The three men chose a long-bladed knife, a pair of pliers and a rusty spade. They were inexperienced but determined to reconnect the electricity supply to their homes. Crouched in a circle in the middle of a dusty street in Bekkersdal township in Gauteng, they began exhuming the black electricity cable — pulling, snipping, twisting: a microcosm of South Africa’s sprawling survivalist economy.
Every fourth South African is unemployed. But now President Thabo Mbeki has shifted joblessness to the front line.
The Cabinet lekgotla last week fast- tracked job creation to the top of its agenda, together with plans to bolster investment and public participation in the economy. This is the first time employment has been at the centre of the government’s development vision, and the state is likely to intervene much more in the South African economy to tackle stubbornly high unemployment rates.
While the government boasts of South Africa’s political and macro- economic stability, these have not filtered down to what Mbeki calls the “second economy” — where the majority of poor, black South Africans live.
According to the Human Deve- lopment Report on South Africa, released by the United Nations Development Programme (UNDP) last week, the country is facing an unemployment crisis as a result of adhering to orthodox market principles.
From 1994 the government ran a hands-off government, particularly in economic management. Job creation was thought to be largely a product of the market. The role of the state was to create the liberal framework to boost business confidence and generate investment.
“The generally low responsiveness of employment to investment and output growth in the formal economy has been the consequence of various built-in biases in favour of capital- intensive methods of production,” the report says. The research shuns trickle-down economics, which holds that “a rising tide lifts all boats”.
Instead, it sticks its neck out and suggests that accepted econometric wisdom on globalisation, growth and poverty may have misled the South African debate on policies to reduce the yawning gap between the rich and the poor.
While unemployment statistics have almost become a cliché in South Africa, even more disturbing is that the labour-absorption rate appears to favour certain race groups. Of the working-class black population, three in 10 are employed. This is 2,2 times lower than the corresponding rate for the working-class white population (six in 10).
A clear trend since the mid-1970s had been the rising share of the informal sector in total employment and the rising number of people who are “underemployed” in low-quality jobs.
Now the government has spun on its heel to bridge the gap between rich whites and poor blacks by using its social and political muscle.
Until this year, the government’s enthusiasm for direct state intervention in the unemployment problem was tepid. In 2001 the government acknowledged that the growth, employment and redistribution (Gear) strategy was a “necessary but not sufficient” framework to develop growth at all levels and dent poverty.
In that year, Mbeki also put black economic empowerment (BEE) at the top of his economic policy agenda and promulgated the law this year. Now the pinnacle of economic policy, the BEE Act, is also proof of the cliché: Where there is a will, there is a way.
This week’s announcement that the government will not sell the core assets of state-owned electricity firm Eskom and transport group Transnet, as they are needed to drive job creation and economic growth, demonstrates a policy shift towards a heavier state hand in stemming unemployment. It also vindicates earlier pronouncements on privatisation by the Congress of South African Trade Unions. The government is also splurging R45-billion on the expanded public works programme over the next five years.
Critics have charged that macro-economic stability is essential before a more welfarist state can be implemented. The government is likely to soft-pedal its policy shift.
While inflation targeting, low- interest rates, low-budget deficit and a manageable level of debt will remain ingrained in policy, the Cabinet has nimbly broadened its priorities.
“All state-owned enterprises need, within a short period of time, to have plans in place for investment, training and other areas critical to economic development,” says a lekgotla statement. The shorthand: job creation. Social security, land reform and community and household assets are all part of the ruling party’s plans for the next five years.
The UNDP report suggests that policy focuses on micro-credit and skills training. It also aims to absorb “self-employed” people into the formal economy and extend the Labour Relations Act to cover them.
As part of the government’s plan to integrate South Africa’s dual economy over the next few years, these policies are likely to be adopted.
Willie Madisha, president of Cosatu, says the fact that the government has acknowledged the severity of the unemployment problem and is using it as a springboard for policy change is heartening. “But recognition doesn’t necessarily translate to implementation — that we’ll have to watch,” he said.Â
Meanwhile, for the unemployed residents of Bekkersdal, the promises remain pipe dreams. “I’ll believe it when I see it,” sighed one of the young men.