A sobering reality is that neither the budget speech nor the state of the nation address is going to pull the economy out of the current crisis it finds itself in. At best, the two can give the country a sense of the state’s policy direction and thus enabling some sort of certainty.
- Fact: 35% of the labour force is unemployed or has given up hope of finding work;
- An even more frightening fact: Absorption of the youth (graduates or non-graduates) into the labour market is South Africa’s single-biggest economic challenge;
- Another one: Government debt now stands at R2.2 trillion, or 50.7% of GDP, while expenditure on public services will continue to grow moderately above inflation.
A glance back to the last ten years of economic performance is shocking enough to turn us into proverbial statues. The South African economy has been plagued by declining productivity since the mid-2000s, and seen stagnant median wages for regular working-class people and at least 15 years of underemployment.
Even amid encouraging remarks by president Jacob Zuma such as, “we’ve declared 2011 the year of job creation, and mobilised our social partners, namely business, labour and the community sector, to work with us in implementing the New Growth Path.”* The years that followed proved contrary; fewer jobs were created and the job opportunities government spoke of never came to the fore. Instead, what followed was a change in the country’s economic narrative that the economy was not growing as it was expected and the word recession became increasingly part of the economic parlance.
Statistics South Africa’s long-term unemployment threshold levels from 2011 further dented any illusion of miraculous job creation in the year/s that followed. The country’s economic slump has now lasted six years, and output is still below the previous peak level (early 2000s). The decline is evident in the last six years’ revision of expected GDP growth to an even lower percentage. The growth has been too little – and almost insignificant in real per capita terms – when compared to countries such as Brazil, Turkey, Indonesia, India or China.
A reality: There’s very little prospect in sight of improvement. The economy’s cracked and fragile walls are giving in, soon they will collapse and bury the country under. What you’ve just read paints a doomsday scenario that has most of us reaching for anti-depressant medication. No matter the angle you look at it from, there hasn’t been any good news related to the economy in a while.
Why am I telling you all this? It’s time words are said against the private sector investment strike. If we are being honest, their actions are equally responsible for the facts mentioned above and the current state of the economy.
It is a truism, of course, that when politicians, especially those who are from the ruling party, do bad things or make mistakes, business will criticise them and even oppose them. It is also a truism that in dominant public narrative, business is hardly as criticised and scrutinised as government is.
I get unsettled when in an economy that has many players, one is more reprimanded for bad play than the other. A strong case can be made that in South Africa, we hardly give the private sector a lashing or serious scrutiny for bad behaviour, corruption or bad corporate practices as we do the state.
While business claims to support minister Gordhan’s call for ‘collective choice in growing the economy’, the unwillingness to invest its growing cash balances locally is contrary to their words. In failing to put their money where their mouth is, business must equally bear the responsibility of a failing economy.
Dean Acheson’s autobiography, which includes sections about his years in government, comes to mind. Pompously titled Present at the Creation, the book is about him being present when America rebuilt itself out of war rubble. So too is business in South Africa present at the creation of the economy’s failure. By refusing to invest locally, it has ensured that household and business suffer inflation, while the economy stagnates.
Each quarter (labour force survey) statistician-general Pali Lehohla, talks about the high number of black graduates who still battle more than any other demographic to find jobs. Yet corporate South Africa says it cannot find qualified people to employ. A hashtag has emerged on Twitter, #jobseekerwednesday, and the level of qualification on CVs shared via the platform disproves that narrative.
By its nature business is selfish. Its sheer buying power allows it to override anyone or anything that stands in its way. Sadly for South Africa, that selfishness has blinded it to matters of national interest and mutual growth.
I therefore remind you, business leader reading this; America fought its way out of the great depression (putting aside individual interest and working on a common goal) by forging a New Deal. The consequences both economically and socially of you not doing the same are to speed up the coming doomsday.
Brought to you by Moneyweb