South Africa was experiencing an economic miracle without being aware of it, the Swiss-South African Chamber of Commerce heard on Tuesday evening.
Economist Mike Schussler told a meeting of the chamber that using publicly available figures from reputable sources such as the International Monetary Fund, the International Labour Organisation and Statistics South Africa he had gleaned that the country had more productive and cheaper labour than was generally known.
Gross domestic product (GDP) per person employed put the country next to the successful Taiwanese economy in the international league table.
South African labour costs had fallen in real terms by six percent in the last 10 years — something it had taken the flexible Dutch labour market 35 years to achieve. Wages and salaries had not risen to compensate for the fall in the rand, which accounted for this improvement in labour costs.
Schussler said if one analysed GDP, the share that went to labour had fallen below the share that went to profits for the first time in 21 years.
”I’m not sure how politically sustainable that is,” Schussler said, to general laughter.
Exports were also growing, and these were not just the traditional commodity exports, but items such as cars, furniture, paints, and chemicals. Non-traditional agricultural exports were also growing such as olive oil and dried fruits.
South Africans were also exporting services. He gave the example of American architects subcontracting their work via the Internet to local architects, and South African banks doing ”back office work” for London banks the same way.
All this had been achieved without subsidy — unlike the much vaunted ”tiger economies” of South East Asia. Asked why the rand had fallen so drastically last year, and then bounced back in recent weeks, Schussler said his explanation was that emerging market currencies generally had been under pressure.
The rand was a highly traded currency — the 13th most traded in the world — which also contributed to the volatility. – Sapa