South Africa needs rapid, employment-intensive growth – CDE

2nd April 2019 By: Simone Liedtke - Writer

Centre for Development and Enterprise (CDE) executive director Ann Bernstein on Tuesday said that, for South Africa to achieve rapid economic growth, it would require a “decisive shift in policy, growth and jobs”, which remain at the apex of national priorities in South Africa.

However, accelerated, inclusive growth, Bernstein believes, requires urban-led and private-sector driven growth, enabled by a smart State targeting mass employment.

Owing to a lack of debate around these topics, according to the CDE, the nonprofit organisation has released the first two reports of its ‘Agenda 2019’ series – a series of short policy briefs aimed at providing voters with information on critical policy issues.

They provide factual summaries of the issues facing the country and highlight questions that voters should be asking about how political parties propose to deal with the many challenges they would face as an incoming government.

During a media briefing on Tuesday, Bernstein questioned whether political parties are offering the kind of policies that will put South Africa on the road to recovery and urged voters to question their respective parties before deciding on which party to vote for in the upcoming national elections on May 8.

Speaking at the launch of Agenda 2019, Bernstein said “elections are about the policy choices that will shape our growth prospects, which, in turn, will determine our ability to address our crises of unemployment, poverty and inequality.” 

Bernstein further urged voters to “ask tough questions about the policies various parties propose to implement and demand answers from political parties”.

The first Agenda 2019 report focuses on tackling youth unemployment, which Bernstein said is South Africa’s most critical social challenge.

“Are parties proposing the economic reforms needed for firms to prosper and, in the process, employ more people? What are they saying about the causes of unemployment and the kind of policies needed to address this?” she questioned, adding that critical questions for an incoming government need to include whether to support the current focus on high labour standards and high wages at the expense of the unemployed.

This has, in turn, resulted in the CDE advocating that South Africa’s approach to mass employment has failed owing to it having adopted bad policies over the last 15 years, which have led the country to low growth.

Bernstein called on the country to change its trajectory on youth unemployment, saying that South Africa needs to stop attacking the firms it has, and instead put a lot more focus into how more firms can be established.

She highlighted that enterprise-led growth is essential to expanding employment and that business is the driver for both development and job creation, which is “the only way to expand the economy in a sustainable fashion”.

To achieve this, Bernstein, on behalf of the CDE, suggested that South Africa amend its labour laws, which make it difficult for young people to get their first job, and that it should stop imposing costs on employers.

Additionally, she said subsidies that encourage companies to use capital-intensive machinery should be reduced, and that it should instead be replaced with incentives for companies that make use of a lot of workers, rather than machinery.

At the heart of this is education, with the CDE advocating for a better basic education and better vocational education and training. However, the organisation warned that education should not be used as an employment strategy.

In the second of the 'Agenda 2019’ reports focused on ‘Creating cities of hope’, the CDE highlighted that South Africa’s cities could become platforms for growth and inclusion but lamented that national policy-makers do not devote enough time, energy and resources toward realising this aspiration.

“How we overcome the apartheid spatial legacy is one of the most critical long-term challenges to becoming more prosperous,” she said, “and we want to give voters the tools to test what the political parties are planning.”

Bernstein warned that it is the failure to accept the centrality of cities which holds back growth and development opportunities, adding that these are not evident in national policy documents.

“[The CDE’s] view is that if the economy is to grow more rapidly, and if it is to do so in a way that creates mass employment, this can only happen predominantly in our cities”.

Transport remains another big issue for the country, considering that “the inefficient spatial economy makes public transport uneconomic and it imposes enormous costs on the poor”, Bernstein noted.

To put it into context, she highlighted that subsidy policy needs a lot of debate because despite taxis carrying about 67% of public transport users in metropolitan areas, 98% of subsidies go to rail and bus.

“We need to get transport for citizens that is much more competitive and affordable and safe for the millions of people who use them, and this has not been a central part of policy”.

However, despite all these challenges, the South African metropolitan areas continue to drive the economy.

“Cities are South Africa’s future and are critical to development and a labour-intensive growth path is inherently pro-urban, and unless South Africa adopts a more labour-intensive growth path, we’re not going to get the employment we need for the millions of unemployed citizens,” Bernstein stated.

In the CDE’s view, she added, growth rates need to be increased in order to make cities more attractive places to do business. Policies and legislation that inhibit growth, jobs and access to skills for people also need to be dealt with.

“South Africa’s future depends on its capacity to adopt policies that generate rapid, employment-intensive growth, and the only way to do this is for a smart State to allow the private sector to lead and our cities to thrive,” Bernstein concluded.