A section of South African society will forever be marginalised, Standard Bank chief economist Goolam Ballim said on Tuesday.
“There is a fair section of South African society that will forever be outside of the formal employment system, simply because they do not have sufficient capabilities to participate in the economy,” he said.
Ballim said this sector would be forever excluded because their intellectual capabilities were crippled during the apartheid era.
“If you have been exposed to an education system that did not render you able to participate in a modern economy - which requires fairly sophisticated skills - the chances are you will not be able to get access to, let alone the opportunity of, decent pay, or a job that can satisfy middle-class aspirations,” he said.
This was why government had to provide social grants, in order to mitigate the legacy of the apartheid era.
Ballim was speaking at a briefing to highlight global economic problems and their impact on the South African economy.
He said the European economy would experience weak growth for a long time.
“Over the next 20 to 30 years, Europe is going to see a roughly 14 percent shrinkage in its workforce,” he said.
At the same time, the proportion of youths not yet working would rise.
Poor economic performance in Europe and the United States would impede global economic growth, Ballim said.
In the past decade, China had been able to achieve double digit growth, but it would be hard for the Asian economic giant to reach its targeted eight percent growth in current global economic conditions.
“China has grown to become the world's second-largest economy. It has a role to play, even though it was not the cause... of the crisis. It has a role to play in providing mitigating measures that impact the rest of the world.”
China had grown to be South Africa's largest trading partner over the past decade, surpassing Europe and the US.
It accounted for 12.5 percent of South African exports.
Commodities made up two-thirds of South African exports, and China was the largest importer of local commodities.
Ballim said China's relations with South Africa extended far beyond the commodities it bought from South Africa.
“If China grew at six percent, it would encourage a recession in the commodities markets,” he warned.
He said weak growth in China, Europe and the US - which made up two-thirds of global GDP - would translate into slower growth in the global economy.
South Africa had performed better than other emerging economies before the financial crisis. But this had changed, and the country was now lagging behind other emerging markets.
Ballim said household spending in South Africa had slowed down and would “reinforce its slowing momentum”.
Household spending had grown by six to seven percent a year before the crisis, but had not picked up during the economic recovery to stimulate further growth in South Africa.
On fixed investment, which accounted for 20 percent of GDP, Ballim said the country had recently depended on parastatals.
Two-thirds of investment which emanated from the private sector was static.
On the recent Marikana mine shooting in North West, Ballim said: “The events in Marikana must stand as a scar on the conscience of every single South African.” - Sapa