Poverty, inequality to blame for mayhem in Soweto

It is generally accepted that social unrest and other forms of instability are driven by multiple factors that have, for whatever reasons, been ignored for a long time. Poverty and unemployment are real and visible everywhere you go in the black townships. In such a depressing environment, all it needs is a spark to ignite a revolt by the poor.

Allegedly young people high on drugs triggered the mayhem in Soweto by attacking a Somali-owned shop. Possibly the motive was to steal goods which they could then sell to feed their drug addiction. The Somali shop just happened to be the easiest target because it’s owned by a vulnerable foreigner. And here lies the weakest link in the social dynamic.

The socio-economic data coming out of Statistics South Africa (Stats SA) and other research organisations paint a depressing picture about the living conditions of a large segment of our society that continues to live in poverty despite the promises that were made prior to the elections in 1994. Dale McKingley presents the following harrowing picture: “Extreme poverty — which is defined by Stats SA as a household of five living on less than R11 a day — has now reached 20% of the population. Moderate poverty — incredulously set at R22 a day for a household of five — encompasses just over 40% of the population. The vast majority in both categories are black South Africans.”

The latest GDP numbers have confirmed that our economic growth is insufficient to make a dent on the unemployment numbers. At the heart of the problem is the uncomfortable reality and contradiction that the majority of the unemployed are unskilled and yet we are progressively moving towards a high-tech and high-skills economy.

In a situation where the economy and investment is growing and sustainable job opportunities are being created, the hopes and dreams of people are positively influenced. In such a situation tax revenues for the state increase and the state is in turn able to increase the services it can provide especially to meet the needs of the poor. Unfortunately we have experienced a pedestrian growth in our economy for many years. As a result the ability of the economy to absorb the ever-increasing workforce has been limited.

The following few indicators reflect the state of the nation:

* Among the “youth” (15 to 24-year-olds), South Africa’s employment ratio is 12.5%. Emerging market average is 36%.
* Total unemployment rate is at 25% of the labour force. Using a more inclusive definition, it is about 40%.
* Those under 35 account for more than 70% of unemployment.
* The household debt as a percentage of disposable income weighs heavily on consumers and stands at almost 80%.

Given the scale and complexity of South Africa’s unemployment problem, and especially of youth unemployment, no single or easy policy solution exists. Stimulating faster growth in general, and employment creation in particular, requires the determined adoption of a broad package of long-term measures to address and resolve both the supply-side and demand-side constraints. These must include not only a rectification of the deficiencies of the education and skills-development systems, but also the adoption of more business-friendly economic policies to restructure the economy, reform the general investment climate, and increase incentives for private enterprises, which ultimately constitute the primary source of new jobs.

Many immigrants are here illegally and yet there is no public acknowledgement about the potential of this situation for social instability. Why was this allowed to happen?

There are no prospects that our high unemployment rate will drop anytime in the near future. In this scenario, the Soweto looting is a foretaste of what is to come.