Researchers urge bold employment plan
October 23, 2006
By Thabang Mokopanele
Johannesburg - To cut the number of unemployed by 50 percent by 2014, South Africa would require an aggressive programme that increases the rate of economic and labour-intensive employment growth.
In a paper presented at the University of Cape Town on the government's accelerated and shared growth initiative for SA (Asgisa) on Friday, academics from the University of Massachusetts-Amherst in the US said other measures besides employment growth were needed to improve living conditions for the poor.
In their research paper, professors Robert Pollin, Gerald Epstein, James Heintz and Leonce Ndikumana proposed that the unemployment-targeted programme should divide the South African economy into broad categories: subsidised and unsubsidised activities.
The paper recommended that the subsidised activities be eligible to receive credit on highly concessionary terms, based on both a large expansion of the government's current development banking activities and a large-scale programme of loan guarantees administered by the private banking system.
Overall, these subsidised activities should account for between 20 percent and 25 percent of all new investment spending in the economy.
Small-scale agriculture, small and medium-sized businesses and co-operative businesses should be eligible for this subsidy programme.
In addition, any other business should qualify if it could demonstrate the capacity either to raise labour intensity or to generate large employment multipliers. Some activities likely to qualify are in the industries identified by the Asgisa programme as having priority, including tourism as well as agroprocessing in the biofuels industry.
The paper estimated that sectors receiving large credit subsidies would be capable of growing at an average annual rate of about 8 percent until 2014.
Statistics SA's labour force survey, released in September, shows that 544 000 jobs were created in the year to March. This is an average of more than 45 000 jobs a month and, if sustained, is in line with Asgisa.
The latest figure represents a big jump in job creation.
Between March 2001 and March 2003 the number of people employed fell from 12.8 million to 11.3 million. In the 12-month periods to March 2004 and March 2005, the numbers rose modestly to 11.4 million and 11.5 million. But in the latest 12-month period, to March this year, the number jumped to 12.5 million.
This brings the percentage of working-age South Africans in employment from 40.3 percent to more than 41.7 percent.
As a result of the new jobs, South Africa's unemployment rate declined slightly from 26.5 percent in March last year to 25.6 percent, despite an increase in the number of people actively seeking employment and a drop in the number of discouraged work seekers.
The authors said they supported significant increases in government social expenditures and income transfers, even while recognising the large fiscal commitments the government was already making in these areas.
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