The biggest challenge facing South Africa is the lack of employment opportunities for about 24% of working age and willing to work population. Details reveal that the majority of unemployed is youth.
Analysts have shown that a large part of unemployment is structural largely owed to historic events; this has been evident when unemployment failed to decline meaningful when gross domestic product (GDP) which measures output growth was growing above trend. Admittedly, there is cyclical component owed to recession and downturn of the business cycle.
Against the backdrop of stubbornly high unemployment as measured by Statistics South Africa, government under the leadership of President Jacob Zuma has dedicated 2011 as the year of employment creation. Cynics have argued that this is a political ploy to lure or keep unemployed as ANC constituency. This argument follows the fact that South Africa would be conducting municipality elections in 2011.
I am, however, of the view that government is indeed committed to slash unemployment, although the road to the promise land still lack a clear view, with specific reference to new growth path strategy.
When President Jacob Zuma delivered the state of the nation address, he deliberated on the road path to jobs creation. The proposed R9bn dedicated to employment creation and R20bn allocated for tax subsidies/holidays on investments for manufacturing firms were all necessary steps in the right direction.
However, inability of South African government to implement well architecture plan is a course for concern. While government is trying to wrestle with the scotches of high unemployment rate and poverty, but I think the government, private businesses, trade unions and the society at large should reach consensus about the best way to reign on unemployment and poverty.
While I think incentives for manufacturing firms is a step to the right direction, but the bigger emphasis of government should be at awaking entrepreneurial spirit in the country. South Africa has numerous MBA students who by definition are masters of business administration but they are employed as analysts, consultants' etc.
In actual fact these people should be running their firms. Somehow, the mindset of South Africans both white and black is that of getting a stable and well paying job. We need to encourage entrepreneurial culture and set up relevant institutions to support aspiring entrepreneurs. I am not referring to tenderpreneurs currently running the show with no solid strategic vision to sustain their businesses but only backed by powerful politicians.
We have institutions of higher learning that are highly recognised in business, even by international rankings, why not leverage on our current strengths. The solution to unemployment and poverty is not determined by the amount of grants and foreign aids but the lasting solution is on awaking/equipping South Africans with the ability to create their sustainable business.
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