­lic works pro­gramme, un­leashed fi­nance from the In­dus­trial De­vel­op­ment Cor­po­ra­tion and done its best to es­tab­lish an in­ter­ven­tion­ist in­dus­trial pol­icy. But these are all Band-Aids that can, at best, cre­ate tem­po­rary jobs. What should be at the cen­tre of Gov­ern­ment’s agenda is ed­u­ca­tion.

There’s a good rea­son why this isn’t a pop­u­lar view. The trou­ble with re­ly­ing on ed­u­ca­tion to get us out of the mess we’re in is that it takes time. Pupils have to grow up to be­come the skilled work­force SA needs. It will take a gen­er­a­tion or longer to sort out, as the cur­rent crop of ma­tric­u­lates are woe­fully in­ad­e­quately skilled for the task at hand.

SA has many tar­gets, such as to cre­ate 5m jobs in 10 years. But its most im­por­tant tar­get should be ed­u­ca­tion. Here the tar­get is a 60% av­er­age in lit­er­acy and nu­mer­acy by 2014. That’s a tar­get that can be met – and it doesn’t even re­quire more money. It’s a tar­get that must be met.


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