Dubbed last week by Bloomberg as the “highest in the world”, South Africa’s unemployment rate drives poverty and inequality in this country. At 34.4%, it is five times that of the world average, and double what it was in 1995 according to economist Mike Schüssler. If you include those who’ve given up looking for a job, that number goes up to a crippling 44.4%.
Tackling unemployment would be the obsessive focus of a DA national government just as it is already that of local DA governments and the DA-run Western Cape provincial government. We believe no decision should be taken by government without considering its effects on unemployment.
There is only one route to mass job creation and that is inclusive economic growth – economic growth that creates opportunities for all.
The DA’s approach to growing the economy can be summed up in four words – power to the people. Economic decision-making power should be decentralised to all the people of South Africa, because even the most brilliant and well-intended cabinet could never match the aggregated knowledge and incentives of sixty million people all making economic decisions in their own best interest, as expressed by free markets.
President Ramaphosa is going to update the nation on Friday on his administration’s latest plan to grow the economy. Our advice to him can also be summed up in four words – get out the way.
It is a great irony that the ANC cannot afford to pay its own employees at Luthuli House and aren’t organised enough to submit its local elections candidates list on time yet want to micromanage every aspect of South Africa’s economy.
When it comes to prosperity there is no need to reinvent the wheel. Experience the world over shows that economic freedom and prosperity go hand in hand. The Fraser Institute’s Economic Freedom of the World report concludes that “virtually without exception, these studies have found that countries with institutions and policies more consistent with economic freedom have higher investment rates, more rapid economic growth, higher income levels, and a more rapid reduction in poverty rates.”
Which isn’t to say there is no role for government in job creation. Quite the contrary. All three tiers of government – national, provincial and local – have a crucial role to play in creating the conditions that bring as many people as possible into the active economy.
Give plants water, soil, air and sunlight and the garden will grow. Give people affordable, reliable, quality water, electricity, education, health, transport, ICT, energy, safety, and a coherent regulatory regime and the economy will grow.
Governments don’t create jobs. Businesses create jobs. So here are the top ten steps a DA would take in national government, to make it easy and attractive for people to invest in businesses:
- Ensure reliable, affordable electricity by opening the energy market to independent producers and allow municipalities to buy directly from them.
- Level the playing field for small businesses by exempting them from all but the basic conditions of employment, including from wage bargaining council decisions to which they have not been party.
- Stand up to SADTU so that teachers can be properly trained and incentivized to deliver a quality basic education to SA’s labour force.
- Curb the public sector wage bill to bring down debt and release funds for spending on essential infrastructure such as ensuring bulk water supply.
- Sell or close failing state-owned companies to improve services to the public and bring down debt.
- Part-privatize rails and ports to bring down the costs of logistics.
- Bring down the cost of data by auctioning spectrum.
- Introduce an independent public service commission to ensure public appointments are based on ability to deliver to the public, to ensure performance-based remuneration, and to hold public servants accountable for lack of delivery.
- Devolve some power over rail and policing to competent metros to enable integrated local public transport systems and greater public safety.
- Decisively walk away from investment-repelling, corruption-abetting, control-centralizing policies such as EWC, NHI, asset prescription, BEE, and the mining charter.
The DA in national government would put the “inclusive” into “inclusive economic growth” by protecting against anti-competitive behaviour and by using tax revenues to open opportunities to more and more people, as per our Economic Justice policy. As employment and tax revenues grow, so will we be able to ensure a stronger and more sustainable social safety net/trampoline for the poor and vulnerable.
But since metro and municipal elections are imminent, this is where the DA can have the most immediate impact on job creation. DA mayoral candidate Geordin Hill-Lewis plans to make Cape Town the most business-friendly city on the continent. There can be no more pro-poor undertaking than that because there is nothing that poor South Africans need and want more than jobs.
Nowhere are the effects – and many of the causes – of unemployment more evident than in the embattled North West Province which, together with seven of its municipalities, has been placed under administration due to collapsed service delivery. I am touring it this week to see for myself and to share the DA’s approach to job creation at the local level.
Where the DA is in local government, we attract investment and job creation to the area by reliably delivering quality basic services – water, sanitation, electricity, roads, streetlights – that are fundamental operating requirements for businesses.
A state of local government report presented to Parliament this week shows that the vast majority of South Africa’s stable, well-run municipalities are in DA-run Western Cape. Which goes some way to explaining why the Western Cape’s unemployment level is 17 percentage points lower than the rest of South Africa.
In the upcoming local government elections, a vote for the DA will be a vote for the only party with a track record of getting things done to create jobs.