No temporary solutions for permanent unemployment problems


Government needs to understand that there are no temporary solutions for permanent unemployment problems, and while they’ve implemented several measures to overcome the unemployment crisis, policy makers need to think bigger and be far more ambitious in expanding both public employment programmes and support for private sector job creation. Chronically high unemployment had already begun eroding South Africa’s economic position in the years leading up to the pandemic, says Andrew Donaldson, former deputy director general of the National Treasury. “Now, post-pandemic, record high unemployment seems an impenetrable barrier to economic recovery,” he told a PSG Think Big webinar. Donaldson is…

Government needs to understand that there are no temporary solutions for permanent unemployment problems, and while they’ve implemented several measures to overcome the unemployment crisis, policy makers need to think bigger and be far more ambitious in expanding both public employment programmes and support for private sector job creation.

Chronically high unemployment had already begun eroding South Africa’s economic position in the years leading up to the pandemic, says Andrew Donaldson, former deputy director general of the National Treasury.

“Now, post-pandemic, record high unemployment seems an impenetrable barrier to economic recovery,” he told a PSG Think Big webinar.

Donaldson is currently a senior research associate of the Southern Africa Labour and Development Research Unit at the University of Cape Town.

Speaking on the future of employment in South Africa and referring to initiatives such as the Expanded Public Works Programme and Ramaphosa’s Presidential Employment Stimulus Programme, Donaldson says the state should not think of job creation initiatives as temporary.

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Permanent solutions for unemployment

“If they are to make any kind of lasting impact, these programmes need to become permanent elements of our approach to raising living standards and investing in the socioeconomic fabric of the country.”

Should government focus its efforts on creating an enabling environment for business rather than job creation? Donaldson says higher investment and growth are imperative, but job creation has to come from both the public and the private sectors.

“The youth employment incentive is not enough. The tax subsidy should be extended to all labour-intensive industries and low-wage earners, not just young first-time work-seekers. To talk to the issue of supporting the South African business environment is to cast the net wide.

“The reality is that ‘business’ is not a homogenous subject. In South Africa, the topic of ‘business’ extends from well-established commercial enterprises that have thrived for decades to the emerging township economy, the economies that exist within informal settlements and accessibility issues that affect rural communities, due to the prevailing inequalities.”

He points out that the bottom line is that the South African government needs to invest in cultivating opportunities for work across the entire economy. He wants employment development programmes to become permanent fixtures on the country’s socioeconomic landscape.

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Success of President’s Employment Stimulus Programme

“The President’s Employment Stimulus Programme achieved more success in six months than that of preceding public employment programmes. Therefore, the solution will be to scale up where institutional capacity is in place.”

He says the President’s Stimulus Programme placed South Africans in schools across the country as assistants and workers in various capacities. Now, we need to take this same approach and apply it to sectors such as the healthcare industry, crime prevention, security on our rail system and in municipalities.

“In tandem with these kinds of efforts, we need to keep building our education system to address the skills shortage as a longer-term solution. In other words, we need to act with both the short- and long-term in mind, a two-pronged approach to the crisis.”

Donaldson believes the reality of the South African situation necessitates a ‘back-to-basics’ approach.

“We need to renew our focus on the areas of service delivery and basic infrastructure that we have known how to do for 100 years. Municipal infrastructure, housing, transport and water services do not need new technologies or innovation, they need investment spending and long-term cost recovery from users.”

He says this can only be done by cementing public-private partnerships to inject much needed funding into these areas.

“Ultimately, we need to invest in the infrastructure that can support labour-intensive industries.”