Nearly 5,5 million people – one in every six adults – are out of work in South Africa. Unemployment at this level is one of the most important causes of poverty and inequality, and contributes to political instability.
Unemployed people are more likely to be tempted into crime or to respond violently to the pressures caused by population growth and poor service provision. Worst of all, unemployment is a terrible waste of human potential and a continued assault on human dignity.
Almost every unemployed person could and should be doing productive work that would improve their lives and develop the country.
We are in the middle of the deepest global recession since World War II. As President Jacob Zuma said in his inauguration speech: “Jobs are being lost in every economy across the world. We will not be spared.” The harsh reality is that our unemployment problems are going to get worse over the next year. The government will have less money to spend on this and every other challenge we face. Zuma and his team will have to look for ways to do more with less.
Late last year, the Centre for Development and Enterprise and Business Leadership South Africa brought together some leading South Africans across the political spectrum to think “out of the box” about unemployment and creating millions of new jobs so that every South African who needs a job will be able to find one. The challenge was to find practical, politically realistic ideas that the country could afford in these hard times.
We all agreed on three things:
- Times are tough, but we have tackled bigger challenges together. As South Africans from every background, we know that we are all committed to decent lives for all.
- We cannot keep trying “more of the same”. Policies that failed to reduce unemployment on a significant scale during the longest boom of our lives certainly will not work during the deepest slump any of us have known.
- None of us know for certain whether our pet project or favoured remedy will work.
We need to start experimenting with a variety of policies and programmes and see what actually does.
So how do we start? The most effective – and least expensive – way to tackle unemployment would be to cut out all the red tape and labour rules that stop employers from wanting to take on more staff.
But that isn’t politically realistic, so the group developed, as a second-best option, some politically realistic and affordable ideas to create many more jobs.
Unemployment hits the youth hardest. About 60% of young unemployed people have been jobless for more than a year. About 80% of unemployed people aged 20 have never had a job. So the group looked hard at South African and international experience and developed four ideas to create jobs for young people:
- Tax breaks and year-long exemptions from laws on hiring and firing for employers hiring first-time employees between the ages of 18 and 24, starting in core business districts such as those in Gauteng.
- Special economic zones (SEZs). Global experience shows that these are very effective in creating jobs – especially for young women, who face the highest unemployment rate of all in South Africa. Businesses that start up in SEZs should be exempted from most rates and taxes and all but the most essential labour, health and safety laws.
- A vocational education programme and apprenticeship system to be piloted in some of South Africa’s rapidly growing medium-sized towns, such as Nelspruit and Witbank. Companies in these towns would become directly involved in deciding the curriculum in vocational schools and in setting up on-the-job training opportunities and apprenticeships.
- Large and very simple employment guarantee schemes in the poorest provinces, like Limpopo and the Eastern Cape. The schemes would guarantee dignified and useful employment (such as helping to build roads and providing basic social services) for every person who applied to them.
The wage should be set at a level that would guarantee subsistence; ensure that only the poorest and most in need of a job would apply; and keep the tax costs down to affordable levels. These must be seen as bridging measures while we take the steps to put the economy on a higher and more labour-intensive growth path.
We should be looking in every province and every community for practical employment ideas we can try out. For example, why not create special economic zones around OR Tambo International Airport or the brand-new airport that is being built in KwaZulu-Natal? Why not take the very successful vocational training schemes in Richards Bay and get 10 more towns to duplicate this intense, effective working relationship between training, employers and actual jobs?
The president has called for vibrant debate, different views and proposals for dynamic partnerships to respond to challenges. This is our contribution. We look forward to engaging people who may also be able to offer practical solutions.
We are sure that if these ideas are tried with determination and political resolution, the millions of new jobs we need can be within reach. All of them build on the country’s strengths and would require effective public-private partnerships.
Of course, there will be some people who disagree with our ideas. If you do disagree, we challenge you to make similarly practical, economically viable and potentially very large-scale suggestions.
Let’s move quickly to try out our suggestions and create work for millions of South African citizens who so desperately need a job.
- This article by Ann Bernstein and Simon Dagut is based on the5 million jobs initiative process and working papers.