The Longer Walk to Economic Freedom by BG Britton - HTML preview

Nobody asks the more fundamental question, namely, what kind of governmental leadership can act justly and wilfully to end the scourge of inequality in our schools?

When this government, like others, fails to resolve these structural problems in education or the economy, they will resort to all kinds of populist performances.

Yes, allowable hairstyles is an important cultural issue - but for heaven's sake, it is not the major fault line in our massively unequal school system. The fury generated around the issue of girls' hair affects a privileged few and is a distraction from deeper problems in the unequal distribution of educational opportunities. Forcing a former white school to take one more black pupil than its teacher-to-pupil ratios allow is also a storm in teacup yet it generates enormous political mileage for media- savvy MECs. One hateful teacher at St John's makes the headlines for weeks.

In the meantime, King's and Kagiso remain unresolved.

We need a new government that can deliver social justice for the children of Kagiso, and of King's.

Unemployment Chronic

Have South Africans have become inured to the high unemployment rate just as we ignore high crime? The scary truth about unemployment is that pretty much half of all adults under the age of 35 are unemployed. While many will be poorly educated, anecdotal evidence indicates that this problem cuts across the education divide. Black economic empowerment legislation also means that many educated young white people are also unable to find work. With a staggering unemployment statistic like this, it is not surprising that many young people look beyond the country’s borders for employment opportunities. This is very sad for their families because global job hunting en masse ultimately breaks up communities. It is also a disadvantage for the country, with millions poured into the education system going to waste as young people take their talents elsewhere. Youth unemployment is a massive problem requiring structural changes to the economy, note Lauren Graham and Ariane de Lannoy in a research paper. They don’t even touch the other side of the unemployment problem: The burgeoning population aged 35 and above who are also struggling to find jobs as the economy remains under pressure. Private sector players are encouraged to do their bit to take a chance in hiring individuals who might not obviously be employable. But with business conditions generally tough and no sign that the ANC is planning to stimulate the economy to the benefit of entrepreneurs and private enterprise, that solution is unlikely. Expect higher crime and rising political tension as more people find themselves stuck in a hopeless cycle of poverty with no real options to fend for themselves in the formal economy. – Jackie Cameron

By Lauren Graham and Ariane de Lannoy*

South Africa’s youth unemployment rates are now considered to be chronic. The latest figures show that about 48% of South Africans between 15 and 34 were unemployed in the third quarter of 2016.1

The situation has worsened over the past eight years despite a great deal of policy attention and the implementation of a range of public and private interventions.

If not addressed as a matter of urgency, the situation is expected to increase levels of frustration and impatience among the youth. In addition to this, the situation will contribute to a cycle of chronic unemployment and poverty: these young people are likely to become the parents of children who will then also grow up in a context of poverty.

Our paper provides an overview and assessment of the problem and discusses some of the structural features that drive youth unemployment in South Africa. We argue that focusing solely on the structural, long-term issues may prevent the country from considering important aspects that could be addressed more speedily, including local level barriers that constrain young people’s entry into the labour market.

Disturbing trends

Apart from the very high jobless rate, the other particularly disturbing trend is that more and more young people have given up looking for work. Between 2008 and 2015, the number of youth who have become discouraged has increased by 8%.

When focusing on 15 to 24-year olds – those who would ideally be finding their first jobs or continuing their studies – just under a third are “not in employment, education or training” (NEET). This group is arguably the most vulnerable to chronic unemployment, poverty and social exclusion, as they are neither improving their skills through education nor gaining the work experience needed to progress in the labour market.

Racial and gender inequalities continue to play a significant part in the youth unemployment landscape in South Africa. African and coloured youth are far more vulnerable to unemployment than their white or Indian counterparts; young women are more likely to be unemployed and to be NEET than their male counterparts. (Apartheid era racial classifications, under which all South Africans were designated African, coloured, Asian and white descriptors, are still used for official purposes in the country.)

A multifaceted challenge

Why is youth unemployment in South Africa such a seemingly intractable problem? The evidence suggests that it’s a multifaceted issue.

The biggest factors are the evolving nature of the labour market and mismatches between the skills needed in the labour market and those provided through the educational system. Research indicates that a key difficulty facing young work seekers, in particular, is the fact that South Africa’s labour market favours highly skilled employees.

The high demand for skilled labour means that those with a post-secondary qualification are far more likely to find employment than those with only a matric certificate.

In addition, South African employers, in their apparent distrust of the quality of education received by young people, have raised the bar for entry into low level jobs ever higher. But by escalating the educational requirements for entry-level jobs, employers are effectively shutting out a large pool of potentially good young employees.

The uneven quality of South Africa’s public schooling system further entrenches inequality in finding employment. Many of the poorer children at schools that are often under-resourced and ill-managed very quickly fall behind in their learning, later on drop out of school and then become part of the excluded groups.

Geographic location also acts as a barrier to employment. Young people living outside the major metropolitan areas must spend more time and money on looking for work. Other barriers include limited social capital and limited access to information.

