Op-ed: Don’t neglect cities in the land reform debate | Sunday Times

Millions of jobs must be created in urban areas, where 70% of people live.

Central to President Cyril Ramaphosa’s plans for revitalising SA is “a massive increase in investment in the productive sectors of the economy”. What does this mean for land reform and the agricultural sector?

The bottom line is that new farmers on redistributed land will not be successful and new jobs will not be created unless the productivity of land is improved. Productivity will not improve unless investment in agriculture is increased. The government cannot generate such investments, so growth and jobs in agriculture can only be produced by the private sector. Encouraging this kind of investment requires a new approach to land reform.

How can the environment for investment, growth, transformation and jobs be made more supportive?

The first principle should be to refrain from changing the constitution. There can be occasions when a constitution should be changed. However, some parts of a constitution are more sensitive than others; given the enormous economic challenges we face and the collapse of growth over the past decade, property rights is an area of particular sensitivity.

Blaming the constitution for the failure of land reform is classic political misdirection; acting on it will at best raise uncertainty and reduce investment and at worst provoke a banking crisis that will destroy institutions such as the Land Bank, spill over into the rest of the economy and make everybody, particularly the poor, worse off.

A second priority is to clear the decks. The report last year of the high level panel chaired by former president Kgalema Motlanthe estimates that there are more than 26,000 unresolved land claims dating from before the initial cut off date of 1999. Since then thousands of additional claims have been lodged. The process has decayed as a result of poor design, exacerbated by corruption, poor institutional capacity and legal and policy confusion. The political urgency of land reform is clear, but embarking on accelerated and extended state led land redistribution before strengthening a shockingly weak institutional infrastructure would be a dangerous gamble.

One of the keys to encouraging a supportive environment for investment and hence for successful land reform is to harness the private sector’s experience and expertise, not only in core areas such as agribusiness and processing but also in land reform partnerships. Over the past 10 to 15 years, many individuals, organisations and supporting institutions in commercial agriculture have worked hard to make such partnerships viable. If properly supported by government policy, attitudes and institutions, such partnerships could spread and multiply.

If these principles and priorities guide the process, land reform will have a much better chance of working. However, if the economic benefits are to be shared more widely than within a restricted class of new commercial farmers, then additional goals need to be targeted.

Addressing poverty, inequality and economic inclusion requires, above all, employment growth.

On most commercial farms, especially in grain areas, increasing mechanisation has meant fewer jobs per hectare, even when investment leads to growth and expansion. Other sectors are more labour intensive. These include field crops sugar cane and cotton and horticulture, such as avocados and macadamia nuts, for which there is fast growing demand. Mpumalanga and Limpopo, where investments in labour intensive exportable crops could create many thousands of jobs, are among the provinces worst hit by uncertainties over unresolved land claims, which stifle investment and job creation.

Perhaps the most important principle of all is to see transformation in land and agriculture in the perspective of the larger economy. An understandable sense of historical injustice encourages some to see land as a standalone issue that is the source of all SA’s ills, and to see transformation of farm ownership as the means of healing them all at once. This is to mistake a part for the whole. We have to acknowledge that ill judged land reform has the potential to destabilise the entire economy.

The backdrop to the issue is that half the population is poor, and SA has vast inequalities and the world’s deepest unemployment crisis. Nearly 70% of its people are urbanised. Any workable land reform scheme has to acknowledge that it would be futile to try to reverse the dynamics that have led to this urbanisation. Indeed, urbanisation can help drive growth.

Those who are committed to farming should be given the opportunity and support to do so. But the best places to create opportunities for millions of poor and unemployed people will be in dynamic, well managed cities in which employment and enterprise can grow.

Urban land reform is a key part of urban management and there is much to be done here. The government needs to pay more attention to the needs of our expanding cities.

Successful land reform means a rapid and steady expansion of black participation as owners, and also as managers and workers in the agricultural sector. This would be enormously beneficial but on its own it will not resolve most of our social and economic challenges. It is vital that we ensure that efforts to deliver land reform don’t make it harder to accelerate economic growth, inclusion and employment.

• Bernstein is head of the Centre for Development and Enterprise, which released a new report on agriculture, jobs and land reform this week.

OP-ED: Smallholders at the forefront of land reform. The right road or a dead end? | City Press

It is vital that the assumptions on which arguments for rapid and large scale transfer of land to small holders rest on solid evidence, by William Beinart and Peter Delius.

The current heated debate on land reform is fuelled by bold pronouncements about how white-owned land should be secured for African people.

