The latest South African Human Development Report, released by the
United Nations Development Programme (UNDP) yesterday in
Johannesburg, warns that, unless there is a major change in
economic policy, high rates of poverty, unemployment and inequality
will persist.
While the report acknowledges the achievements of the last decade by the post-apartheid government, it examines sustainable development challenges in South Africa and what it would take to overcome them.
Presenting the report yesterday, UNDP policy adviser Asghar Adelzadeh drew attention to the fact that the key challenges to sustainable development should be tackled jointly by government, the private sector and civil society.
He pointed out that job creation remains South Africa’s biggest challenge, as unemployment continues to rise unabated.
The report found that the country’s economy provided only 11,56-million jobs for 16,81-million economically active South Africans, in March 2003, resulting in 5,25-million unemployed – or an official unemployment rate of 31,2%, which is substantially higher than the 19,3% unemployment rate in 1996.
Adelzadeh argued that two important challenges would have to be dealt with if the South African economy is to produce a gradual, but substantial, decline in the rate of unemployment. These are the achievements of the inclusive reorientation of the economy and a sustainable high growth rate.
The report calls for South Africa to put employment and an employment policy at the centre of its development vision, thus making the growth and employment strategies one and the same, with the aim of effecting economic development that is broad-based, equitable and sustainable over time.
“This reorientation of the economy implies that the future growth of the economy needs to be associated with a larger shift in employment – that is, one that is more ‘employment-elastic’ – and the poor need to be able to integrate into the processes of economic expansion,” the report states.
During the apartheid era, Adelzadeh commented, the generally low responsiveness of employment to investment and output growth in the formal sector was the consequence of various built-in biases – including government’s incentive programmes – in favour of capital-intensive methods of production.
Since 1994, government has pursued the objective of restructuring the economy through export promotion in an increasingly liberalised environment.
In doing so, it has used a host of incentives that have continued to foster the capital-intensity of production at the expense of encouraging employment potential.
“As a result, the mainstream of the economy, namely the private sector, has remained on the same comparative advantage path as before, resulting in increasing capitalisation of production activities and corresponding direct job losses.
“The restrictive macroeconomic policy has also resulted in inadequate institutional and policy support to enhance the economy-wide net employment effects of using high capital-intensive technologies in the mainstream of the economy,” the report explained.
Consequently, employment growth has seriously lagged behind output growth since 1995.
The report further pointed out that, compared to 1995, a much smaller number of jobs are being created for every 1% growth in total production, and warns that, unless future growth potential of the economy is associated with a larger growth in employment, problems of unemployment and underemployment will continue.
Speaking at the launch yesterday, secretary-general of the Congress of South African Trade Unions (Cosatu) Zwelinzima Vavi said government’s employment policies, until recently, have been contradictory, but added that he was happy to see that they are being loosened up.
“As the UNDP report emphasises, the restructuring of the economy requires innovative thinking, consistency, the prioritisation of employment creation and equity. Success will require a willingness to review fixed positions and past policies, commitment to open debate and an understanding of the realities we all face.
“Cosatu is convinced that the country will not succeed in attaining the objectives of cutting unemployment and poverty by half in 2014, unless this fundamental review of our economic strategies has taken place, as suggested by the UNDP report,” he concluded.
While the report acknowledges the achievements of the last decade by the post-apartheid government, it examines sustainable development challenges in South Africa and what it would take to overcome them.
Presenting the report yesterday, UNDP policy adviser Asghar Adelzadeh drew attention to the fact that the key challenges to sustainable development should be tackled jointly by government, the private sector and civil society.
He pointed out that job creation remains South Africa’s biggest challenge, as unemployment continues to rise unabated.
The report found that the country’s economy provided only 11,56-million jobs for 16,81-million economically active South Africans, in March 2003, resulting in 5,25-million unemployed – or an official unemployment rate of 31,2%, which is substantially higher than the 19,3% unemployment rate in 1996.
Adelzadeh argued that two important challenges would have to be dealt with if the South African economy is to produce a gradual, but substantial, decline in the rate of unemployment. These are the achievements of the inclusive reorientation of the economy and a sustainable high growth rate.
The report calls for South Africa to put employment and an employment policy at the centre of its development vision, thus making the growth and employment strategies one and the same, with the aim of effecting economic development that is broad-based, equitable and sustainable over time.
“This reorientation of the economy implies that the future growth of the economy needs to be associated with a larger shift in employment – that is, one that is more ‘employment-elastic’ – and the poor need to be able to integrate into the processes of economic expansion,” the report states.
During the apartheid era, Adelzadeh commented, the generally low responsiveness of employment to investment and output growth in the formal sector was the consequence of various built-in biases – including government’s incentive programmes – in favour of capital-intensive methods of production.
Since 1994, government has pursued the objective of restructuring the economy through export promotion in an increasingly liberalised environment.
In doing so, it has used a host of incentives that have continued to foster the capital-intensity of production at the expense of encouraging employment potential.
“As a result, the mainstream of the economy, namely the private sector, has remained on the same comparative advantage path as before, resulting in increasing capitalisation of production activities and corresponding direct job losses.
“The restrictive macroeconomic policy has also resulted in inadequate institutional and policy support to enhance the economy-wide net employment effects of using high capital-intensive technologies in the mainstream of the economy,” the report explained.
Consequently, employment growth has seriously lagged behind output growth since 1995.
The report further pointed out that, compared to 1995, a much smaller number of jobs are being created for every 1% growth in total production, and warns that, unless future growth potential of the economy is associated with a larger growth in employment, problems of unemployment and underemployment will continue.
Speaking at the launch yesterday, secretary-general of the Congress of South African Trade Unions (Cosatu) Zwelinzima Vavi said government’s employment policies, until recently, have been contradictory, but added that he was happy to see that they are being loosened up.
“As the UNDP report emphasises, the restructuring of the economy requires innovative thinking, consistency, the prioritisation of employment creation and equity. Success will require a willingness to review fixed positions and past policies, commitment to open debate and an understanding of the realities we all face.
“Cosatu is convinced that the country will not succeed in attaining the objectives of cutting unemployment and poverty by half in 2014, unless this fundamental review of our economic strategies has taken place, as suggested by the UNDP report,” he concluded.
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