Building Blocks: reconstructing a frailing economy

Several years into political liberation and our people are still poor, some live under conditions animals shouldn’t have to, they go hungry for days and hopelessly go about everyday not knowing whether their skies will be grey or blue come dawn. Yet, many of us shamelessly live around a kind of opulence fit for kings, mindlessly and wastefully taking for granted the blessings many people know only how to pray for.

Even though we shouldn’t have to apologise for the earned fruits of our labour, we should however be very cognisant of the fact that we are mere beneficiaries of our context and that the random roll of the dice has tended to favour us more than others. There is no such thing as: “I made it on my own!” life sometimes randomly conspires to throw favourable circumstances to our direction and we are fortunate enough to mindfully exploit these to our full advantage, as we should. Think of many key moments in your life, where you had to choose between going north and going south and then think of where things could have very well ended had you chosen one instead of the other, only heaven knows where your life would be today.

What should be crystal clear to us all is that we have reached a critical juncture in a journey to a fortuitous destination. I say critical because it is yet another opportunity to choose between north and south. We live in a country plagued by corruption, joblessness, crime and diseases (AIDS in particular). As these worsen, they seem to reinforce their total effect and feed off each other creating a downward spiralling vortex of destruction. To go north is to decide to do something about it, no matter how trivial it may seem, to do nothing but watch from the sidelines is to go south, a sure-fire path to complete Armageddon.

Right now we have a lot of unemployed youth (75% of our labour force to be exact), most of whom have never had a job before and thus have no labour market experience, their future prospects of formal employment are slim to none. So if you look through the data into people’s lives you’ll see a lot of suffering, hopelessness and pain. Naturally, frustrated unemployable youth are a ticking time bomb and if we don’t do something substantial and very fast, heavens be with us.

Without jobs people cannot earn a living, without a living people become more dependent on the state, with this dependence comes a supplicant disposition, with this disposition politicians and elected officials cannot be held to account, without account people do what is in only their interest, with the self-serving interests of money and power come tyranny and with tyranny we are no different to many states to the north of our borders. Clearly, we are a lot closer to Armageddon than we’d like to believe.

The taxpayer base is already small as it is and with more and more people losing their employment this base diminishes still, this means overall domestic demand for all goods and services will shrink (because people don’t have income to spur demand) leading to more job losses, lessening our total output further. This means Government will have to borrow even more to just standstill on delivery. How long will that last? Eventually, social welfare, public health and service delivery will suffer to an unfathomable point. I don’t mean to sound like the prophet of doom; I am merely bringing caution to light.

There is no doubt in my mind that of all the challenges facing our nation, job creation is by far the most poignant. Even if you sealed off all portholes, paid public servants more and cleared the housing backlog, you would still remain with the grim prospects of an unemployed and angry youth; 16 June 1976 may look like a walk in the park. What makes this particular challenge all the more concerning is that it is laden with all sorts of complexities.

There is no single definitive solution to unemployment, because there is no single clear cause of unemployment. The solutions have to be structured and tiered correctly to address unemployment sufficiently and sustainably. Any solution prophesied to be a magic-bullet will fall short as too optimistic, idealistic or a mere simplification of what is a serious dichotomy of issues. Perhaps it is worthwhile to look at unemployment as a multiplicity of problems. For one, you have unemployed adults, then unemployed youth, then unemployed but educated, unemployed uneducated, unemployed urban and an unemployed rural populace. Clearly the solutions are as varied as the causes and require careful consideration and a multipronged approach.

To suggest that 6, 7 or 8% GDP growth is the ineffaceable solution is plausible and has some merit. However, we have seen, over the years, a growing disparity between the rate at which an economy grows and that at which it creates jobs. GDP growth may come purely as a result of non-labour absorbing economic activities, such as; an increase in global commodity demand or prices. Thus GDP growth may prove to be an underdose of an antidote. Moreover, the first hurdle with this solution is to first find solutions to the creation of GDP growth. Concisely, economic growth is a necessity but not an antidote for job creation.

Another popular proposition is the beneficiation of mineral resources, which has garnered much fanfare and excitement among some of my learnered colleagues, but questions remain around the international competitiveness with which we can beneficiate these minerals, the number of possible jobs that can be created, the nature of these jobs, the geographic spread of this jobs and importantly the education and skills required in these jobs. Two major categories of inhibitors come in the way of sustained employment creation, viz. Labour Related (Laws, skills and prices) and Economic related (growth, policies and infrastructure) challenges.