But it is marked by an absence of detailed policy discussion about what should be done with the land that is redistributed.

Prof Ben Cousin has set out to fill this void with the suggestion that 48-million hectares of commercial farmland, 60% of the existing freehold, commercial farmland, should be acquired by the state over the next 15 years and given to about 200 000 “market-oriented smallholders”.

President Cyril Ramaphosa, apparently echoing this approach, has stated that the initial focus of the government’s plans for land redistribution will be the group of around 200 000 emerging black farmers who are “yearning for land”.

Smallholders occupy a considerable area of agricultural land in South Africa, perhaps 23-25 percent (over 20 million ha), and we agree that where possible, they should be assisted to intensify production and market their output.

But at present they produce relatively little and evidence suggests that they are, as a whole, withdrawing from farming.

It is vital that the assumptions on which arguments for rapid and large scale transfer of land to small holders rest on solid evidence.

Our analysis of deep seated patterns of change, the current levels of production and impediments to expansion suggests that the idea of transferring large amounts of new land to small holders is more likely to do economic harm than alleviate poverty.

There is the added danger that a crude version of these proposals will serve as an intellectual fig leaf for deeply destructive populist policies.

In the late nineteenth century and early decades of the twentieth century, South African smallholders intensified their production with new crops such as maize; some produced for markets.

This historical success together with the more recent experiences of land reform in societies such as the ‘Asian Tigers’ has provided a model for some South African policy makers.

But South Africa differs from the latter examples in that conquest, land dispossession, taxation and other pressures set in motion the tragic destruction of black small holder production in the 20th century.

Instead it was a pervasive and increasingly coercive system of migrant labour that left the most indelible mark on most African rural communities and fundamentally restructured their economic and social systems.

These pressures ensured that the development of black farming was stunted.

The former homelands, in which land is very largely held by African people, represented about 14-15 percent of the land (17-18 million ha) in 1994.

This is not the worst land in South Africa; much is in the higher rainfall areas in the eastern half of the country.

There is considerable debate around how much land has been transferred to black people in the democratic era but we estimate that if private land transfers are included there is now around 26-27 percent (25 million ha) in black hands with additional redistributed land owned by the state.

However, if you travel through the former homelands, it is striking how little land is being used for arable agriculture.

Approximately 80 percent of former fields are no longer used, amounting to hundreds of thousands of hectares – perhaps close to a million.

This is a huge amount of land, a third of the amount that commercial farmers use for maize.

If farmed with relatively effective inputs, it could potentially produce a great deal more maize, and other crops, leaving sufficient land for grazing as well.

This development could transform the economy of the areas currently occupied by African landholders.

Smallholders are presently producing less than 5 percent of the maize in South Africa; they are probably producing a higher percentage of the vegetables, but even less of many other crops and fruits.

Livestock are still seen as valuable investments and prices for slaughter animals are good.

But even here, meat production does not meet rural demand.

The great bulk of food consumed in the rural areas is purchased.

There are therefore potentially huge opportunities for African growers to market locally in the rural areas and small towns.

It is clear that land shortage is not a key impediment to expanding production.

Other impediments are far more important.

Agricultural technology is a bottleneck. Few have teams of oxen for ploughing, and tractors are expensive to buy, maintain or even hire.

People see smallholder farming as hard work for risky and limited returns; the costs of seed, fertiliser, ploughing and equipment are prohibitive.

Many associate it with poverty and a way of living that no longer accords with their ideas of modern living.

Family labour is less available but the transition to wage labour has not generally been made.

The existing tenure systems make it difficult to accumulate land.

Land acquired through land reform is usually held within Communal Property Associations (CPAs). These have some of the same benefits as communal areas, providing access to land and grazing for a large number of families. But they also lead to the same disadvantages for individual families in that they are managed collectively and often to the benefit of the few.

Although the overall picture of smallholder farming suggests a decline, there are exceptions.

These “pockets of dynamism” suggest where investment and assistance may be most productive.

Some irrigation schemes that were built in the homeland era are thriving but many are not effectively managed and offer scope for intensification.

Joint ventures or partnerships with the private sector have been an important innovation.

These are now very diverse. In sugar, forestry and wool for example, there may now be around 50 000 smaller black farmers who connect with major companies both for production and marketing and this is probably the fastest growing area of smallholder production.

Land restitution is resulting in a variety of leasebacks where successful claimants gain ownership of the land but lease it back to established or new commercial operators.

