The state is so bad at creating jobs that it needs to stop trying

Imagine being so bad at something and committing to keep doing it.

President Cyril Ramaphosa is having sleepless nights about unemployment, yet if we go through nearly every State of the Nation Address during his rule, unemployment features, sometimes even with a hint of addressing it. Economists may marvel at a 1% improvement here and there while we disregard the drops in previous quarters, but largely, there has not been much to boast about over the last 15 years.

Government is bad at creating jobs

The only conclusion is that this government is bad at creating jobs. I’m certain beneficiaries of the numerous stimulus packages will take the relief they offer, regardless of how temporary it may be, but we’ve had the Presidential Employment Stimulus Programme for half a decade, and the statistics aren’t convincing.

Defenders of the project will rush to say that the economy and unemployment would be worse without this intervention. That is, of course, true, in much the same way as hiring five carpenters to build one bench would be. It doesn’t improve anybody’s long-term prospects, nor that of the country. If it did, surely we’d see some significant improvement.

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But the president’s proposed solution can hardly inspire hope because it’s, at best, empty jargon. “We need to mobilise more money so that we can create jobs for the young people of our country, so that we can find ways of creating jobs but also working with the private sector,” Ramaphosa recently said about addressing unemployment.

What does that mean?

The capitalism interpretation could be: “Employ capital in any market and hope for the best” while the cadre interpretation could be, “Comrades, here is some money. Go spend it at any JSE listed company or German car dealership”. There is no interpretation that actually gives us any plan, and alas, he goes on to put subtle blame on the private sector, proclaiming that it controls 75% of the economy.

Once we overcome the appropriate “duh” response, we can remind ourselves that it’s the government that creates the legal framework in which the private sector functions. It’s the state that makes the rules and supposedly enforces them. If the private sector isn’t playing ball in job creation, where is the mea culpa from the state in terms of those rules?

Transnet and Eskom

But it was then that we got the real juicy plan; the one that’s going to fix South Africa and make the place work. We’re going to fix Transnet and Eskom, and they will be big employers. Gosh. I haven’t heard such a great plan since the apartheid government did exactly the same thing with exactly the same state-owned entities. Only now, Transnet is as broken as its rail infrastructure, and Eskom is overpriced and already bloated. I wonder who did that.

It must really suck to have to resort to a pre-94 jobs programme and still be unable to execute it as effectively.

The comrades are excellent at creating jobs to a degree, but it’s easy to create jobs to that degree. Get a budget, apportion it, and hire. Their problem is that after years of not caring where that budget is coming from and what value can be added to improve it, there’s a limit on what that budget can continue to do. Over time, there’s going to be an increasing limit to that budget itself.

Once that degree is met – and I believe it was met a long time ago – they’re pretty bad at job creation and, alas, the stats bear that out.

We can be happy for our fellow African states and their good economic growth, while being frustrated at the lack of our own. We can be happy for Gwede Mantashe that he never needed a government to get him a job, while being annoyed that his government got lots of votes, in part, for promising jobs. We can be happy for Ramaphosa that he has a bed to sleep on, even if he can’t sleep.

Perhaps there is something under his mattress that he could remove to make his bed more level. Perhaps he could mobilise that.

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