Letter: Improve economy to create jobs

High SA unemployment rate

The headlines in the papers in the run-up to the recent municipal elections were filled with desperate pleas from many voters all over South Africa, all saying, “We want jobs”. The politicians have all responded with promises to create jobs, but these promises are mostly doomed to failure because:

  • The overall economy of South Africa is current stalled and hovering around a 0% growth rate and there is even talk of recession;
  • South Africa’s labour laws are so restrictive that private sector firms think twice, even three times, before they hire additional staff so this often restricts their ability to respond to changes in market demand – they often lose out. They also have to contend with the BEE legislation, including the fact that the present government is looking for 51% black ownership as a prerequisite to doing business with it.

Where do these qualified people come from all of a sudden? If public sector performance is any indicator, then who knows what will happen to hi-tech areas such as the automotive industry?

This no growth scenario does not create jobs, so what can be done? Unfortunately not much is possible in the very short term unless there is stimulation from the public sector with:

  • Infrastructure projects such as building, upgrading, maintaining and/or improving roads and railways, provision of proper RDP housing, electricity and removal of alien vegetation – the list is endless. These, however, will only soak up a small portion of the unemployed;
  • A major review of import tariff protection and/or incentives to stimulate labour-intensive industries such as clothing and textiles, and even steel is needed. Why should we export scrap metal to China, only for it to export rolled and finished goods back to us?

Perhaps some of us may recall the devastation that the clothing industry, especially in the Western and Eastern Cape, suffered when cheap imports hit our shores from China in the 1990s?

Electricity supply constraints are easing so businesses should be assured of supply – if only Eskom chief executive Brian Molefe can be persuaded to continue getting independent power providers on board, and not worry so much about his bloated and inefficient utility being put out of business.

All the public wants is electricity at the least cost.

In the medium to long term, the economy needs to grow at a rate which is higher than our net birth and immigration rate, thus soaking up some of the unemployed.

For this growth to be realised the private sector needs to operate in an environment conducive to growth.

This largely depends on the government removing or easing all the barriers to business that it has steadily erected, however well-intentioned they may have been to protect jobs. I think the reverse has, in fact, occurred.

The amount of red tape one has to plough through to set up and maintain a small or medium enterprise business is mind-boggling, never mind the time-wasting delays!

We need to grow our local industries as much as possible, even exporting where possible. However, sustained growth needs properly educated people, including those in the public sector.

I am afraid to say our standards of education are falling at an alarming rate. I read recently that only about 12% of pupils who started out actually passed Grade 12.

Also extremely worrying is the fact that our universities are under pressure to provide free or at least heavily subsidised education to masses of potential students from the underperforming school system.

Our competitive edge is being blunted and we will not be able to compete in the international export markets. A dramatic turnaround in education is called for and this is where every spare cent must go.

Where will the money come from? For a start, reduce bloated and overpaid staffing at all levels of government and only appoint competent, trained staff.

The government needs seriously to consider privatising as many parastatals as possible such as Eskom, SAA and Prasa. They should at least be run as profit centres and not have continually to be bailed out by the state.

Nursing, teaching and policing, where the highest integrity, commitment and passion are demanded, do not need unions, which are there to protect the lame and lazy or those with criminal records whose services should be terminated if they do not perform.

Food production is critical. We should support, encourage and, if necessary, train small-scale farmers, especially around major markets.

Those who perform must be assisted with soft loans to purchase and own the land. These farmers can market their product through the major retail chains.

Groups of farmers may share transport/ packing/packaging/break bulk facilities.

This contra flow of people out of urban areas will also ease the strain on the metros.

Under these scenarios, South Africa will again be a great country to live in – vibrant and prosperous. Unfortunately, I do not see the situation improving in the short to medium term unless there is a change in national government.

Perhaps the dropping off of ANC support in the major metros in the recent municipal elections will force a change of heart in the present government.

One thought on “Letter: Improve economy to create jobs

  • August 17, 2016 at 12:32 am

    The foundational key to any long term, sustainable economy is to remove all land from the market and socialize it by giving equal dividends to every man, woman and child from the rental values of the land collected by the government. Privatize everything else. Socialize land – privatize everything else.


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