Our research suggests that there is great scope for innovative thinking and projects on the land already occupied by black smallholders in the former homeland areas or on recently transferred land.

This may now constitute around 25 percent of agricultural land much of it in areas with over 500mm rainfall.

It is essential that the current landholders receive upgraded, secure tenure in these areas.

Unlocking the productive potential of these areas should be a policy priority and would generate considerable, widely distributed income, as well as provide the basis for other businesses.

Successful redistribution that facilitates production will require far more support than has been provided so far.

The state does not at present have the resources to provide adequate extension services and agricultural education for those who hold land.

It is vital that private sector resources are mobilised as well.

The issue is not so much the area of land involved but the capital, inputs and skills to bring it into production and to enhance rural livelihoods rather than spread rural poverty.

A fast track process to land redistribution in which land allocation runs ahead of support structures and infrastructure (including basic services such as schools and clinics) is likely to be a dismal failure.

The damage will be even greater if the manner of implementation undermines confidence and productivity in the commercial farming sector which will for the foreseeable future remain fundamental to food security and economic growth.

Large numbers of people have and will continue to move to the cities. The government should prioritise provision of residential sites and housing in secure forms of private tenure.

In peri-urban areas and in smaller towns, some of which still have a good deal of municipally owned land, there is scope for larger plots that allow for urban gardens.

In the context of a rapidly urbanising society the overall assessment of the progress of land reform should include urban land and the expansion of property ownership in its criteria and should not be restricted to rural land.

Based on our recent contribution to CDE’s VIEWPOINTS series, Smallholders and land reform: A realistic perspective.

• Beinart and Delius are Emeritus Professors at Oxford and Wits Universities respectively.

Who’s to blame for SA’s rising unemployment? | Power FM

Speaking on Power Talk, CDE’s Ann Bernstein argues that the country “has chosen policies that have made the unemployment as bad as it”.


On Friday 26 October 2018, CDE’s Ann Bernstein, gave evidence to the Joint Constitutional Review Committee arguing for accelerating land reform but against changing section 25 of the constitution.

Op-ed: Case for higher minimum pay is dangerous | Sunday Times

It’s dangerous that the jobs summit retreated into a fantasy world, by Nicoli Nattrass and Jeremy Seekings.

The framework agreement from the jobs summit endorses the monitoring and enforcement of the new national minimum wage. Ignoring the trade-off between wages and employment, it argues that this will “stimulate aggregate demand in the economy through wage-led growth”, implying that such growth will also create jobs. This is a dangerous fantasy.

Believers in job creation through wage-led growth make three dubious assumptions.

The first is that employers can remain competitive by improving efficiency without shedding jobs. In “tradable” sectors that are exposed to international competition, firms are already under pressure to increase efficiency – they don’t need to be prompted by higher wages to do so.

Much more likely, a rise in the minimum wage will result in labour-saving technological change and some firms will go out of business. The result will be job destruction, especially in labour-intensive sectors where labour costs account for a large proportion of total costs.

The second dubious assumption is that higher wages will boost consumer demand to such an extent that profitability and investment remain buoyant. This is most unlikely in an open economy like SA’s where consumer demand sucks in imports (even low-income consumers purchase clothes from Asia and chicken from the US) and higher wages drive up prices, thereby undermining competitiveness in tradable sectors.

Higher wages can help boost nontradable (domestic) services such as hairdressing and restaurants, but this will be insufficient to compensate for the loss of international competitiveness. The likely consequence is a fall in profitability, investment and growth.

SA’s economy is profit-led, not wage-led. Capital accumulation relies on corporate savings and capital inflows (the government and household sectors are typically net borrowers). And, as emphasised by the international expert panel on South African growth chaired by Harvard professor Ricardo Hausmann in 2006-2007, SA’s “binding constraints” are on the supply side, notably skilled labour shortages, infrastructural bottlenecks and investment finance – not the demand side.

Yet the zombie notion that the South African economy is demand-constrained and can be kick-started by higher wages refuses to die.

For example, Cosatu favoured the introduction of a national minimum wage at a relatively high level, justifying it with reference to the Brazilian case, the so-called “Lula moment” when economic growth, driven primarily by the commodities boom, benefited also from rising minimum wages and linked social security payments during president Ignacio Lula da Silva’s second term of office (2006-2010).

There is evidence that rising minimum wages and social security payments in Brazil helped cushion the impact of the global economic crisis, create jobs and reduce poverty. But in sharp contrast to SA, this occurred in the context of very low unemployment and in an economy where investment was financed largely from domestic sources. South Africans, by contrast, borrow to finance consumption – and this trend worsened after apartheid.

