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SA bad at turning economic growth into jobs, says analyst

10 March, 05:06 PM

Professor Jeremy Seekings argues South Africa has a poor record of turning economic growth into new jobs. Rather, he says, historical economic growth tended to increase the earnings of people with jobs. "That's a really terrible position to be in,"says Seekings.

At the beginning of 2016 ratings agencies forecast a bleak year for South Africa's economic growth. Minister of Finance Pravin Gordhan told reporters growing South Africa's economy remained key to development. The comment followed his Budget Speech delivered in early February.

In the National Council of Provinces (NCOP) this week Deputy President Cyril Ramaphosa spoke about prospects of implementing a national minimum wage. He answered oral questions on Wednesday, 9 March 2010 and described how it would be implemented, taking cues from countries such as Brazil.

Seekings says a national minimum wage would be a wage of "nudging up" the income of people already employed. However, it would not address the needs of many people in South Africa who are not formally employed. 

According to the United Nations Development Programme unemployment in South Africa is at around 25% with an even higher percentage of unemployed people within the 15 and 35 years age bracket.

"We forget South Africa is a really exceptional economy," says Seekings. "There are almost no other economies around the world that have unemployment rates as high as South Africa or employment rates as low as South Africa. There are very few economies which are so bad at converting economic growth into new jobs."

Speaking of policymakers, Seekings called for sharper attention on job creation, rather than the "sledgehammer" of national minimum wage. He also noted the opportunity for South Africa to generate low income jobs likely to leave the Chinese market.

"We know that the Chines labour market is getting much tighter and wages are being pushed up," he says. "South Africa should be looking at those jobs and be saying, 'We want some of those jobs.'" 

Then Seekings criticises government for what he perceives as a lack of political will to grab that opportunity to create entry-level jobs. "I just think they're not being bold enough in their thinking and in their action." 

Watch the clip above.

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