For South Africa the triple structural challenges of poverty and high unemployment (25% of the workforce is without work, using the narrow definition) and racial inequality will continue to define our socio-economic profile for the foreseeable future unless we make a radical shift in our growth strategy and trajectory. The reality we must face and acknowledge is that our economy has been shedding jobs consistently in all major formal sectors for well over 30 years as the key drivers of production gradually shifted from labour to capital. The mining sector provides a defining example of how this shift has contributed to unskilled job losses.
Johannes Fedderke states that “There is not one country in the world that has addressed the problem of poverty without first getting on to a high growth trajectory. Growth is not a sufficient condition for solving the problem of poverty but it is certainly a necessary condition”. Growth and employment creation are at the centre of all the government economic strategy plans including the national development plan (NDP). The fundamental question we have to deal with is whether the strategic choices and responses that have been made to deal with the problem of low growth will deliver the desired outcomes.
In a recent article, I proposed a framework for strategy development and execution that I believe may assist in leading us to make optimum strategic choices for dealing with our growth challenges. The fundamental principle underpinning this framework is that a brilliant strategy has no value if you cannot deliver on it. A realistic strategy must be executable. The following are key elements of the framework.
Understand the context. There must be a clear and comprehensive identification and understanding of the challenges and the environment within which they exist. South African developmental challenges have been analysed, documented and debated extensively. The NDP is a strategic vision resulting from this process and provides a sound basis for discussing and developing shared strategies and policy options.
Develop vision-aligned strategies and plans. The medium-term strategic framework 2014-2019 has recently been made public and is intended to give effect to the NDP and to “accelerate growth, create decent work and promote investment in a competitive economy”. But the following key issues raise serious questions on the credibility of the strategy:
• All the key drivers for growth in the medium-term strategic framework are constructed around an increase in the GDP growth rate from 2.5% in 2012 to 5% in 2019 and yet, nowhere in the document has the rationale and basis for this assumption been articulated. Prevailing evidence points to growth rates way below this range. Nothing in the performance of key growth drivers gives confidence that the anticipated growth rates in the NDP, that are necessary for achieving basic development objectives, will be achieved.
• The adopted growth plan has placed disproportionately more emphasis on a high-skilled and capital-intensive trajectory that will have little impact on the large unskilled unemployed population currently living in poverty. And therefore the assumed “decrease in the unemployment rate from 25% in the first quarter of 2013 to 14% in 2020” is highly unrealistic. Evidence points to about 20% by 2020.
• The decision to go for the high-skilled and capital-intensive economic growth strategy requires for its success an education system that can deliver quality education and the required skills. It fails dismally on both requirements. The radical transformation that is needed to deliver quality education requires an immediate introduction and rigorous implementation of accountability and performance contracts for executive management of schools and teachers. It also requires a massive recruitment of science and maths teachers from abroad under contracts that will tie them to under-performing schools in the basic public education system.
• The lack of stakeholder support and buy-in on the key and contentious elements of the NDP poses a significant, if not fatal, constraint to its successful implementation. No evidence exists that can point to any credible effort by government to engage the key stakeholders of business, labour and civil society to bridge the ideological gap.
There must be capacity and capability to implement the strategy. And there is no better example of a chronically failing public sector than local government. What is driving this failure is our structurally weak corporate governance architecture that has removed accountability from the citizens and placed it in party leadership. Our electoral system is the single most important contributor to the entrenched culture of patronage and crony capitalism that has infiltrated the ruling party.
Identify constraints and remedies to mitigate them. This is one critical factor that is often deliberately avoided because most constraints are uncomfortable to deal with. For example scarcity of skills is a major constraint to successfully implementing a high-skills and capital-intensive growth trajectory. The key driver is quality education but there is no leadership commitment to make tough decisions.
The reality is that South Africa is trapped in a low-growth scenario and finding solutions to create employment opportunities for unskilled workers cannot be deflected by ideological fixation on a decent job to the exclusion of other options. Breaking into the high-skills economy takes time given the constraints identified above.