South Africa: Unemployment: an indicator of our failed state

[Yep, this has been going on for long. Jan]

As dire as the unemployment figures for the second quarter of 2021 are, they foretell an even worse reading for the next quarter. Not included are the effects of the riots, disruptions and looting that plunged the economies of our two main industrial centres, Gauteng and Durban into paralysis and a destruction of infrastructure unprecedented in our history.

These events will add nearly 150,000 more people to our jobless queues. It speaks of the terrible inequalities that exist in our society and of an economy that has excluded and thrust the poor to the margins of society. We have become a society dependent on the meagre hand-outs offered to nearly a third of the population, which has deprived these people of any self-respect and dignity.

The figures speak of a failed state. Less than 15 million people are employed, nearly 8 million are unemployed and at least 3,3 million are discouraged work seekers, who have given up ever finding work and joined the ranks of those that rely on welfare.

Not economically active people of working age number 13,5 million, which means that just shy of 40 million people of working age (between 15-64 years) do not earn any income. No wonder then that more than 50% of the population exists or survives on an income which is below the poverty line.

Unemployment amongst our youth is nearly 60% and conventional wisdom says that one out of every two young people will never find work in the formal sector. What a bleak future we have bequeathed our youth!

Accompanying these horrific statistics are a slew of dreadful metrics which paint a portrait of a dysfunctional state; highest murder rate per capita and getting worse; gender based violence out of control, highest rape rate even though most rapes are not reported, rapes of children is a national disease, teen pregnancy levels are reaching new peaks since covid-19; and despite all the lockdowns to try to restrict the spread of Covid, deaths in excess of normal deaths that are the worst in the world.

Not to even mention a non-functioning police force, state security apparatus and a collapse of many state institutions, we should just be grateful that we don’t have enemies on our borders.

Instead of dwelling on the appalling state we are in, let’s identify some ways out.

We must disabuse our economic policy makers of their “communist” leanings and the ANC’s obsession to hold control over the “factors of production” and the allocation of resources. The state’s fixation of appointing cadres to controlling positions in failing state owned (SOE) enterprises is placing a huge and unsustainable burden on taxpayer’s funds.

The only redemption is for all these SOE’S to be privatised while they still offer some value. We are likely to shortly see the additions to the unemployment lines, when the likes of Denel are wound up. They have given away all the patents and IP secrets and are unlikely to be snapped up by any private enterprises.

In the Department of Trade and Industry (DTI) we have a tradition of employing Ministers with communist leanings, who view the economy as Marxists do, i.e. as if they can ‘command’ supply and demand and which areas to grow. So they have focused on manufacturing and yet manufacturing has declined from contributing 25% of GNP to 12% and is still declining.

Or recently on Women’s Day, when President Ramaphosa commanded that women (or women owned companies) would supply 40% of all the State’s purchases. It’s all communist hogwash! If the state wants manufacturing to succeed it must lessen its political interference (favouring black industrialists) and limit its interference to offering tax and other incentives to invest in capital goods.

State tenders should give a clear advantage and preference to locally produced goods. Make “made in South Africa” meaningful.

The state employs about half the workforce. This is unsustainable and unproductive. Stop cadre deployment and encourage technocratic principles. Remove almost all of the high earning Directors that do nothing and reward our teachers and nurses better with these savings. Halve the size of our bloated Cabinet.

Unfortunately, at least 20% of these civil servants need to join the queues of the unemployed, so that the state can better use the savings made to allocate fiscal spending to productive areas like infrastructure spend. The medicine must first be dispensed, which is a bitter pill to swallow in order to free up unproductive funds and allocate them to productive areas which in turn will create new and productive high skilled jobs, which will also absorb many of the youth.

Free up the business sector. Remove all BBEE racist laws. Black economic empowerment has served only to enrich a minority of well-connected Blacks and resulted in corporate posturing and restructuring on a grand scale, which has destroyed many well established businesses and created wiggle room for fraud and corruption. Free up the harsh labour laws which inhibit businesses from employing people.

The ANC has no plan to ameliorate matters. It exacerbates the problem as President Zuma did by promising to create 500,000 jobs, a pipedream because he has never created a job in his life.

Unfortunately, Ramaphosa also contributes to creating expectations, by his investment Conferences which result in empty promises. The ANC is so entrenched in its path of putting party interests before those of the state, that the only hope is for them to be voted out.


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