Harsh lessons for job creation
Education is the key
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.