Nothing short of a targeted rescue plan to create jobs will relieve SA from permanently high levels of unemployment. Labour analysts say government, business and labour are all guilty of shirking the responsibility of vigorously addressing the creation of jobs.

At nearly 22 percent — or 30 percent if discouraged job-seekers are included — SA's unemployment rate has dropped, but it is on a par with the 25 percent in the US at the height of the 1930s Great Depression.

The difference is that in SA, unemployment is structural, not cyclical. It won't go away without targeted initiatives — especially in a time of financial crisis and uncertainty.

SA needs a jobs summit

University of Johannesburg sociology professor Sakhele Buhlungu says SA needs a jobs summit to force government, business and labour to develop a joint plan.

SA's economy is shedding jobs faster than it is creating them, and every year there is a large number of unskilled school-leavers. It has up to 500 000 vacancies in skilled positions. If the country had had a rate of employment similar to that of comparable developing countries, more than 6m more South Africans would be working.

What should a jobs summit consider?

SA's best bet is to give the private sector incentives to hire, says Democratic Alliance (DA) chief whip Ian Davidson. A government subsidy would offset some of the costs of employing new people.

With incentives, the private sector could be a more active employer, Davidson says. It needs to be encouraged to introduce unemployed people to the labour market, sometimes for the first time. And once people are in, the incentive to train them — if rebates are offered — is higher.

Wage subsidies

Labour analyst Andrew Levy agrees. "Government has to take the lead by persuading companies that it is worth their while to hire people." Levy had hoped to see provisions in this year's budget to give companies incentives in the form of wage subsidies. But government hasn't yet bought into the idea.

The Human Sciences Research Council's Miriam Altman says the contracting economy makes it unlikely that companies will hire, even if incentives are offered. She suggests giving incentives to the nongovernmental sector instead. With government subsidies, nonprofit organisations can employ matriculants to fill some vacancies. The sector is generally underresourced, says Altman, and is in need of human resources anyway.

Analysts are in favour of an industrialisation strategy to support investment in labour-intensive businesses, and this has been championed by the ANC in its election manifesto. It is also among the suggestions made by the Harvard panel of academics, constituted to advise government. They have said SA needs to build export industries to create jobs.

SA's growth strategy has to be based on the people that SA has, not on the people it wishes it had, the Harvard working paper says. A strategy based on expansion of the tradeable sector represents a better match with the labour available in the country.

Labour analysts differ on implementation. Davidson says government should assist, but must not be led to support industries that cannot be commercially viable if left on their own.

But Buhlungu believes only sustained government support will produce job creation and training on the part of industry. Sharing responsibility means benefits for both once these start to accrue, and this is good news for job creation, he says.

"Businesses have to come to the party"

"Businesses have to come to the party," says Buhlungu. They have presented themselves as the victims of inflexible labour legislation, among other things, but have not demonstrated enough commitment beyond their self-interest, he says.

Long-term government incentives would also mean that the state can put pressure on industry to develop in semirural areas, decentralising wealth and jobs, says Buhlungu.

Government's public investment programme, which has grown significantly, is a large employer of unskilled labour. The ANC says it will expand investment in public infrastructure over the next few years.

Though companies have fingered strict labour legislation as a compounding problem, both Levy and Buhlungu say relaxing the law won't help.

The real problem is that the economy cannot grow fast enough to create enough jobs. Doing away with the minimum wage may stimulate employment slightly, but Levy says this would be too great a social price to pay, and one that would bring fierce resistance from unions.

"Those who want flexibility already have it."

Employers have already navigated around legislation by using casual or foreign labour, adds Buhlungu. "Those who want flexibility already have it."

Another solution is the DA's 'opportunity vouchers' proposal. Focused specifically on school-leavers with a matric qualification, it would give people money to either further their education or use as seed capital to start a business.

But policing the distribution of vouchers can be tricky. Levy says the money would be better spent if given to the private sector.

No strategy will work in isolation, says Buhlungu. Government, business and labour have to achieve consensus.

Financial Mail


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