op-ed: Jobs plan should make large cities opportunity centres for more people| Business Day

01 Sep 2017, by Ann Bernstein

An economic-development strategy is needed to provide for young people in rural areas, small towns and townships.

The country’s highest rates of unemployment are frequently in places where the spatial legacies of apartheid continue to fester: large rural towns in remote parts of the country, townships in and around big cities. With nearly 40% of SA’s 20-million young people (aged 15-34) not in employment, education or training, it is imperative that bold, countrywide reforms are implemented to generate millions of new jobs for the labour force we have, not the skilled one we wish we had. SA needs a new development strategy based on a firm economic rationale that deals with the young people left behind in rural areas, small towns, townships, as well as secondary cities where future prospects are difficult to determine.

There are too many densely settled old homeland areas that are far from urban centres and provide almost no hope for the unemployed. The youth unemployment rate in Bushbuckridge, Mpumalanga, is 73% (78,113 young people) and almost 80% of households depend on grants as their main source of income. The municipality’s strategy for creating growth and jobs in the region is to turn family farms into commercial enterprises, but only 5% of those who are employed work in agriculture.

Another place where few opportunities are likely to emerge is Matjhabeng, the municipal region in the Free State that includes Welkom. Due to a long-term decline in gold mining, the local economy has shrunk by an annual average rate of almost 2% in the past 15 years. Generating jobs for the 58% (53,618) of young people who are unemployed in the region will be extremely challenging.

Secondary cities such as Rustenburg, Emalahleni (Witbank), Mbombela (Nelspruit) and Emfuleni (Vereeniging) all have high youth unemployment levels (40.9%, 43.1%. 48.4% and 52.4%, respectively), but they appear to have some economic potential. Nevertheless, they will find it hard to compete with the economic dynamism of the big metros. It is impossible to predict whether these secondary cities will expand or contract.

What are the best ways to deal with these realities? The Centre for Development and Enterprise (CDE) recently completed a project that took us to 20 youth unemployment “hot spots” — from Msunduzi, KwaZulu-Natal, to Cape Town; from Alexandra, Gauteng, to Thulamela (Thohoyandou), Limpopo.

In workshops with politicians, officials, business, nongovernmental organisations and young people in cities, towns and townships, the most commonly proposed approaches would not have much effect. The dominant approach tends to be mainly small projects designed to help people where they reside. Due to the distance from markets and frequently an absence of appropriate infrastructure, most local projects in these areas never achieve commercial viability and sustainability.

There is no prospect of such projects achieving the kind of scale needed to tackle youth unemployment meaningfully.

Another idea, of achieving more balanced growth patterns across the country — of bringing jobs to rural areas — ignores economic realities. Less growth and fewer jobs will result from attempts to entice growth away from urban centres, where economic activities naturally cluster and growth rates are always higher than the national average. Such policies end up fighting prosperity rather than poverty.

The priority should be to make large cities centres of hope and opportunity for more and more people. SA’s cities, if properly managed, can absorb many more young job seekers.

Johannesburg and Cape Town have the lowest unemployment rates of all settlement types in SA, while absorbing large numbers of people. Nonetheless, the numbers of young unemployed people remain dangerously large. Managing the big metros for faster growth, jobs and the inclusion of young work seekers, requires a new mind-set and policy reform.

SA should encourage densification by ensuring that zoning rules are open and flexible; remove the regulations holding back business; and empower these large urban areas to move to the centre of a national economic strategy prioritising jobs and growth.

In cities and towns with minimal economic potential, the focus of interventions must be on helping people rather than places. That means giving young people in places such as Bushbuckridge and Orange Farm a chance to move to where the jobs are.

Improving education quality and access to work-related skills training is vital, as this will help make it easier to move to larger urban centres with more work and other opportunities. In too many places across the country, young people are stuck, living in limbo. Without jobs, they cannot lift themselves out of poverty, make a proper, dignified transition into adulthood or contribute positively to building a better, more cohesive and prosperous society.

The official labour centres provide little help: 618,570 unemployed South Africans have registered with these centres, but only 14,634 (2.3%) were placed successfully in full-time employment by September 2015.

In places where economic potential exists, local businesses and local governments should work together to create new and faster forms of enterprise-led growth. This requires building trust between officials and local businesses, and adopting an approach that puts existing and new firms at the heart of local economic development. Frequently, the best way for municipalities to initiate a more conducive environment for enterprise-led growth is to start by getting the basics right.

Corrupt, inefficient local government with little capacity can inflict serious harm on local firms. This was evident recently in Standerton, when the municipality’s failure to pay its electricity bill threatened to destroy the farming operations of Astral’s Goldi processing plant and Meadow Feeds mill.

Had the company not publicised its plight, resulting in emergency municipal action to reach a deal with Eskom, more than 4,000 jobs would have been destroyed.

With political will and local government capacity, it may be possible to forge growth alliances between senior municipal officials and local business associations. Together, government and business can identify opportunities for growth, become much more effective in attracting new investments by promoting their city together, and ensure the regulatory environment is as business-friendly as possible. It is time that local interests started to “shout louder” about national laws and regulations that hold back local growth.

When the CDE visited Thulamela in northern Limpopo, a young person pointed out that “there is a big difference between young people in rural areas and those in urban areas, consequently they need different resources to get out of unemployment”. Policy makers should recognise this challenge and ensure that all policies are driven by the goal of integrating millions of young people desperate for jobs into the formal, expanding, modern economy.

Bernstein is Centre for Development and Enterprise head. This article is based on a series of CDE reports entitled Youth Unemployment: An Agenda for Action (www.cde.org.za).

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