/ 1 August 2012

Jobs fizzle as ANC fiddles with economic policy

While Cosatu has dropped its call for a ban on labour brokers
While Cosatu has dropped its call for a ban on labour brokers

Economists say South African job growth can be expected to be sluggish for the foreseeable future while the ANC battles to settle on an effective economic policy intervention.

With news emerging this week that the ANC would be investigating the possibility of a job seeker's grant, economists are decrying government's lack of a clear vision for the South African economy.

"What we are seeing is a government incapable of making firm decisions on which the future of our country hinges," Adenaan Hardien, chief economist at Cadiz Financial Services, told the Mail & Guardian.

Although South Africa's official jobless rate fell marginally to 24.9% from 25.2% in the first quarter of 2012, there are no indications that even this modest downward trend will continue, with extraneous factors weighing in on the figures.

Right now, about 4.47-million South Africans are without jobs, and most of them are under the age of 35. The job seeker's grant is largely seen as a substitute for the contentious youth wage subsidy, which Cosatu has vehemently opposed.

The news of the ANC's investigation into the policy came the same day as the union federation's announcement that it had temporarily dropped its drive to ban labour-broking.

In March Cosatu embarked on organised national protests against labour brokers, which resulted in a meeting between the union federation and the ANC where a deal was reportedly struck. It is suggested both decisions could be seen as the forming of a tacit agreement within the tripartite alliance.

However, the ANC has denied this. "These are two completely different things. The job seeker's grant is something that can be looked at to help young people as they look for a job. But that doesn't mean the youth wage subsidy is completely dead; they can be used interchangeably, possibly even together," Keith Khoza told the M&G.

Details are at best sketchy at this stage as to how the job seeker's grant will be constructed or formed, but it is believed to essentially be a monetary benefit offered to citizens seeking work – in particular the youth.

"This sounds like nothing more than another welfare programme that won't work," said Chris Hart, the chief economist at Investment Solutions. "You can't substitute good economic policies with schemes, we need a holistic approach that will transform the structure of the economy."

Hart said handouts were not the correct strategy to tackle South Africa's economic woes. "You can give away as many grants or subsidies as you want, if there are no jobs to employ people, what is the actual point?"

But, without firm decisions being made in terms of how jobs can best be created, there is little hope of any immediate improvement. "The issue is that policy indecision has a monumentally negative impact on the economy. Investors will be unwilling to put money into an environment that is uncertain and the mining sector's failure to truly capitalise on the global mining boom is a case in point," Hardien said.

Hart said structural reform in the economy is needed. "We need to work on the regulations that inhibit the growth of small business. This is not about diluting workers rights, but about structuring the economy that will drive micro-business development that will in turn offer job opportunities."