No places for the unskilled

UNEQUAL: DIFFERENCE IN EDUCATION LEVELS

Investment success doesn’t miraculously resolve social challenges.

Andrew Jackson, the seventh president of the United States, said: “We should measure the health of our society not at its apex, but at its base.” In President Cyril Ramaphosa’s State of the Nation address (Sona), the relationship between the labour market, inequality and poverty wasn’t emphasised. Instead, the three were mentioned separately and in passing towards “bigger” issues.

Investment success doesn’t miraculously resolve social challenges.

Long term, South Africa’s various social problems usually come down to the intertwined nature of education and income inequality.

Without significant progress, society will continue on a downward slide.

The dynamics of SA’s inequality are interwoven with old and new challenges.

Education-earnings paradox

Present education policies fail to undo the deep-rooted legacy of a discriminating, inferior apartheid education system.

The proletarian working class didn’t only inherit the present failing education system, income levels restrict their ability to access better education. Consider the emerging challenge of: Skills mismatch and shortage; and Graduates’ unemployment crisis Assume one way to solve inequality is through education, but its policies are characterised by flaws, like producing individuals with high skills and those with low or no skills. This produces a widening income gap.

SA’s inequality can be linked historically. The dispossession of land and the ensuing creation of migrant labour decided SA’s income and wealth distribution.

In many ways, this set the trend for wage determination with those in the rural areas working mostly in the low-paying agricultural sector.

For those in urban areas, the better part of their income went on transport, due to historic spatial planning.

Rural to urban poverty

Rural depopulation is increasing, with most working-age people migrating to urban areas in search of employment, higher incomes and better education.

However, while their lives may be better due to access to healthcare and basic services, many still live in poverty.

Access to services determines the employment rate and thus income inequality.

Stats SA says income in urban areas is far higher than in rural areas.

It’s theoretically possible to overhaul this repeatedly overlooked link between inequality and SA’s labour market.

First, government’s policy interventions must go beyond social grant distribution to lower the skills discrepancy while simultaneously fixing education.

Second, without social policies to mitigate poverty, youth unemployment and the heavily indebted middle class, the labour market will continue to punish the poor and the youth with ever-widening income disparities, while demanding years of experience from job market entrants.

Third, government inefficiencies lessen SA’s economic competitiveness. Combined with corruption, cronyism and poor policies, they drag the economy down and dim opportunities in the global value chain.

Inequality’s economic and social fallout makes it a triple threat because:

Its widening has significant consequences for political and economic stability; and

It lowers potential growth, further dooming low-income households and the poor to worsening wages and few jobs.

A failing economy cannot reduce poverty since the labour market distribution pattern already favours the highly skilled and high earners.