I stand by my view that it will be the orderly permutation of solutions that suffices in the end. South Africa needs to create 6 million jobs and provide for another 2 million new entrants very fast. Assuming that there’re no job losses, no major strikes, no electricity supply constraints and a translation ratio of 0.5% employment growth ratio for every 1% growth in GDP, it would still take 20 years to address our unemployment backlog, that’s an entire generation. Needless to say this is a highly optimistic view, unlikely to say the least.

So how then can we transcend this problem? What factors should we consider, what combination of solutions are likely to yield results in both the short-term and in the long-term? How do we create jobs, in what quantities, where do we create these jobs and what type of jobs do we create? These are all very thorny questions which require the skilful command on po-litical, macroeconomic and social expertise for our political leaders, union bosses and captains of industry alike.

There are two separate yet related issues that need attention; the first is education. If you consider the fact that South Africa has a Grade 12 pass rate of only 60% [2009], you should hasten to ask the question, what becomes of the 40% who do not pass grade 12? If 600 000 children write their grade 12 final exams and as many as 40% (240 000) fail, there’s clearly something wrong in the system. If you fail grade 12, you are unlikely to be employed, pretty much anywhere. So here you have 250 000 young adults, most of whom are loitering at home, finding entertainment in recreational sex (easily) with multiple concurrent partners often leading to HIV infections and “child” pregnancy, which at that stage becomes the burden of the state, through the payment of a child grants and perilous demand on the public healthcare system.

At this rate, we are on course to produce millions of unemployable youth, millions of new social welfare cases and an expansionary socioeconomic disaster. The solution begins in the individual households and communities with parents taking responsibility for the education of their children. It then extends to the department of education and to teachers, who have a collective legal and moral responsibility to ensure that these children receive good quality education uninterrupted by strikes and perverse personal ends.

So we start by achieving a 100% grade 12 pass rate, then we ensure that all those who wish receive further education in growing fields of employment. This is the idealism and simplification I mentioned earlier. However, our standards in education need to be unrelenting, it must be compulsory for all failed pupils to receive tutoring and assistance to rewrite and pass their grade 12 within 3 months immediately after failing their final exams. This is a very pragmatic approach to solving what is a very real cause of long-term structural unemployment.

The second problem is dealing with 8 million jobs that need to be created in a relatively short period of time. Practically speaking, there are two obvious pathways to solving the problem. The one is to identify, promote and invest in large scale job creating industries. Mining, manufacturing and agriculture come to mind, even though mining and agriculture only employ 1.1 million (8.3%) people combined. The scope for beneficiation in mining and security of tenure in agricultural land are almost certain to double the ranks of the employed in those sectors. Provided black farmers come to the party and new crops are explored i.e. for bio-fuels and allied industries.

Part of the problem with unemployment is our continued obsession with the obsolete dogma of working as salaried hedgehogs. We are now living in a virtual world, we are moving passed the information age at the speed of light, yet we continue to flirt with stale, failed and recycled proposals. In this century the concept of employment needs to be as fluid as the world in which it has to occur. People need to be taught to be enterprising and equipped with the basic skills they need to generate their own living. This is an inevitable change, no state or private sector can create 8 million jobs in the short or mid-term (No matter what the New Growth Path may suggest), the sooner we accept this fate the sooner we are able to forge ahead with practical solution that will work.

Unavoidably, the solution is small business development. I am talking less start-ups and more value-add. I am talking about co-operative business development, where complementary skills can be successfully invested and scarce resources concentrated to lessen the chances of failure of these small businesses. I am not talking about starting a million security, cleaning, landscaping and catering businesses, but, I am talking about the tailor making of effective and creative solutions to existing problems of Government, businesses and households.

If unemployed graduates were willing and allowed to work (on a contingency basis) at a local business, bringing in their education and marrying this with the experience and knowledge of business owners and employees, a very rich outcome could very well be the manifestation of such an initiative. If this translates to growth in these businesses then graduates can be paid a percentage of the additional income that these businesses now generate or maybe considered for employment, partnership in the business or self-employment opportunities as value-adding independent consultants.

In this way there’s a practical relationship between adding value to a local business and being compensated for it. This proposition represents no risk to the business owner and an incredible opportunity for a graduate to earn their stripes and generate some form of income. This can be done in rural and urban communities, assuming that there’re enough businesses as it is for graduates to approach. In this way, employment is created where people live and urban migration, to the extent that it is caused by unemployment, can be sharply reduced.

There is little wonder why our people remain obstinately poor, seeing how everyone is waiting for jobs to be created by the political kind. The correct cause of action is one whereby our people are both encouraged and empowered to do if for themselves!!!