In a country where 46 out of every 100 people of working age are unemployed (excluding those who are studying), you would expect members of the governing party to be fixated on nothing other than jobs, jobs and more jobs.
If this high level of unemployment wasn’t enough motivation, you would expect the fact that the party’s grip on power was slipping to be a hard kick in the backsides of party members and leaders to fix the economy.
It is a growing economy – the faster and more sustainable over a long period of time the growth is, the better – that generates jobs and financial resources (through taxes and increased capacity of the state to borrow more).
But the economy doesn’t appear to be uppermost in the minds of the faithful in the governing ANC. At various ANC provincial conferences, the minds of the members in good standing have been on who gets what position. Leadership positions matter, but you would at least expect the party faithful to be interested in how the people vying for leadership positions proposed to fix the economy.
Not that ANC leaders have much to go on, by the way. The ANC’s economic policy discussion document falls far short of what is required – in terms of both urgency and breadth – to deal with the problems besetting the South African economy.
This country’s economic situation has been on a downward trend for more than a decade. Unemployment is a useful measure of the shrinking capacity of the economy to grow faster, let alone create enough jobs to mop up the army of the unemployed.
In 2009, 31% of South Africans in the labour market, between the ages of 15 and 64 (working age), were unemployed based on the broad measure (also referred to as the expanded definition) of unemployment, which adds back into the calculation people who at the time of the survey had stopped looking for work.
The most used measure of unemployment removes from the calculation those workers who have stopped looking for work. By this measure, unemployment stood at 24%.
Twelve years later, unemployment based on the narrow measure exceeds 2009’s expanded definition.
On the most recent data for the first quarter of this year, unemployment stood at 34.5%, using the narrower definition. On the broad definition, the unemployment rate had increased to 45.5%.
For sure, the number of people in the working age group (15 to 64) has increased since 2009, but this doesn’t take away from the fact that the South African economy’s capacity to create jobs has not kept up with the increase in the working age population.
GLOBAL FINANCIAL CRISIS
Given this background, plus the fact that the ANC faces a crisis at the polls, you would have expected an economic policy document that was urgent in substance and tone, yet the governing party’s economic policy proposals are anything but.
The party sounds like a stuck record, harping on about colonialism and apartheid. For sure, colonialism and apartheid continue to cast their shadow, but what matters most in the lives of South Africans is what is done today and tomorrow to create socioeconomic conditions within which they can improve their lives.
That South Africa’s faultlines have distinct class, racial, gender, geographic and age dimensions is well known. That they disproportionately affect black people, women, rural communities, young people and persons with disabilities is common knowledge too. The latest General Household Survey for 2021, published by Stats SA, paints a stark picture of these faultlines.
What South Africans – at least those who still have faint hopes that the ANC will repent – would have hoped for from the governing party were economic policy proposals that gave hope about the future.
Instead, the ANC comes up with the promise to increase the share of young people aged 18 to 25 with matric “so that we can increase their employability”. This shows a lack of ambition as well as a poor understanding of labour market dynamics.
The June 2022 Quarterly Bulletin published by the SA Reserve Bank notes that South Africans who obtained only “matric” and “less than matric” had the highest rates of unemployment, at 36.5% and 39.8%, respectively, during the first quarter of this year. So, the ANC wants to add more young people to this army of the unemployed.
This, in a country where unemployment among people aged between 15 and 24 (who were actively searching for work) is already above 60%, which is where it’s been stuck for 21 months.
COVID-19 STRUCTURALLY ALTERED ECONOMY
The Reserve Bank’s bulletin also points to another trend that could be a serious hurdle to this country’s job creation ambitions. It quotes the International Labour Organization (ILO) as saying that the Covid-19 pandemic has structurally altered the labour market to such an extent that a return to pre-Covid-19 levels may not be sufficient to compensate for the setbacks.
The ILO has pointed to an increase in temporary employment, linked to contracts of limited duration, as a share of total employment.
The bulletin says:
What this signals is that employers in South Africa will probably catch up with their counterparts elsewhere in the world by shifting more workers on to short-term contracts, or hiring new ones on this basis. You can bet that this will disproportionately affect those without matric as well as those who have completed matric but didn’t proceed to higher education.
Trends like these should inform the ANC’s economic policy proposals, but they aren’t. Yet, they are the current and future reality of this economy. The ANC continues to dream about “solutions fundamentally to reshape the economy and which are economically and socially sustainable”.
The reality is that the private sector accounts for more than 75% of economic activity, meaning that it is the private sector that will drive investment and create jobs. In short, any fundamental reshaping of the South African economy depends on the buy-in of the private sector, not in words, but in deeds.
The ANC’s economic wishes in terms of its national democratic revolution can only come true in the real world where the private sector dominates.
Take mining, for example. The party says that mining remains an important sector, providing jobs, tax revenues and foreign exchange earnings from exports.
The discussion document says:
“It is through increased exploration activity that the South African mining sector will continue to grow in future years.”
The gap, though, between the ANC’s ambition and reality has so widened that government would have to do something more drastic to close it.
The Reserve Bank’s bulletin notes, for example, that mining production (which has been adjusted for inflation) during the first quarter of this year was “comparable with that last attained in the fourth quarter of 2012 when the mining sector was challenged by severe industrial action”.
It is common knowledge that two of the biggest constraints to the expansion of mining activity have been electricity supply disruptions and mineral policy uncertainty. This has been known for a very long time. Government has promised to address these, but very little progress has been made.
These examples demonstrate serious shortcomings in the ANC’s economic policy proposals. In short, the ANC shows a lack of appreciation for the depth of the South African economic crisis and the urgency required to address it.
Mathebula is the executive director of Ignite Africa Advisory Group and nonexecutive director for various companies. He writes in his personal capacity.