- A society where more than 50% of the population is living in poverty, and 35% of the working population is unemployed, is unsustainable.
- Government has invested in education, health services, social development, housing as redistributive measures, but implementation remains a challenge.
- No country has a future when over 40% of its young working population is not in employment, education or training.
The pre-Covid-19 economy was unsustainable. The crisis has revealed major fault lines and exposed the limitations in how we imagine the future. We lived in a very unequal society, where more than 50% of the population is living in poverty and 35% of the working population is unemployed.
The long-term trend indicated progress in reducing poverty, however, inequality remains high mainly due to a polarised labour market that has contributed to high wage inequality.
For more than two decades, the government has sought to address poverty and inequality with a wide range of initiatives that include fiscal support. It has invested in education, health services, social development, housing as redistributive measures, but if one had to measure the success of all these initiatives, we would find that not all have been successful in closing the inequality gap.
More plans, fewer results
Every year, budgets are allocated to government departments so that houses, hospitals and schools are built, but with each year, there are fewer houses built and more dilapidated hospitals.
There is also more corruption, which has been left to fester and erode the fabric of society. Now that the economy is in a pit, this should give us an opportunity to start anew. This will involve putting together the building blocks for a more equitable and sustainable economic growth trajectory.
Policy implementation, or the lack thereof, has long been our Achilles heel. We are good at identifying the multiplicity of problems, but inept at solving them. Not too long ago, the government put together an economic roadmap called the New Development Plan.
This comprehensive document was supposed to unblock the country’s structural problems and blockages caused by unsuitable policies. Unemployment was expected to have halved by 2030, 10 years from now, and economic growth was supposed to have been strong.
Treasury released a policy document in 2019, which identified low-hanging fruit that can help the economy turn the corner. The policy document was criticised before implementation because the document did not go through the National Economic Development and Labour Council (Nedlac) for verification.
In November 2013, the government launched a Broadband Policy document called South Africa Connect: Creating opportunities, ensuring inclusion. South Africa Connect was a policy aligned with the NDP, that aimed to provide a seamless information infrastructure by 2030 through a widespread communication system that connected the public sector, healthcare and education.
Kicking the can down the road
SA Connect also aimed to deliver widespread broadband access to 90% of the country’s population by 2020. Unfortunately, this ambitious plan suffered the same fate as the NDP and the policy document. The can was kicked down the road and implementation delays meant that they lagged behind in addressing issues such as inequality, poverty and unemployment.
If 90% of the country’s population had broadband, we would have been better equipped in dealing with the pandemic - where many students have not received any education since the end of March, when the country went under lockdown, because they didn’t have access to e-learning facilities. These students were let down by lack of implementation of policy that was meant to uplift their lives through accessible connectivity.
A big part of the failure to implement policies is the inability to do the groundwork at government level. This involves having the right skill set, and requires people of integrity to ensure that implementation is cost effective and well executed.
But the other more significant cog in the system is ideology, which often has consequences on policy, and whether it is implemented. The NDP was torn apart because a small group of people felt that it was not aligned to their ideology.
As a country, we need to have a common set of value commitments. On the political side, these may include values of liberty and equality and, on the economic side, these commitments might involve values of growth, equity and employment.
The other component of ideology consists of a set of institutional preferences. These institutions are operational instruments through which a society is supposed to attain the values it is committed to. For instance, do we prefer state ownership or free private enterprise, cooperatives or trade unions. Without some level of common values, plans and policies will not receive buy-in.
Having a common set of values will help, but we need to put the interesst of the country at the centre, instead of our individual interests.
We are currently in the vortex of the pandemic and we may not have another such opportunity where the whole world is in an economic pit. What is certain is that the pre-Covid-19 South Africa was unsustainable. No country can achieve sustainable growth when 35% of the working population is unemployed, and no country has a future when over 40% of its young working population is not in employment, education or training.
* Thabi Leoka is an independent economist who has worked in financial services for over 17 years. She is interested in fiscal and monetary policy. She is also a member of the Presidential Economic Advisory Council. Views expressed are her own.