Two published macroeconomic analyses of the economy using simulations and data from the 1990s (by Gibson and Van Seventer in 2000) and 2000s (by Oranan and Galanis in 2013) concluded that wage-led growth was not feasible in SA.

Both predicted that increasing the wage share would undermine investment, growth and employment, and generate balance-of-payments problems. A subsequent simulation by the National Treasury (by MacLeod in 2015) came to the same conclusion, notably that the South African economy “is profit/investment driven” rather than “wage/consumption driven” because profits are the main source of funding for investment and wages, and because a significant amount of consumption generated by wage increases gets spent on imports.

The Treasury model predicted that if a national minimum wage was set at 60% of the median wage (that is close to the minimum sectoral determination for domestic work) and rigorously enforced, it would result in a 2.1% fall in employment and a 2.5% fall in output.

Two Cosatu-aligned macroeconomic modelling projects, however, continued to present an implausible alternative narrative that higher minimum wages would drive growth. The models assumed unrealistically that higher minimum wages would boost productivity, while leaving employment largely unchanged, and that any negative impacts on profitability, investment and the balance of payments would be insufficient to derail wage-led growth. Yet even in these dubious models, unemployment remained stubbornly high, implying that even if higher wages could fuel economic growth by boosting demand (which is unlikely), this will never amount to serious job creation. For that, a much more labour-intensive growth path is required.

Those presenting wage-led growth as a means of overcoming unemployment make a third dubious assumption, that consumption-driven growth will improve the employment elasticity of growth.

Even in the consumption-led growth of the 2000s, SA’s employment elasticity of growth remained low, meaning that economic growth did not result in proportionate job creation. Trying to stimulate economic growth through raising wages is likely to reduce it further. In other words, even if the economy was stimulated to grow faster, the benefits would not reach the unemployed and the poor.

Wage-led modelling narratives depend on implausible assumptions and are inconsistent with historical trends in SA.

They offer us the rosy fantasy that, this time, things will be different: higher wages will somehow translate automatically and instantaneously into higher productivity, implying that savings and investment will not be undermined.

Such narratives ignore the negative impact on profits (and thus on investment), choosing instead to emphasise the benefits of lower wage inequality but without confronting the fact that unemployment remains high and the chances of less-skilled workers ever getting jobs decreases.

Wage growth in profit-led economies like SA typically benefits skilled workers because it encourages mechanisation: skilled labour is a complement to capital-intensification, whereas less-skilled workers lose their jobs.

It is depressing that the jobs summit retreated into the fantasy of wage-led growth rather than confronting the challenges of making the economy more labour-intensive.

• Nicoli Nattrass, is a professor of economics at the University of Cape Town and Jeremy Seekings is a professor of political studies and sociology at the University of Cape Town.

A look at unemployment in South Africa

“South Africa needs growth to make it a much competitive place to invest, start firms and expand businesses, and that requires policy changes” says CDE’s Ann Bernstein on BBC Radio.

op-ed: The jobs summit was helpful, but simply fine-tuning what we already do won’t work | Business Day

SA’s growth path must become more labour-intensive — and wages matter for employment acceleration.

In the run-up to the presidential jobs summit, the big question was whether the impact of the commitments that would emerge would accord with the scale of SA’s unemployment crisis. Would it deliver the “extraordinary measures” needed to address the most pressing social crisis?

These measures are needed because SA’s unemployment crisis is vast: nearly 10-million adults who want to work cannot find any, and the rate at which jobs are created is so slow that unemployment queues have increased by an average of nearly 900 people every single day over the past 10 years. Worst of all: the number of young people in jobs has declined over the past decade.

The main reasons for this are set out in the opening section of the jobs summit agreement. Growth has been too slow; has been capital- and skill-intensive in character; and has failed to create the kinds of jobs needed to absorb the large numbers of job-seekers who received sub-standard education at largely dysfunctional schools. Add to that the limitations of SA’s skills-production machinery, the ratchet-like tightening of labour market regulations, and the raising of minimum wages, and the necessity for “extraordinary measures” becomes apparent.

So, given the depth of the crisis, did the jobs summit deliver interventions that might move the dial? Unfortunately, the provisional answer to this question must be “no.” This is despite most of the initiatives announced at the summit being positive and desirable.

Agreement proposals

The agreement proposes a veritable raft of measures, large and small, across multiple sectors of the economy, including R100bn in financing for black business development to a 100-worker clothing factory in the Eastern Cape.

