New Economic Realities

The number of South Africans out of work has risen above seven million. Even though the economy is creating jobs the number of jobseekers continues to rise at a disturbing rate. This phenomenon could be ascribed to long-term unemployed citizens resuming their job hunt, as well as thousands of recent school leavers and new graduates seeking employment.

Unemployment, poverty, inequality

While unemployment is rife there is also an increasing polarization between rich and poor, an insidious pattern of inflation and high interest rates. All these factors have given rise to incomes of poor households being eroded by rising food prices, a break-down in economic and community efficiency due to strikes and a growing menace of corruption. Large numbers of South Africa’s young, educated and skilled workforce continue to emigrate while there is a massive and largely illegal inflow of destitute people from the rest of Africa, which further exacerbates the country’s existing social challenges. As history has repeatedly taught us, poverty, unemployment and diminished food security are the stuff of which civil unrest and revolutions are made.

Crime, corruption, price hikes

The country’s new economic realities drive social challenges like poverty, strikes, violence, crime, corruption, political instability and social inequality. Recurring price hikes also impinge on consumer spending, consequently limiting the number of new business start-ups and closing down of established firms. Those in the lower-income brackets are hit the hardest, making life a constant struggle. The gravity of the new economic realities is that over 68 percent of all South African workers are employed by small business; if businesses are forced to retrench staff to keep their doors open these individuals may have to join the ranks of the unemployed.

In the 1950/60’s the South African economy and employment opportunities grew rapidly; close on 80 percent economically active citizens were absorbed in agriculture or a viable subsistence lifestyle. However, economic growth rates have since declined incrementally so that today a major sector of the economically active population employed in the formal sector survive by the unsustainable exploitation of the natural environment. In some ways South Africa is like all other countries caught up in the realities of a competitive global economy, subject to the same universal environmental and ecological threats, yet in other ways it is unique and incomparable to any other country. South Africa continues to grapple with social ills due to an under-educated and under-skilled population ill-equipped to drive a developing economy; large-scale unemployment; poverty; corruption; crime; and inadequate modern economic, social and infrastructural facilities.

Embracing New Realities

An understandable question arising out of the above observations is “Why an economy that worked so well six or more decades ago has since been in a steady decline?” The most evident answer to this question is that while social circumstances have changed economic policies have not yet fully adapted to these new realities. The old South African economy had access to a large pool of cheap and submissive labour and foreign competitors did not threaten the market-share position of local producers. By comparison, today’s economy is driven by increasingly sophisticated, capital intensive and labour saving technology, shaping individual lifestyles in South Africa to keep up with global trends. However, rather than develop the country’s short-term domestic goals, adopting ever more sophisticated technology not only requires more capital but also more highly skilled manpower. This plays directly into South Africa’s areas of weakness, making unskilled manpower redundant, leading to mass unemployment.

A major policy of new economic realities includes promoting local enterprises and consumerism, without compromising global economic activity, through entrepreneurial development. Many projects, aimed at creating skills and self-employment opportunities, are in operation in South Africa, but most of them are struggling to reach levels of viability where they can provide an adequate income and where services are not undercut by the formal economy or by imported goods. Consequently, a process of out-sourcing and flexi-employment is taking place within the formal sector; while this does promote the input of small business development, the affiliation usually means much reduced income levels and poor job security. Unless unemployment figures are radically curtailed South Africa will experience unmitigated social unrest and tension and an escalating sense of unfairness. While unemployment affects all groups equally, it has a devastating effect on already vulnerable communities.

Calling all aspiring entrepreneurs

The informal economies in both urban and rural communities operate largely independently from the main-stream economy.  The key to higher economic growth in South Africa is to bring about a “surge in productivity” – the value of output per hour worked. As a developing nation South Africa can hike its growth rate by grouping aspiring entrepreneurs to work toward a common goal to accelerate lasting change by putting an end to unemployment and poverty. Increased productivity and partner networks collate high-potential opportunities to attract foreign investment, in any number of diverse trade categories such as agriculture, transport, manufacturing, construction tourism, and secure major trading partnerships worldwide.

It is an accepted fact that the real wages of highly-skilled, well-educated workers increase whereas the real wages of low-skilled and poorly educated workers remain static; also, jobs are almost non-existent in this category. Unless something is done soon about this growing inequality serious political and social consequences will follow. The solution to help unskilled workers gain socially productive skills is to accelerate project-based training in a “learning by doing” context. The mentor or coach plays the role of facilitator, training workers to acquire essential skills, instill critical thinking, problem solving, collaboration, and various forms of communication, and encourage feedback and revision.