Govt jobs plan: Putting the cart before the horse - News24
John Endres
The government's Economic Recovery and Reconstruction Plan promises 800 000 job opportunities within a year and investment of over R100 billion over the next three years "to support the employment stimulus programme" (Economic recovery plan: More jobs from Public Works, 9 November 2020).
Is this ambitious plan going to work? Let us take a look at the evidence.
Over the past decade, with monotonous regularity, the South African government has been announcing "massive infrastructure drives" and ambitious, state-led employment schemes. Such announcements can be found in the New Growth Path, the National Development Plan, and now the Economic Recovery and Reconstruction Plan.
But, with equally monotonous regularity, the number of people without jobs has kept rising and the nation's crumbling infrastructure has fallen further into disrepair.
After a decade of "employment stimulus programmes", the unemployment rate reached an eye-watering 30.1% in the first quarter of 2020 – and that was before 2.2 million jobs were shed during the Covid-19 lockdown.
Last week, it was announced that, in the third quarter, the unemployment rate has risen to 30.8 percent (or 43.1% on the expanded rate), and that jobless, working-age South Africans now number 11.1 million.
After a decade of "massive infrastructure investment", South Africa's roads are crumbling, its electricity supply is expensive and intermittent, its water is polluted and its rail infrastructure is being stolen and carted off piecemeal.
Instead of embarking on yet more state spending and promises of jobs, which are unlikely to materialise, it behoves the government to take a step back and consider the true reasons why its plans have not worked.
Corruption
Certainly, one of the reasons is corruption – not just in the conventional sense of state capture by private actors, but more importantly in the sense of state capture through official ANC policy, including cadre deployment, BEE and the centralisation of power.
Public infrastructure projects are notorious for their inflated prices and kickbacks to entire chains of connected middlemen. When tenders are awarded on criteria other than price, quality and the ability to deliver, those criteria take over and the public gets less value for money.
Even more importantly, however, we argue that the government's fundamental stance is flawed. It puts the state at the centre of developmental efforts. And the worse the state performs – being far removed from the "capable state" that President Ramaphosa envisaged at the beginning of 2020 – the more government intervention is thought to be required.
In fact, the opposite is true. The state should focus on getting the basics right and get out of the way of the productive private sector.
Cut regulations
Getting the basics right means: cutting regulations and restrictions that tie up the private sector's ability to create jobs; it means guaranteeing property rights instead of punting state control of land, of pensions, of mineral resources, of the private health sector at every turn; it means abandoning the folly of pursuing perfect demographic representivity through quotas and penalties, and instead developing policies that boost social mobility for all, but above all for the poorest South Africans.
The time has come for a fundamental rethink of how South Africa plans to become a prosperous middle-income nation.
At its most basic, achieving this requires guaranteeing property rights, abandoning race-based policies, depoliticising the public service and deregulating the private sector.
These things are hard to do, no question. But without them, it does not matter how many billions of borrowed rands the government spends: it will not be able to create a successful future for South Africa.
John Endres is Chief of Staff at the Institute of Race Relations (IRR).