Some of these have been announced before, others are new, and some are barely developed. Most seem positive (though final judgment will have to be deferred until more detail is available and the cost, quality and impact of implementation is assessed).

There are exceptions to this generally positive assessment. What, for example, can be expected of government-appointed experts who advise distressed companies facing the prospect of closure or retrenchment? How does the commitment to “no retrenchments in the public sector” impact the deepening fiscal crisis in state-owned enterprises and the public sector? Nonetheless, the overall judgment stands: on their own terms, the individual initiatives seem mostly worth doing.

The problem, however, is that the plethora of initiatives lacks a coherent strategic focus. Taken as a whole, they reflect an approach to reform that assumes SA’s challenges can be resolved by fine-tuning the performance of individual companies, sectors and value chains. They are premised on the idea that with enough bits and pieces — a subsidy and working group here; a training initiative and smallish fund there — economic and employment growth are bound to accelerate.

This kind of policy fine-tuning, however well-conceived and however well-executed, is very unlikely to weaken the many distortions that hobble the economy as a whole and the labour market in particular. If SA is to see much faster economic and employment growth, many policies need to be overhauled, not fine-tuned.

How one responds to the jobs summit, then, depends on whether you believe fine-tuning or policy overhaul is required.

Fine-tuning vs overhaul

It is, of course, possible that the social partners know all this, but believe that political constraints make overhaul very difficult because achieving agreement on what to do is hard and imposing the right mix of policies risks political and economic disruption. If this is the case, then the summit may have delivered as much as might reasonably be expected from such a process. The price of this is brutal, however: without fundamental reform, SA will remain trapped in a stagnant economy and massive unemployment.

The cost of setting high minimum wages and standards that all employers must meet is that too few jobs are created. Real reform would include exempting small and newly created companies from many current regulations, including the imminent national minimum wage. It would also include making SA a competitive place for light manufacturing to attract the many jobs leaving China.

Creating an environment in which companies are able and encouraged to create large numbers of low-skilled jobs is the single most important step SA could take to make its growth path more inclusive.

The agreement’s 10-year extension of the employment tax incentive is the only meaningful measure to reduce the cost of employment. And it would have been better if the incentive had been extended to a broader range of low-wage workers. This is especially so in light of the pending implementation of the national minimum wage.

That said, the jobs summit made some advances, and could open up the possibility of more meaningful movement later. Business representatives are encouraged that the mood of engagement with the government is a vast improvement on what has prevailed over the past few years. The establishment of a presidential jobs committee promises that employment growth will receive greater priority than hitherto.

According to the agreement this committee will “urgently” deal with a range of issues, including the immigration regime. This opens up some space and business should certainly push for fundamental reform with respect to skilled immigration — not just fine-tuning but far-ranging reforms that would affect the entire economy not only large firms.

SA’s growth path must become more labour-intensive, the country must become a more competitive place in which to do business and wages matter for employment acceleration. There are real limitations to what can be expected of the plethora of initiatives and actions that have been agreed.

Tinkering with what we have will not suffice. SA must seize the thorny issue of fundamental reform sooner rather than later if we are to achieve faster growth and millions more jobs. This will require bold leadership and skillful political management.

• Bernstein is executive director of the Centre for Development and Enterprise​.

Op-ed: Expanding scope of low-wage jobs does not mean a race to the bottom | Business day

Government’s job-creation project has pay flexibility, so it makes no sense to exclude private sector’s efforts, write Nicoli Nattrass and Jeremy Seekings.

SA’s extremely high unemployment means inclusive development is impossible without labour-intensive growth. When nearly two adults in five are unemployed, the expansion of jobs, even at relatively low wages, reduces poverty and inequality.

SA’s development strategy rests on the false hope that an increasingly skill- and capital-intensive economy can generate such high growth that unemployment falls. In fact, the economy has grown by less than 3% per year since 1994 and growth is generating fewer and fewer new jobs. It is time to change direction. This means learning from the experience of the many countries that have industrialised through labour-intensive manufacturing.

In China, production for export generated 5.5-million clothing jobs by the mid-2000s. Bangladesh grew the number of clothing jobs from 1-million in the mid-1990s to more than 4-million today by taking advantage of rising wages in China. The clothing industries in Cambodia, Vietnam and Burma also employ huge numbers of workers. Clothing jobs are still leaving China. Countries such as Ethiopia and Madagascar are taking advantage of this. SA should start competing for these jobs too.