A recent national study of participants in a youth employability programme reported that the average transport and other work seeking costs for young people were around R560 per month. This stands against the average per capita household income for the same group of youth of R527 per month.

Poverty at the household and community level further complicates the situation. More than half of young people aged 15-24 live in households with a per capita monthly income of less than R779 (the “upper bound poverty line” as defined by Statistics South Africa). Many lack access to information as they are unable to afford the high costs of data so can’t use mobile phones or Internet cafés to search for job opportunities or for post-secondary education opportunities.

And, unlike their middle-class peers, poorer young people lack “productive social capital” – social networks that can be used for information about and access to the labour market. These are important for navigating entry into the labour market.

Short term interventions

It’s clear that the challenge of youth unemployment is a structural issue requiring massive policy investments, political will and time. But it’s equally important to concentrate on what can be done in the interim.

Quo Vadis

The days of the ANC are over. The ANC are to be admired as a liberation force and their accomplishments to 1994 are to be applauded. But as a governing party, it has taken but twenty-three years to prove that they are sorely lacking in ability, ideas and morality.

The ANC Bill of Rights was completed in 1990 and that document was fine-tuned in 1994 into one of the finest Constitutions in the democratic world. But it lies gathering dust as they have sadly reverted to the same syndrome of big man tribalism, African elitism, kleptocracy and national disdain which has become the cliché for Africa since the start of decolonization in 1941.

Notwithstanding, the ANC has a bigger administration than the USA despite being 20% of America’s size

Already the western world has turned its back on South Africa and essential Foreign Direct Investment, as a result, is dwindling.

Communist tendencies and talk of nationalisation has driven off potential foreign investors

Should South Africa be downgraded one more notch by the Ratings Agencies we will see a legislated capital flight from the country of R250 billion.

The mineral resources that buoyed up white minority rule in the latter part of the last century, have largely been depleted and new job creating technologies, looming on the international horizon, are beyond the reach and capability of a poorly educated and unskilled South African population.

The progression from kindergarten, to primary school, to high school, to university, to a job, to being a taxpayer and assisting the country to live within its means appears to be a bridge too far. If achieved, it will take decades. Welcome to Africa.

There are more social grant recipients than people employed.

Support of the enormous body of social grant recipients is not sustainable in the face of high unemployment and the migration of taxpayers. State policy has not had much of an effect. Grants have reduced poverty, but cannot affect inequality much, and the fiscal space for expanding the social grant system is now limited. High inequality probably will remain a feature of South African society for decades to come, at least until education and services radically improve and their benefits are felt in the labor market

The ANC has alienated entrepreneurs like Elon Musk, Roelof Botha and others who now spawn jobs for foreign countries and farmers who now plough their skills into foreign loam.

The National Development Plan, a sound business plan for the country to the year 2030, astutely devised by ex-Finance Minister Trevor Manuel’s NPC Committee, plays second fiddle to greedy Kleptocrats and the Communist inspired second phase of the National Democratic Revolution.

The ANC have usurped the Private Sector’s role of creating employment and offer only financially disastrous State-Owned Enterprises and Government Positions as employment alternatives. These, as we know are nepotistic, inflationary, non-productive and unsustainable solutions to an economy desperately in need of growth.

At a time when the world is shedding ‘womb to tomb employment’ and betting on Small Business to create employment, through innovation, South Africa is reverting to monolithic edifices of the Marxist era. The ANC have yet to be convinced that their old indoctrinators Marx, Lenin and Castro were proven wrong in Berlin in the eighties.

So, what of the future? Will South Africa be re-colonized by Russians, Chinese or Indians? Will South Africa inevitably go the way of the other fifty-four de-colonized African nations and slip into economic mediocrity and eventually join the queue at the IMF with a begging bowl?

Frans Cronje, CEO of the Institute of Race Relations, paints four possible future scenarios. In his recently released book ‘A Time Traveller’s Guide to SA in 2030’ he says that two scenarios are dismal, one is partly positive and one is extremely so — his "Rise of the Rainbow" scenario.

SA’s future is mostly grim

They call economics the dismal science. At present, scenario planners seem to be in a competition to see who can be the most depressing. Frans Cronje sees a sliver of light.

Claire Bisseker

27 April 2017

President Jacob Zuma is very much in power, he will remain in power, and there’s an infrastructure that will survive after him. As a result, SA’s democratic rights and freedoms will be increasingly shot down.

This is the central view of Institute of Race Relations CEO Frans Cronje. He suggests four potential scenarios for SA’s future in his new book, in this happily-ever-after rainbow nation, South Africans find common political ground by 2030 and by unleashing the energies of the private sector end up prosperous, free and stable.

1. Zuma faction in poll position and civil society vulnerable to attack

This is not the way Cronje thinks the future is most likely to pan out. In fact, he believes that SA’s future as a free and open constitutional democracy may already have reached the point of no return. "It’s been a gradual process of the white-anting of institutions while one man and his faction have accumulated almost untrammelled power," he says.

