South Africa’s politicians, many orthodox economists and our financial press continue to ignore the inescapable reality that full employment, as we knew it in the past, will not return.
For them the solution to our socio-economic problems continues to lie in higher economic [gross domestic product] growth. In our globalised world, this is a myth.
Underpinning the dramatic change are modern, capital-intensive production techniques that force companies to maintain international competitiveness. Information and computer-driven high-technology, plus free capital movements, have taken over. In the relentless quest for lower costs, “rightsizing” and “downsizing” have become major features of company restructuring — at the expense of employment.
Criticising corporations for not caring about workers misses the point. The rules by which they must play, or go under, are made in the globalised economy, not at home. Hence the difficulty in restructuring the modern economic sector to increase its employment potential.
The jobs crisis in South Africa is becoming ever more critical. In official terms, open unemployment has risen from 16% in 1995 to 30% in 2002. It has hit African youth and rural people hardest. People under 30 faced a 47% unemployment rate in 2001 — 70% of all unemployed people. Credible unofficial estimates put the figures higher.
This conflict of national interests — global competitiveness versus employment — is a real dilemma. However, there is hope of a resolution.
The clue lies in recognising that since colonial times, South Africa has been sharply divided into two separate socio-economies. Politically, black people were regarded as “outsiders” in a mainly European settlement and generally excluded from full participation in the mainstream economy.
Today we have a developed modern commercial sector that can compete in the global economy, alongside a large marginalised or “left-behind” sector mainly comprising urban townships and poor rural areas.Â
In everyday reality we have two separate economies and not the single, integrated economy propagated by the media. The crucial difference lies in self-reliance versus dependency: the marginalised sector (especially the urban townships) almost wholly depend on the modern sector for jobs and consumer commodities.
The draft labour position paper for the Growth and Development Summit refers to a “dual economy”, and President Thabo Mbeki also recently used the phrase.
Yet the policy implications are not well understood. Common sense suggests two largely separate economies require two distinct sets of policies.
Labour’s position paper emphasises the need to cut labour’s transport costs and locate low-income housing near city centres and industrial sites. It does not envisage an alternative — bringing jobs to local communities.
Given the failure of existing policy to address rising unemployment and poverty, new thinking is needed. This would focus on a new objective — developing more self-reliant working local economies that can generate more jobs and higher incomes. Such initiatives would greatly help in breaking the one-sided supply dependency so painfully dominant today.
The government’s recent efforts to stimulate local community development via integrated development plans are a positive step. But much more remains to be done.
Initiatives focused on more self-reliant local-level community economic development might include:
l A community investment programme based on government investment grants, rather than the proposed consumption-based Basic Income Grant. Local communities would combine adult residents’ grants into local investment budgets, creating local decision-making powers to serve local needs.Â
l Developing a much expanded “local-level market system” to help communities make decisions. Currently we have little of this. Examples are regional periodic markets to facilitate trading and service delivery, community markets for “work rights” and various “asset rights”, derived from the community investment programmes, as locals organise to invest and manage assets.
l New financial arrangements to promote self-reliance, such as local currencies (a “Soweto dollar”) and local banks or credit unions. More attention should be given to “import replacement”, at least so that the essentials of life are locally produced.
These suggestions aim to explode the myth that globalisation is a universal necessity. “Localisation” would counterbalance the narrow ideology of “globalisation”.Â
Professor Johan van Zyl lectures at the School for Public Management and Administration at the University of Pretoria
‘Where are the jobs?’