Political analysis

September 2015

RON DERBY, editor: Business Times

The jobs crisis...

The real problem with South African politics is our fascination with the state of the ruling party and which faction or
other is in the ascendancy at any point in time.

I guess it’s understandable to a degree, given our desperation for a sign for some positive change, any change that
would signal we’ve reached our lowest ebb. The fact that every day, there are still the same men at the helm in both Luthuli House and the Union Buildings confirms our biggest fear that the decay continues, unabated.

The cult of personality, which is what the older guard in the ANC warned its own party members to avoid all those years ago, has taken root in the party and in extension in all of us. What this detracts from is the actual state of South Africa Inc.

The upgrades to the president’s Nkandla homestead, the likely outcome of local government elections next year, which is expected to influence those of the ANC’s 2017 polls, have been the main considerations for everyone across the political spectrum. Even the Democratic Alliance, with its new leader, has been enthralled by the theatre of it all.

But whilst they, and I guess by extension, us the citizenry, naval gaze, the gates to Rome are burning.

We are in the throes of the second round of effects of the global economic slowdown that has been with us for close to a decade. The story of the first round was dominated by the woes of the West and in particular the old continent of Europe.

Emerging markets were for the most part shielded from the slowdown by China’s insatiable appetite for raw materials. Congregating around this strength rather opportunistically, were political leaders from Brazil, Russia, South Africa and India, forming the BRICS alliance.

But it was really inconceivable that the Chinese economy, even with its billion plus populace, would continue to grow in double digit territory. Most of its produce, from shoes, mobile phones to whatever else one can imagine, were destined for markets in the developed world, the very developed world that is nowhere near the growth rates seen before the 2008 crisis, and won’t be for years to come.

What China did was to soften the impact of a global economic slowdown for emerging market economies, especially those endowed with a rich reserve of resources such as us. That support is no more, plunging commodity prices is the clearest evidence of the sea-change.

The mining industry, which has long been on a drive to reduce its numbers, is now being more vocal about its plans. Everyone including Anglo is on cash conservation mode, looking to reduce output as demand fails to ignite. There’s been a knock-on effect on other industries such as steel. Even parastatals such as SAA, which is currently been overseen by Treasury, is looking at cutting staff numbers. Since April alone, some 23 000 South Africans received notice that they may lose their jobs.

This is the delayed effects of the nearly decade long global economic slowdown that I referred to earlier.

In the first leg, we lost about a million jobs, which were offset by increased hiring by the state. This time around, Treasury doesn’t have the fiscal space to go on a hiring spree.

Politicians are now going to have to zoom in on the structural impediments to higher growth in South Africa, which would alleviate the growing unemployment crisis. No global alliance can detract from the fact that we need a really sober conversation.

And there’s no need to set up an inquiry into these fault-lines, there’s been so many national plans that have highlighted the problem areas in the economy, chief among them energy and education.

Can we trust that our ruling class has their hands on the pulse? To safeguard us from the worst, the Economic Development Minister, Mr Ebrahim Patel, in an interview with a weekly newspaper said that every government department would create new jobs by hiring staff to work on infrastructure maintenance projects.

You can take your jaw off the floor now...

Yes, that is just one (or I hope that’s the case) plan from a ministry dreamt up to help navigate our way through this near ten year global slump. It doesn’t fill me with any confidence, and rather concerns me that these are plans based on the US economic recovery of more than 60 years ago – a world far removed from the digital economy we now live in.

In the same story, there’s a more sober admission from the ruling party’s head of economic affairs that government had no plan to arrest the rising job losses, no war room to stem the bloodletting.

The economics of South Africa is where the focus should be, unfortunately there’s seemingly very little appetite to look at our weaknesses.

For some in the ruling party, what is of a more pressing concern is what camp they’ll be in after the next Sunday paper exposes. Our opposition parties on the other hand are more thrilled by the continued embarrassing revelations around the president’s Nkandla upgrades.

This is fast becoming hot air, guilt has been long established by the court of public opinion and I have no doubt it will come back to haunt both the party and the ultimate beneficiary. Our focus should remain on our economic health, and unfortunately the politicians’ sway is important to its medium- and long-term health.

When it began in earnest in 2010, a French-based analyst said that the European debt woes will play out for a number of years because politics is central to its ultimate solution.

Some five years later, Europe isn’t out the woods. Greece is a thorn in its side, but there are other problems lurking just beneath the surface. There’s not much to indicate that South African politicians will do a better job of the jobs crisis, is there?

South African politicians haven’t even begun to truly grapple with our short-comings. Any action towards this and it could be as simple as a meeting between government, different political parties and all of the main players in private sector to discuss South Africa Inc. to induce some much needed confidence.

Instead it’s a re-election focus that we have and on the other side of the fence, opposition looking to easy political point scoring.

The term “Pay back the money” should be changed to “Show us your worth” – a message to all political formulations.

Publication: September 2015

Section: Relevant