Let skilled immigrants in to hatch new jobs

As best as can be calculated, about 1,200 people, immigrants, became naturalised SA citizens in 2019. That’s the average for recent years, and way too few. It goes to the heart of why we struggle as an economy, Covid or no Covid.

The government’s plans to reboot and transform the economy as (when?) we come out of the pandemic make no mention of the economic driving power of immigration and in fact, in practice, often do the very opposite.

Partly that’s because the plans are based on the shaky ideological premise that re-industrialisation is a sure way to create jobs. I read a very good piece in this newspaper by Moeletsi Mbeki the other day, explaining why the structure of our economy has changed so little since the ANC came to power (“Nationalist rule keeps SA’s economic inequalities intact”, April 7).

“Nationalists,” Mbeki wrote of both the white and black variety who’ve run SA for more than a century, “do not fight to change the socioeconomic structure of the colonial system.

They fight to be included in it as part of its privileged elite. This is why the SA economic system organised by the British between 1900 and 1909 to exploit the country’s vast mineral resources and cheap black labour remains essentially intact to this day.”

Mbeki is one of the cleverest observers of our political economy and I listened carefully when he was interviewed by John Maytham on the radio later in the day. Asked what the way forward was he said it was in manufacturing. He held up local earthmoving equipment brand Bell as a champion example of what we need more of, rather than importing Caterpillars and Komatsus.

I shouted at my radio. That just had to be wrong. It is great to have a Bell Equipment to call our own but Bell trucks run on imported Mercedes diesel engines, imported gearboxes, imported axles and imported tyres. All the pricey parts.

Nothing the government can do with its manufacturing masterplans will change the facts on the ground, and if you’re the political leader responsible for the economic policies that assume this is all doable you’re in for a nasty surprise. Technology has changed manufacturing completely. No research I have seen sees manufacturing as a jobs driver.

No-one in SA is going to start manufacturing tyres that can dwarf a tall human, or gearboxes that large. Or any gearboxes at all. We are too late and we don’t have an internal market big enough to kick-start the creation of the new industries the ANC wants.

We don’t really make machines here and it isn’t important. It is what we do with the machines we import, or fabricate or assemble, that matters. We’re miners and farmers and, pathogens permitting, hosts to potentially 50-million tourists a year, provided we don’t murder them. Get those right and we are home and dry. Last year we became the world’s second biggest citrus exporter. How cool is that?

Sadly, SA’s a big business haven. The government talks small business but acts like the SA of old. The Small Business Institute has just produced great research on how small companies are probably already being left behind by “localisation”, the big jobs vision hatched by President Cyril Ramaphosa and trade, industry & competition minister Ebrahim Patel.

“Instead of seeing SMEs as the engine room of our economy despite all the lip service paid by government and big business to them, they are forever treated as an economic widget,” complained the institute, 27 years down the line from 1994. It reminds us that Albert Einstein once usefully said: “We cannot solve our problems with the same thinking we used when we created them.”

And it is here, among the little guys, where the jobs are, and where opportunities are being ignored in the chase after more localisation and manufacturing. Before Covid more than 98% of all employing firms in the country employed fewer than 250 people, says the Institute, illustrating a vital point as we try, through a central planning model plucked right out of the 1960s, to recover.

The point is that without the souls who start the companies that employ the 98% we are nothing. Or, another way, unless we find a million more people to start businesses and become employers our chances of cutting unemployment meaningfully are zero.

Where are these people? The Small Business Institute comes to the same conclusion I always do. “There is a wealth of research,” another of its papers says, “demonstrating that immigrant entrepreneurs have a profound impact on overall labour demand by starting companies that hire new workers.” And it quotes Harvard economist Jason Furman answering a question about the three keys of boosting a nation’s productivity with “immigration, immigration and immigration”.

Opening our borders to skilled immigrants who would have to start businesses and hire South Africans to get in and stay would electrify this economy. They would arrive with skills and export networks back home we simply cannot ever reach.

But no-one in the government is listening now. Pity. The Small Business Institute’s research shows that over the entire period of ANC government, through its various economic policy initiatives, the contribution to GDP in each of our primary sectors, secondary sectors and tertiary industries, by province, falls each time policy changes.

In other words, the outcomes of ANC economic policy become worse over time, not better.

‘NATIONALISTS DO NOT FIGHT TO CHANGE THE SOCIOECONOMIC STRUCTURE’

‘KEYS FOR BOOSTING PRODUCTIVITY: IMMIGRATION, IMMIGRATION AND IMMIGRATION’

● Bruce is a former editor of Business Day and the Financial Mail.