It is widely assumed in SA that encouraging the growth of labour-intensive firms that pay lower wages necessarily threatens higher-wage, higher-productivity firms, spurring a “race to the bottom”.

This view is mistaken because firms paying different wages can coexist in the same industry by using different technologies and producing different items for different markets. It is possible, for example, to expand the production of work overalls in lower-wage, labour-intensive clothing factories without affecting jobs in higher-wage firms producing more expensive and sophisticated fashion items. Setting minimum wages at a level that only the sophisticated firm can afford simply rules out labour-intensive development without necessarily improving the position of workers in high-end firms.

Wages matter for employment. In post-apartheid SA rapidly rising minimum wages in clothing (and in agriculture) have demonstrably destroyed jobs. The new national minimum wage (of R20 an hour) in effect rules out any significant labour-intensive growth and threatens jobs (including in the clothing industry) in the poorest parts of the country.

The minimum wage setting system needs to be modified. The national minimum wage already makes time-bound exemptions for agriculture and domestic work. It also allows an exception for the government’s expanded public works programme (EPWP), setting a minimum of R11 an hour. This exemption could become the effective minimum wage floor across the economy — with subsequent adjustments being made to it by the Employment Conditions Commission after due consideration of any potential employment effects.

It makes no sense to exempt the government’s employment creation programme without exempting private sector efforts to generate jobs suitable for relatively unskilled people on a large scale. Bargaining councils can continue to set minimum wages above this floor, but these should not be automatically extended to nonparties, which tend to be smaller, less capital-intensive firms.

There are no simple solutions to economic development, but where wages are appropriate and an effort is made to attract investors from countries with experience in labour-intensive development, significant job creation can result. Newcastle in northern KwaZulu-Natal is a case in point. In the early 1980s, the municipality encouraged East Asian manufacturers to relocate to Newcastle, efforts that were supported by industrial policy incentives. Ten years later, Newcastle had 1,000 Chinese residents and 54 large Chinese-owned factories providing thousands of jobs, mainly in the clothing industry.

The industry contracted in the 1990s and 2000s as a result of trade liberalisation, currency volatility and rising minimum wages. A tough back-bone of Chinese-owned labour-intensive firms continued to compete successfully against imports from low-wage countries, but only by paying below the industry’s minimum wages. Rather than harassing these firms into closure, we should explicitly allow lower wages in these labour-intensive firms. Industrial policy should support them to compete against imports and grow into export markets — which some firms in Newcastle were able to do at one point in their history.

The key challenge for such a proposal is political: organised labour (backed by some employers) is opposed to greater wage flexibility and is suspicious of development approaches based on labour-intensive growth. This is both an ideological preference and a self-interested position because trade unions in SA represent relatively well-paid workers, mostly in nontraded sectors, and have no direct interest in expanding lower-wage jobs.

A commission of inquiry might be set up to investigate how best to promote labour-intensive development, either through amending wage-setting machinery at a national level or restricting downward flexibility to special economic zones (SEZs). It should include representatives from municipalities that stand to benefit from the expansion of labour-intensive employment (including new SEZs or existing capacity in places such as Coega in the Eastern Cape). A great effort should be made to include the voices of the unemployed who are marginalised from bargaining councils, Nedlac and political structures.

Greater minimum wage flexibility is neither a necessary nor sufficient solution to SA’s growth crisis. It is necessary, however, if the economy is to become more labour-intensive and hence more inclusive.

This is not an argument against minimum wages in general or against health and safety regulations, all of which are important. Rather, it is an argument that we need to set minimum wages at different levels for different sectors and allow wages that are appropriate for the expansion of labour-intensive jobs. Additional support could also be provided for the growing numbers of worker co-operatives in the clothing industry.

Given inadequate welfare support for the unemployed, the expansion of lower-wage, labour-intensive sectors will have a significant effect in terms of reducing poverty and inequality. Where this is linked to SEZs, nonwage benefits could potentially include better housing, schooling and access to clinics.

• Natrass and Seekings are professors at the University of Cape Town. This article is based on a Centre for Development and Enterprise publication, Viewpoints.

Will the Jobs Summit yield results?

Speaking on ENCA ahead of the Jobs Summit, CDE’s Ann Bernstein questions whether the voices of the unemployed will be taken into account?

Addressing the scale of the unemployment challenge

The jobs summit needs to take extraordinary measures in order to deal with the scale of unemployment, says CDE’s Ann Bernstein to the The Money Show.