For ANC governments, there is often a great gap between aspirations and achievement. As in many other fields, such as education, crime prevention and health, that has been the case with job creation, though it should not be forgotten that many new jobs were created in the expansion phase of the past decade. The economic policies applied up to now cannot be rejected because of jobs lost in the global recession.
The medium-term strategic plan published by economic development minister Ebrahim Patel promises a new approach. Its central aim is to increase the number of "decent" job opportunities in the economy. As an aspiration, that seems admirable. It is also a priority of President Jacob Zuma's government. But the plan and the philosophical approach carry considerable dangers.
These include expansion of government, increased government intervention and the risk of creating short-term employment while allowing continued erosion of competitiveness and productivity, which are the best creators and guarantors of job creation in the long run.
SA needs to be a developmental state, says deputy economic development minister Gwen Mahlangu-Nkabinde. As a philosophical approach, the developmental state has achieved some successes, in Asian countries and elsewhere, including Botswana. It can also lead to misallocation of capital, renewed trade barriers and diminished competitiveness.
Patel's new economic development department will have a "cross-cutting" role, meaning its brief and, possibly, its gatekeeping function, could straddle many departments. It will need to be successful at co-ordination, co-operation and partnerships. Without that, it may impede rather than facilitate government's delivery capacity.
If Patel's new department does everything mentioned in the strategic plan, it could become large, interfering and grasping. This thinking may already be reflected in its proposal to tap retirement funds for development funding.
It does say options include the creation of a government development bond, and it will identify appropriate mechanisms for responsibly leveraging such investments. Development bonds may be a feasible idea and attractive for investors. We already have infrastructure funds. But any attempt to exploit retirement funds, except through the market, should be rejected.
The plan's repeated reference to creation of "decent" work - not just jobs - seems to reflect its protagonists' trade union background. Unions continually demand better working conditions and more pay, regardless of the conditions of work enjoyed by our international competitors. By doing that they remove choice and destroy jobs. Many of the unemployed may prefer to have poorly paid work than no work at all. They should be allowed that option.
In the past decade, SA has created a substantial welfare state. For some, the development state may be a logical next step. Government uses taxpayers' money to fund huge payments to the unemployed and many other beneficiaries. The health department is dreaming of a national health insurance plan. Now Patel's department wants a developmental state, in which an interventionist government decides how jobs are created and takes action to do it.
Zuma has said economic policies haven't changed, but any move towards increased intervention is an important philosophical shift. Intervention aimed at job creation will also fail unless government succeeds in other areas, including uplifting SA's skills and its competitiveness.
As deputy finance minister Nhlanhla Nene said last week, competitiveness is driven over time by improving skills, reducing the costs of doing business and more efficient logistics systems. Making the economy more labour-intensive, he added, will require raising productivity, boosting exports and promoting greater levels of savings and investment.
It seems government already knows what's needed. The problem is implementation.
Ranking the Analysts 2009
