EDITORIAL: Jobs crisis needs action yesterday
BUSINESS LIVE / 31 OCTOBER 2018 - 05:06 / STAFF REPORTER
It’s time for the government to grab low-hanging fruit that will boost the economy, such as tackling visa policies and the lack of spectrum
When it comes to SA and unemployment, even the good times have been bad.
Just as the collapse of Lehman Brothers late in 2008 was starting to convert the financial crisis into a global emergency that would push much of the world, including SA, into recession, we were actually recording our best numbers.
It may be hard to believe now that in the final quarter of 2008, SA recorded a record low unemployment rate. That was the good news. The terrible part was that even then we were talking about a jobless rate of just over 21%, a level that in most democracies would be enough to topple governments. At the height of the European debt crisis, the average joblessness rate among the countries sharing the euro rose to more than 12% by early 2013. As a consequence, countries with varying degrees of economic stress voted their leaders out, from France to Spain and Greece, the poster child of the crisis.
In that wider global context, it shouldn’t have come as a big shock that our unemployment numbers took a turn for the worse. But what we didn’t count on was the lost decade under the presidency of Jacob Zuma, which meant that even as our main trading partners started to improve, we continued in the wrong direction.
We might take some comfort that we never did revisit previous records at more than 30%, but there is no other way to describe a joblessness rate of 27.5% as anything less than a national emergency.
Ramaphosa came into power predicting a 3% growth rate for this current year, but the latest numbers from the Treasury indicate that we’ll only get to 2.3% in 2021.
The defenders of the calamity that was the Zuma presidency often look to the global crisis and subsequent recession as an excuse. But a more honest reading of the data will acknowledge that other countries have been recovering. The unemployment rate in the euro area is back in single digits, with even Greece showing some improvement. In the US the unemployment rate is less than 4%, as it is in Germany. We’ve clearly been left behind and the damage is largely self-inflicted.
The problem with our emergency is that it’s been such a constant part of our reality that apathy and indifference may start to set in, especially when it is hard to see a light at the end of the tunnel.
A lot of positives came out of President Cyril Ramaphosa’s jobs and investment summits, but most realists will acknowledge that growth and work creation don’t happen just because we have agreed they would be nice to have.
The economy hasn’t grown more than 2% a year for about five years and the latest projections from the Reserve Bank and the government have signalled that it will remain around this mark for some time. Ramaphosa came into power predicting a 3% growth rate for this current year, but the latest numbers from the Treasury indicate that we’ll only get to 2.3% in 2021.
That’s very far from the 5.4% rate the government’s own National Development Plan says is needed to make a significant dent in the unemployment rate.
Another potential negative is the possibility that higher interest rates by the Reserve Bank will become unavoidable as the inflation rate continues to inch up towards the higher end of the 3%-6% target range.
Nobody should be so naive as to think that Ramaphosa or new finance minister Tito Mboweni will wave a magic wand and produce the growth rates needed to deal with the jobs emergency. The fact that the numbers have hardly changed for so long shows the problems are deep.
But there is low-hanging fruit, and it’s a crime that we haven’t gone and grabbed it.For example, why can’t Ramaphosa simply announce tomorrow — today, rather — that home affairs minister Malusi Gigaba’s job-destroying visa policies are a thing of the past? Or why are we not moving quickly to auction off additional spectrum to telecommunications players, so data prices can finally be lowered?
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER