Quality development needed to solve crisis of unemployment

Finance Minister Nhlanhla Nene. (David Harrison)

Finance Minister Nhlanhla Nene. (David Harrison)

Finance Minister Nhlanhla Nene says one of the reasons South Africa has such a high rate of unemployment is that the skills people are getting are not aligned to the needs of the economy.

Speaking to the Mail & Guardian at the annual African Development Bank meeting in Abidjan, Côte d’Ivoire, recently, Nene said tertiary institutions in the country needed to empower people with skills that would enable them to get a job almost anywhere in the world.

“In South Africa we have not done that,” Nene said. “We need to identify our competitive advantage in terms of skills. For example, we found that when we were building Medupi [power station] we needed engineers but the country did not have enough.
We ended having to bring engineers from outside.”

No education, no jobs
Nene said the education system was a major stumbling block because, when people did not get educated properly and lacked qualifications, they were not employable.

Unemployment rose to 26.4% in the first quarter of this year, according to the recent Statistics South Africa Quarterly Labour Force Survey. This means that 5.5-million South Africans who actively looked for jobs were not successful. The unemployment rate rises to 37.8% when “discouraged workers” – people who have given up on finding employment – are added. This means that for every two South Africans who are working there is one without a job.

According to the StatsSA survey, there is a high correlation between the level of education and employment success. The survey shows that, in South Africa, the attainment of education still follows a racial pattern in which a far larger proportion of whites and Indians have matric or tertiary qualifications compared with their unemployed coloured and black counterparts, most of whom never completed matric.

Skills creation to address unemployment
Rhodes University economics professor Gavin Keeton said in order to tackle unemployment the local economy needs to grow faster. The level of education needs to improve dramatically and jobs must be created for the millions of unemployed people and the hundreds of thousands of new entrants into the labour market who do not have a matric.

“Economies grow either because more people are employed, or because existing workers are more productive,” Keeton said. “Growth in gross domestic product in the first quarter was just 1.3%. Growth at such a pace inevitably means no increase in employment. The rise in unemployment in South Africa is unsurprising given the feeble pace of economic growth.”

Nene also said South Africa did not only need GDP growth but also quality growth that focused on developmental factors. The agriculture sector, for instance, was growing at a slow pace but had the potential to create more jobs than the fast-growing finance and financial markets sectors.

“It is not just about the numbers,” Nene said. “If the growth is such that the vast majority are poor and unemployed, we need to shift focus. We need to identify opportunities where we can take part on the next level of the value chain, like manufacturing.”

He said South African schools and tertiary institutions needed to align their programmes with the country’s economic needs, otherwise “we end up with unemployed graduates because they are qualified in those fields where the economy is either saturated [and] not where the economy would be able to attract those skills. We need to create skills that will address unemployment.”

Employment-orientation strategies
University of the Witwatersrand economics professor and national planning commissioner Christopher Malikane believes the reason behind the high unemployment rate lies with the fact that the government and the treasury do not have an employment-oriented strategy.

He said the government always made the excuse that the private sector needed to create jobs and that foreign investment was essential for increasing employment. “But companies only care about profits and not labour, and foreign investors take their money and reinvest it elsewhere,” Malikane said. He added that, to have an employment-oriented strategy, the government needed to own its strategic sectors.

Nene told the M&G the government was also looking at the socioeconomic challenges of unemployment and poverty.

“During the strikes in the platinum belt, one of the things that came to the fore was the impact and the consequences of the migrant labour system ... you had problems in Marikana but those problems showed that the real suffering was in the Eastern Cape.”

Nene said that government’s interventions were aimed at addressing the social conditions in the areas affected by the migrant labour system.

“It is not an overnight, easy solution to find but structural reforms are also part of [the work of] government. We need to start focusing on the labour-absorptive sectors,” he said.

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