Tuesday, February 06, 2007

Create Jobs and fight Poverty

South Africa must industrialise to create jobs and fight poverty
February 2007

The ideological supposition and expectation created in South Africa’s political economy discourse in 1996 when government adopted the Growth, Employment, and Redistribution (GEAR) strategy was that high levels of economic growth would address the poverty and unemployment challenges. Various and at times dissimilar statistics continue to indicate that although the productivity of the South African economy has somewhat increased over the past 13 years, poverty and unemployment continue to ravage South African society.

Despite the poverty and unemployment, which South Africa’s growing economy unceasingly fails to address, the ideological supposition that economic growth should precede redistribution, poverty alleviation and job creation continues to be predominant in government economic planning. For instance, the Accelerated Growth and Shared Growth Initiative (ASGISA) is prefaced on a supposition that the rate of growth needed to allow government to achieve social objectives is around 5 percent on average between 2004 and 2014. The government presupposes that this rate of growth could contribute to halving poverty and unemployment by 2014. Certainly, the economy should grow, but it should not be narrowly viewed as a basis for employment creation and poverty alleviation.

The unproven supposition that economic growth can lead to poverty alleviation and employment has seemingly filtered down to provinces. Gauteng Provincial Government premised its Global City Region strategy on a supposition that pursuit of economic growth will address the social challenges that Gauteng is facing. This is largely derived from the National Spatial Development Programme (NSDP), which proudly sets “rapid economic growth, as a pre-requisite for the achievement of other policy objectives”. Where does South Africa’s virtually sentimental belief that growth will lead to development, poverty alleviation and employment creation come from? Perhaps the question should be which developing country has successfully addressed poverty and unemployment by pursuing economic growth first?

South Africa’s unemployment problem cannot be de-linked from the poverty levels, as creation and provision of quality jobs could be the most effective way of alleviating poverty in a sustainable way. I reckon that the most viable option for South Africa to effectively address joblessness is vigorous industrialisation, particularly on areas that South Africa can provide the natural and primary products. Instead of exporting virtually all the mineral wealth, which South Africa produces, the country could beneficiate minerals in a very effective and productive industrial process. Certainly, industrialisation is brought about by various pre-conditions, including labour and tax laws, and the propensity of industries to massively profit.

As a political intervention, which will disallow super-exploitation of labour, perhaps the South African government should consider nationalisation of all mineral wealth, in order to lay a firm basis for vigorous industrialisation. Nationalisation of mineral wealth as a basis of industrialisation is highly justifiable in the face of the massive poverty and unemployment challenges that South Africa faces. Besides, minerals are natural resources that are largely produced by South African underpaid labour, whilst benefiting very small cliques of white and lately black owners of production means. With ownership of mineral wealth, the State could provide incentives to particularly labour-intensive industry.

Indeed opposition to nationalisation will be wrongly premised on the basis that it is a communist project. Apartheid sustained oppression overtime because the State was in ownership of more than 300 economic activities. Many capitalist states are in ownership of various key components of their economies.

The massive public infrastructure investments intended by ASGISA will certainly benefit big business; mainly in the Construction industry, but will never create quality and sustainable employment opportunities. Construction companies mainly employ majority of its workers on a casual basis, and paying low salaries. This does not suggest whatsoever that public infrastructure is not a necessity, but dispels an expectation that it could be basis for employment creation and poverty alleviation.

The wealth that South Africa has on mineral resources is excessive and could be effectively used as a primary basis for employment creation and poverty alleviation. The almost zero unemployment rates and high levels of economic growth in Malaysia, Japan and South Korea is a consequence of massive industrialisation. South African economy is still predominated by production of primary commodities and a very low labour intensive tertiary sector, and if such continues, unemployment and poverty will not easily vanish. South Africa ought to industrialise to address the unemployment and poverty challenges. The skills shortage which government harps as the basis for unemployment should be addressed concurrent to industrialisation.