Are South Africa’s economic policies in line with international best practice? International experience shows that labour-demanding growth is best pursued through stable, growth-oriented macroeconomic policies, a trade regime that encourages exports, and a competitive labour market.
Unemployment is a major determinant of poverty and inequality. Almost two million jobs have been lost over the past two decades as a result of investment being channelled into capital-intensive sectors and technologies. South African manufacturing is now more capital-intensive than other middle-income countries like Brazil, Mexico, Korea and Malaysia.
Nicoli Nattrass argues that employment in manufacturing and services has to be at the heart of any sustainable and significant anti-poverty programme.
Macroeconomic and labour market policies must be consistent with each other. However, there is a fundamental inconsistency between the policies pursued by the Ministry of Labour and the vision embedded in the Growth, Employment and Redistribution framework (GEAR).
There must be greater coordination between the Ministry of Trade and Industry and the Ministry of Labour. Labour market policies must be more flexible and more synergy between fiscal and monetary policy is required to promote economic growth.