Op-Ed: Why South Africa must do better – by Greg Mills and Jeffrey Herbst (SOUTH AFRICA Daily Maverick – July 8, 2015)

http://www.dailymaverick.co.za/page/home/#.VZ_0N_lViko

While the end of Apartheid in April 1994 brought about political rights for the excluded black majority, their economic enfranchisement over the subsequent two decades has proven to be exceptionally difficult. The fundamental claim of our new book is that the overwhelming challenge that South Africa faces, and has to date failed to address, is unemployment.

As is well known, the current unemployment statistics are appalling and fall especially on young African youths who were promised a better future in 1994. If the unemployment crisis is not addressed, it will be impossible to lift many millions of people out of poverty. Especially in light of the Arab Spring – fuelled in good part by youths who believed that they had no future – the stability of South Africa cannot be assured given compounding issues of insecurity, unemployment and lack of investment.

The prospects of the African National Congress (ANC) will also be challenged if it cannot deliver jobs to the ‘born-free’ generation. Equally, the ANC’s trade union partner, the Congress of South African Trade Unions (Cosatu), with an ageing cohort of members, requires economic and employment growth to refresh their membership.

Two decades and five ‘new’ strategic economic plans into its democratic transition, South Africa does not have the luxury of too many more chances. We also do not believe that South Africa can solve the unemployment problem solely through redistribution. The most dramatic redistributive steps that South Africa has taken are broad-based black economic empowerment (BBBEE) and the social grant. BBBEE, like its predecessor, black economic empowerment (BEE), has succeeded in creating a small class of African business people who have wealth on the same order of magnitude as very rich whites – 10% of the Top 100 companies on the Johannesburg Stock Exchange are held directly by black investors largely through BEE schemes – but it has had no perceptible impact on unemployment.

As a project of elite transformation, BEE has been successful, but it is more a burden for employers than a transformative agent for the unemployed. The social grant has been a great success in keeping an increasing number of people out of absolute poverty, but it pays far less than the salaries of even those with unskilled jobs. Simply put, South Africa is not sufficiently rich to redistribute enough resources to address unemployment. It must expand the economic pie and increase the number of jobs if the poorest are to benefit.

The book differs from many other retrospectives in that it digs deep into South Africa’s economic workings through extensive interviews with a broad spectrum of business managers, government leaders, unionists, entrepreneurs, taxi drivers and farmers, among many others. The country’s future is being built daily on the shop floor, on the farm, down in the mine and in corporate boardrooms where South Africans are making millions of uncoordinated decisions that cumulatively will determine the country’s future. These decisions are made in contexts that are established by major policy documents, but also by how legislation and regulation are understood and executed by officials at every level of government.

For the rest of this column, click here: http://www.dailymaverick.co.za/article/2015-07-08-op-ed-why-south-africa-must-do-better/#.VZ_zhflVikp

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