Tack­ling un­em­ploy­ment in SA South Africa needs to focus on de­vel­op­ing tech­ni­cal skills and be­come com­pet­i­tive at at­tract­ing in­vest­ments that utilise un­skilled labour.

Finweek English Edition - - OPINION - Ed­i­to­rial@fin­week.co.za is CEO and co-founder of GetBiz, an e-pro­cure­ment and ten­der no­ti­fi­ca­tion ser­vice.

south Africa may have es­caped a credit down­grade by a whisker but the coun­try is not out of the woods yet. The long bat­tle to quell ris­ing un­em­ploy­ment, in­come in­equal­ity and poverty, con­tin­ues. SA has slipped from be­ing Africa’s largest econ­omy to third-big­gest behind Nige­ria and Egypt. It has also strug­gled to at­tain high growth rates since its po­lit­i­cal tran­si­tion in 1994.

There are two re­cent rev­e­la­tions that in­di­cate SA is re­gress­ing in­stead of pro­gress­ing. In April, Stats SA pub­lished in­for­ma­tion that re­vealed that black youths aged be­tween 25 and 34 were less skilled than their par­ents and white con­tem­po­raries. The sec­ond rev­e­la­tion paints a dis­turb­ing picture of an in­crease in South Africans who are de­pen­dent on the state for a liv­ing – ac­cord­ing to the Gen­eral House­hold Survey, re­leased by Stats SA on 2 June, the per­cent­age of people that re­ceived so­cial grants leapt from 12.7% in 2003 to 30.1% in 2015.

The first rev­e­la­tion ex­plains why un­em­ploy­ment and in­come in­equal­ity are stub­bornly high, and sadly the black youth bear the brunt of th­ese so­cial ills. The sec­ond im­plies that gov­ern­ment has been re­duced to a re­dis­trib­u­tor of wealth and an en­cour­ager of de­pen­dence on wel­fare hand­outs in­stead of be­ing a stim­u­la­tor of wealth cre­ation and jobs.

Let me deal with the rev­e­la­tion that young black South Africans are less skilled than their par­ents. To put it bluntly, this re­gres­sion means that apartheid gov­ern­ments did a bet­ter job train­ing black people than the cur­rent demo­cratic state.

We are spend­ing more money on ed­u­ca­tion than any other coun­try in Africa, but the grad­u­ates that the sys­tem pro­duces lack the skills the pri­vate sec­tor needs. Part of the re­ver­sal was caused by the re­duc­tion, after 1994, in in­vest­ment in tech­ni­cal and vo­ca­tional train­ing and a dis­pro­por­tion­ally greater focus on aca­demic ed­u­ca­tion. This has led to the prob­lem of un­em­ployed univer­sity grad­u­ates who can­not find work any­where.

The lead­ers of the ANC should hang their heads in shame. They have presided over the dan­ger­ous re­ver­sal that is caus­ing anger and frus­tra­tion amongst the young black South Africans who are be­ing re­jected by the labour mar­ket. The pri­vate sec­tor, which con­tin­ues to ex­clude black people from its up­per ech­e­lons and black-owned busi­nesses from its sup­ply chains, should also share the blame for what is hap­pen­ing.

The re­duc­tion in tech­ni­cal and vo­ca­tional train­ing co­in­cided with the de-in­dus­tri­al­i­sa­tion of the econ­omy, where we have seen the rise of con­sump­tion-driven sec­tors such as bank­ing and con­sumer re­tail­ing and the de­cline of pro­duc­tive sec­tors like min­ing and man­u­fac­tur­ing.

Shopping malls have pro­lif­er­ated in big cities, small towns and town­ships across SA while mines and fac­to­ries have been clos­ing down. As a re­sult, the coun­try’s cit­i­zens are fac­ing mas­sive un­em­ploy­ment and in­equal­ity. Be­tween 1994 and 2013, the man­u­fac­tur­ing sec­tor’s share of GDP de­clined from 20.9% to 12.4%.

The drive to re-in­dus­tri­alise the econ­omy presents us with an op­por­tu­nity to de­velop tech­ni­cal skills (en­gi­neers, tech­ni­cians, and ar­ti­sans) by en­cour­ag­ing young people to en­rol at vo­ca­tional col­leges, in­stead of solely fo­cus­ing on en­rolling at uni­ver­si­ties. Th­ese skills are not only spe­cific to man­u­fac­tur­ing and can eas­ily be trans­ferred to high­tech min­ing and the con­struc­tion and main­te­nance of in­fra­struc­ture. Coun­tries with lit­er­ate work­ers that are skilled at op­er­at­ing ma­chines at­tract in­vestors.

In SA we are known for poor ed­u­ca­tion and labour un­rest, hence we are strug­gling to at­tract in­vestors to our man­u­fac­tur­ing sec­tor, which is cru­cial to grow­ing our slug­gish econ­omy. On top of this, we are not com­pet­i­tive in at­tract­ing in­vest­ments that seek to utilise un­skilled labour.

The other source of con­cern is the grow­ing num­ber of people who are liv­ing on so­cial grants. An es­ti­mated 2.6m people re­ceived so­cial grants in 1994, but the re­cip­i­ents have bal­looned to 16.9m people in 2015. At some point, this will be­come un­af­ford­able.

While the gov­ern­ment must be com­mended for widen­ing the wel­fare net to pro­tect the poor from slip­ping into ab­ject poverty, this also rep­re­sents a mas­sive fail­ure to in­ter­vene in the econ­omy in a man­ner that cre­ates a cli­mate that is con­ducive to at­tract­ing in­vest­ment and gen­er­at­ing em­ploy­ment.

Cor­po­rates con­tinue to hoard about R1tr in cash be­cause they don’t feel com­fort­able in­vest­ing in SA due to leg­isla­tive un­cer­tainty, labour in­sta­bil­ity, and the high cost of do­ing busi­ness. The con­cerns over state cap­ture by po­lit­i­cally in­flu­en­tial in­di­vid­u­als to curry favour with cabi­net min­is­ters will not help to build trust be­tween busi­ness and gov­ern­ment to en­sure the re­lease of th­ese funds into pro­duc­tive in­vest­ment in the econ­omy.

While jobs re­main scarce, par­tic­u­larly for the youth, the po­lit­i­cal risk is build­ing up and SA may find it­self fac­ing its own Arab Spring. Or the poor and dis­en­chanted may find them­selves in the arms of the EFF, which is promis­ing to seize mines, farms, and banks with­out com­pen­sa­tion if voted into power.

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