Ultimately, the assertion that only business and not the government creates jobs, is not matched by the government's track record in creating a conducive environment for business to thrive and create jobs, write Frontline Africa Advisory's Calvin Matlou and Siseko Maposa.
During his State of the Nation Address (SONA), President Cyril Ramaphosa ruffled the feathers of opposition parties and ANC's alliance partners, the SACP and Cosatu, when he stated business creates jobs and not the government.
Though he later clarified this remark during his Reply to the SONA, his statement came at a time when South Africa is experiencing the highest level of unemployment since 2008 at 34.9% and the unemployed are looking up to the government, along with business, to do all it can to arrest the situation.
Cosatu stated the government was shifting its responsibility of creating jobs to the private sector. The federation added the president had effectively admitted defeat on this front, and this had not happened since the dawn of democracy.
The SACP called on Ramaphosa to "re-examine" his views calling them "neo-liberal" and "fatally flawed".
A change in posture
Though the importance of the private sector in the creation of jobs has always been acknowledged by Ramaphosa, this year's statement represents a considerable deviation in posture regarding the state's role in the economy.
In previous SONA's, Ramaphosa articulated the state's role in job creation as central and not just for purposes of creating an enabling environment for business.
For instance in 2018, he stated the government would prioritise investments in the infrastructure and agricultural sectors to boost economic activity and create jobs.
In 2019, Ramaphosa set a target to create two million jobs for young people within the next decade.
In 2020, he launched the Presidential Youth Employment Intervention, which had six priority actions over the next five years. It would be funded by top-slicing one percent of the budget every year to address the national crisis of youth unemployment.
Ramaphosa has also driven a change in the strategic focus of the Department of Labour to prioritise employment, so much so he even changed the department's name in 2021 to explicitly include "employment".
His concession is ironic given the government has failed to create an environment conducive for the private sector to play a more involved role in inclusive problem solving and policy development in South Africa.
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Instead, it can be argued the government has not made it easy for the private sector to contribute to job creation and grow the economy.
For instance, in the development of Covid-19 lockdown regulations, the private sector was effectively sidelined, with the government solely assuming the right to determine the balance between saving lives and livelihoods.
Industries, such as the hospitality, entertainment, tourism, and alcohol sectors, continue to reel from the crippling effects of ill-timed and poorly conceived lockdown regulations which were developed in disregard of industry views.
With South Africa's unemployment rate hitting a new record high of 34.9% in the third quarter of 2021, there has been criticism of the National Minimum Wage Act, which recently led to the minister of labour and employment increasing the national minimum wage to R23.19.
In 2018, when Ramaphosa signed the bill into law, critics stated it would lead to more unemployment and deter companies from hiring more workers.
Furthermore, the country's state-owned enterprises (SOEs), which the governing ANC insists must be repositioned to play a developmental role, are some of the major job creators on the part of the state.
This is, in part, the reason why EFF deputy president Floyd Shivambu charged Ramaphosa's remark signalled an ideological confusion in the government; for the South African state, like the Chinese as he retorted, albeit to different degrees, was hugely important in creating jobs.
In a mixed economy, like South Africa's, the state is not a mere passive participant in job creation.
Ultimately, the assertion that only business and not the government creates jobs, is not matched by the government's track record in creating a conducive environment for business to thrive and create jobs.
There remains an important need for the government to improve its relations with the private sector.
This requires a consistent understanding in the government that sees the private sector as allies and not enemies of the state.
The president should play a leading role in ensuring this understanding permeates within and across all government departments from national to local levels. Additionally, government departments cannot develop policies to regulate industries without extensive input from players in those industries.
The know-it-all attitude has seen several bills being returned by the president for more work, and some being overturned by the courts.
The Red Tape Task Team created by the president will not achieve its goals if it does not work closely with the private sector to understand markets and current industry issues which stifle meaningful economic activity and job creation.
The task team will also not achieve any considerable success if it works in a silo without collaboration from the departments of trade, industry and competition and small business development. These government departments will be expected to implement whatever the task team recommends.
- Calvin Matlou is a public policy and regulatory manager at Frontline Africa Advisory, where he primarily focuses on facilitating conversations between the public and private sector in achieving policy outcomes that are beneficial for both parties.
- Siseko Maposa is a public policy and stakeholder engagement officer at Frontline Africa Advisory.
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