He also thinks confidence in the robustness of SA’s civil society and media as an effective countervailing force is misplaced. Both are "quite vulnerable to attack" should they ever pose any real threat to Zuma’s project.

The media can be squeezed by the state withdrawing all its advertising or through the introduction of regulations in the name of transformation, he argues. Similarly, NGOs which already must register with the state and fill in reports could be silenced through creeping regulation that stipulates they must act in the national interest. There’s also talk of a draft bill that would ban NGOs from receiving foreign funding.

Helen Suzman Foundation director Francis Antonie strongly disputes Cronje’s view, saying: "I don’t think civil society is as weak as we may fear, nor as robust as we would like".

Any attempts to weaken NGOs through regulation would be contested in the courts, he says, and the judiciary would doubtless prove a strong ally in supporting institutions whose mission is to defend the constitution.

"But if the judiciary is captured, we can all pack up," says Antonie.

An opinion poll of five political analysts, released last week by Rand Merchant Bank, shows that the political environment is highly uncertain and multiple outcomes are possible.

According to those polled, the Zuma faction pushing Nkosazana Dlamini-Zuma for president is the clear front-runner to win the ANC’s December elective conference (with their odds averaging 36% for a decisive win against only 14% for the anti-Zuma faction). The odds of a "messy win" with no clear winner are close to 20%.

But if Zuma remains as president of SA until 2019 the odds of the ANC losing the 2019 general election are as high as 47% on average. At almost 60%, the odds of a split in the ANC are even higher.

2. The Break-up of South Africa

Based on current trends, Cronje feels the most probable of his four scenarios is "the Break-up of SA".

In this future, the ANC wins the 2019 election on a ticket of resurgent nationalism but then fails to enact the economic reforms required to meet voters’ expectations so loses its national majority thereafter.

This creates a vacuum in which unstable coalitions and policy confusion reign. Government finds it impossible to implement the economic reforms required to create growth.

For a moment, it looks like civil society might force positive change but hope soon fades as mass protests develop a nasty racist character and turn into violent rioting.

Race, ethnic and class divides become deeper and South Africans gradually drift apart into enclaves — the wealthy and middle class behind the walls of their cluster homes and golf estates; the poor clustered into rural areas along tribal lines run by traditional leaders and in the inner cities into ghettos run by gangs.

"We’re actually further down this road than people realize," says Cronje.

The elite and the upper middle class will suffer through it, their dollar-denominated wealth will decline, there’ll be terrible problems – the country might run out of petrol – and they will be forced to become increasingly self-sufficient, independent of government. So, there will be good private schools and independent universities in the enclaves.

"If you’re well hedged and living on the Atlantic Seaboard you will be able to maintain a fairly high standard of living ... if you can block out the horror outside the walls."

It’s been a gradual process of the white-anting of institutions while one man and his faction have accumulated almost untrammelled power

Property rights and civil liberties are likely to be eroded as the regime refuses to reform policy.

"Anti-government protest action will escalate sharply and will be met, when not with rubber bullets and arrests, with wild populist promises and hateful racial rhetoric and incitement to terrible violence," writes Cronje.

He feels this outcome is probably more likely than his final scenario, the "Rise of the Right," in which the ANC under Zuma’s hand-picked successor surprises its critics after the 2019 election by using its authority to force through pragmatic economic reforms.

Cronje says elements on the Right fantasize about "a new breed of authoritarian African capitalist society" modelled on the Asian Tiger economies and what is emerging in Rwanda and Ethiopia. At heart, the Asian Tiger countries (Hong Kong, Singapore, South Korea and Taiwan) were authoritarian societies where government used complete power to enforce sensible macroeconomic policies.

The Rise of the Right

In the "Rise of the Right" scenario the new ANC president professionalizes the civil service, deregulates the labour market, re-orientates empowerment to support growth and jobs, and embraces the private sector as a partner to drive growth.

"The Rise of the Right is positive," says Cronje. "We are growing quickly and are politically stable. Unemployment will be wiped out. But we have surrendered rights and freedoms."

Some political philosophers wonder if this might even be a necessary initial step for any society to move from poverty to prosperity. That is certainly the lesson of the Asian Tigers.

This model is not the most probable scenario, Cronje thinks, since factionalism and leftist ideology still have too much hold over the ANC, and the civil service remains too weak and corrupt to implement the changes required.

In his book, he regrets that he could not come down in favour of the happily-ever-after scenario.

"While it has regrettably become difficult to offer a frank and honest as well as broadly positive assessment of where SA is headed, it also serves no purpose to play down the real threats to our future, the ineptitude of the current government, and the devastating consequences of its racial and ideological fixations," he writes.

"There can be little doubt that past reluctance to face up to those hard truths ... contributed to getting the country into its current political and economic predicament."

Will the next Nelson Mandela please stand up and lead this motley nation to economic freedom?