Trap and ignite the economy

ral monopoly”, but operating plants migrate into a competitive environment in which the advantages of private ownership and management can be mobilised.

A bias towards employment

Industrial and urban development policies under apartheid were designed to constrain employment growth and retard opportunities for black economic participation, outside of Bantustan areas and decentralised enterprise zones. The law and governance arrangements have changed, but the structure and dynamics of economic growth have not yet reversed these distortions.

Deliberate policy measures and interventions are needed to push the economic growth bias towards employment and inclusiveness.

Tourism and related services have continued to grow despite difficult market conditions. More accommodating visa and border control arrangements would be helpful.

Special economic or export-oriented industrial zones need to be given greater impetus, and associated institutional and regulatory barriers must be addressed.

Some subsectors of manufacturing have considerable employment potential, such as food processing, clothing and textiles, and furniture manufacturing. Industry partnerships as part of the Industrial Policy Action Plan need to be supported and implemented aggressively. Bargaining council agreements need to recognise the need to accommodate and support small and low-productivity enterprises.

There is further growth potential in the extended public works programme (EPWP), particularly in cities, larger municipalities, schools and health facilities. Support for work seekers in bridging the gap between school or college and the work environment is central to improving young people’s prospects.

Well-managed implementation of labour market reforms and support for low-productivity activities are central to a successful transition to more inclusive growth.

Implement the minimum wage

The government has indicated an intention to introduce a national minimum wage that has considerable potential to protect vulnerable workers, but could also lead to higher unemployment and reinforce a “dual” labour market in which informal, noncompliant enterprises become more common.

The minimum wage should be accompanied by suitable complementary measures to strengthen social protection and assist low-productivity enterprises.

It has been recommended that the EPWP and similar programmes, such as the Community Work Programme, should be exempt from the minimum wage. This is morally cynical and institutionally impractical. If there is a socially agreed-on minimum wage, then the government must lead by example.

It is mistakenly thought that the minimum wage would be “unaffordable” for EPWP projects — in fact, current levels of EPWP participation are still well below what they should be, and the costs of phasing in compliance with a R20 an hour minimum wage by 2019 are modest. This would send a clear message of the government’s intent to respect the new standard.

The minimum wage task report recommends temporary relief for workers in agriculture and domestic service, for an adjustment period of two to three years. A better approach, aligned with the country’s structural employment challenges, would be to extend the employment incentive to all low-wage employees, subject to compliance with minimum wage and social security participation.

The circumstances of young, entrylevel employees, whether in training or internship positions or in parttime or relief employment, need to be distinguished from the employment status of older workers in more stable jobs.

South Africa has an especially severe youth unemployment problem, and it is neither practical nor affordable to extend labour standards or social security requirements fully to young work seekers. The present employment incentive operating through the tax system is not enough.

The commitment of business leaders to the “million jobs” initiative needs to be given recognition and impetus, including appropriate regulatory relief to align the costs, benefits and incentives associated with youth employment.

Social security and health

Proposals for comprehensive social security and health insurance were set out in the Taylor committee report nearly 15 years ago. The policy frameworks are still far from adequate as practical implementation plans and credible financing strategies.

In the absence of progress in social insurance and integrated health coverage, the gap between publicly funded services and private pensions and health insurance widens.

But the underlying policy issues and social security design considerations are complex and politically contested. The relevant government departments and social security funds and entities do not collaborate effectively. There is little engagement with private sector and civil society stakeholders.

There are several pressing needs and opportunities for reform targeted at the most vulnerable. Key social security proposals include a basic income transfer for longterm unemployed work seekers, and a standard retirement pension and basic death and disability cover implemented using the Unemployment Insurance Fund administrative platform.

What’s to be done?

Achieving social consensus on an economic strategy and its implementation will be enormously difficult. There is insufficient trust and engagement among stakeholders, and views are highly polarised.

Yet there is considerable common ground in our substantive imperatives: we need accelerated growth and investment; housing and urban development are unarguable priorities; employment and rising wages have to be achieved; and social services must be improved.

It is easy to state the obvious: political leadership and a clear national vision and plan are needed.

But it is also important to emphasise the role of diverse forums of engagement — between municipal officials and local business and civic leaders, between business organisations and financial institutions, between organised labour and investors, between social service departments and public benefit organisations.

These sites of struggle have the potential to become engines of inclusive growth.

Food processing, clothing and textiles, and furniture manufacturing have great job potential