OPINION | SA must learn from the US (after Great Depression) how to tackle joblessness

SA boasts the unfavourable spot of having the highest unemployment rate in the world, especially among the youth. The current unemployment rate of 32.1%, by the narrow definition, and youth unemployment of 60.2% are a catastrophe waiting to happen.

Post the 2008 global financial crisis, the South African economy has been steadily underperforming, averaging just a meagre GDP growth of 1.7% from 2010 to 2019, while simultaneously experiencing population growth of 1.4% in the same period.

Thus, in real terms, our GDP per capita has dwindled, making the average person poorer over the same period. Covid-19 worsened the crisis, and the current plans have been unable to mitigate the matter, given that Stats SA has released figures that show how the current labour force adds an estimate of 500,000 to 700,000 people per annum, while less than 400,000 net jobs are being created annually.

These figures paint a picture that not enough urgency is being applied to deal with the high joblessness in the country effectively. The situation at its core, requires more than cosmetic changes and internship culture that have been tried over the past decade.

Moreover, the affect of the high joblessness is reflected in the current social ills; high levels of violence, increase in petty crimes, significant surge in gambling, addiction to substances, traffic lights full of talented but unemployed youth, and overall disillusioned attitudes towards the government and governance as demonstrated by the low voter turnout earlier this year.

The latest quarterly labour force survey indicates that in the past quarter, most of the jobs created came from community and social services, construction and trade, while manufacturing, transport, finance, and private households saw job losses increase. Moreover, the more rural provinces of Eastern Cape, North West and Mpumalanga saw the highest increase in unemployment by the expanded definition.

Structural reforms are paramount as there has been a consistent lethargy in putting effective policies in place for job creation and the current initiatives are not only ineffective but largely unsustainable if SA economy is going to work for the majority if not all of its citizens. The state will have to be a catalyst in achieving that.

Numerous learnings are available when looking at what countries such as the US did post the Great Depression when unemployment was at its highest.

President Franklin D Roosevelt, in his New Deal Programmes, implemented several initiatives to act as catalysts in reinvigorating the economy:

• First, he focused on public works administration, where large state-funded infrastructure projects were initiated to stimulate job creation, improve public facilities and become catalytic in reviving the entire infrastructure value chain, where the economic multiplier is enormous. SA’s current spending on infrastructure is insufficient, it is estimated that the state now needs an additional R1.6-trillion to achieve the infrastructure goals.
• Second, Roosevelt’s programme included the Works Progress Administration, which was the state creating employment opportunities through a wide range of projects that cut across sectors and industries like the arts, construction, writers, parks, etc. This initiative was strategically aimed at using the state not only to create jobs and improve public infrastructure but also to ensure citizens had access to capital to stimulate the supply and demand of goods and services in the economy. In SA, we learnt recently that there are more than 1.1-million unemployed graduates within the unemployment figures. This shows that unemployment is more of a macroeconomic challenge than a skills matter. Inevitably creating an environment where there isn’t sufficient demand for goods and services that companies can produce.
• Third, monetary policy was revised. The US revised policy that moved from the gold standard, sought to improve and increase the money supply, stabilise prices and promote economic recovery. Moreover, contextual to the current environment is the lowering of interest rates to make borrowing cheaper, encourage investment and facilitate higher consumer spending.
• Fourth, the Civilian Conservation Corps was created specifically to provide jobs for young, unemployed men in the environmental conversation projects. The jobs included planting trees and building infrastructure to develop parks among others. An initiative like this, not too dissimilar to the Expanded Public Works Programme, inclusive of all genders, would enable low to semi-skilled latent labour, especially among the NEET category within the youth, to access job opportunities. The initiative could look at sectors with low barriers to entry such as agriculture, emerging online spaces like e-commerce, and drop shipping among others.

SA’s unemployment levels, despite the government rhetoric, have reached crisis levels. The lack of urgency in structural reforms, policy implementation, and sustainable government initiatives creates an accelerated path to instability and social unrest.

We ought to apply pressure on the state to ensure they study and apply the various case studies from developed and developing nations that can be applied contextually to the South African reality to reduce the chronically high unemployment figures while all parties are still patient an hopeful.

• Diole is co-founder of YT Consulting Africa, a boutique research and advisory firm focusing on youth development in Africa.