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Government employment programmes are not adequate to address the high unemployment rate in the country as these are not complemented with a well-planned and targeted small, medium and micro enterprises (SMME) national strategy.
During the presentation of the Development Indicators Report of 2012, Minister in the Presidency Collins Chabane mentioned government employment programmes such as the expanded publics works and the community works programmes as government measures to alleviate unemployment. However, as experience from the Asian countries has shown, these are not sufficient in reducing unemployment, poverty and inequality.
This year alone, the unemployment rate increased from 25.2 percent in the first quarter to 25.6 percent in the second quarter, translating to a rise from 4.6 million to 4.7 million jobless people. There has been a 30.8 percent increase in jobless numbers from 2008 while the country’s youth unemployment rate is at 52.8 percent.
Even though the Development Indicator Report of 2012 gives a general view of a country that is on track and doing well, the main challenges of high unemployment and poverty must be urgently addressed with robust development of the SMME sector.
Owing to these challenges of unemployment and crippling poverty, millions of South Africans are increasingly relying on the welfare system. The report highlights the total number of grant beneficiaries was 15.5 million as at March 2012, accounting for 3.4 percent of gross domestic product.
In monetary terms, South Africa spends over R100 billion of its total budget on social grants. At these unsustainable levels it is faced with serious risks to social cohesion and economic sustainability.
Grants do not alleviate poverty. They provide support for those who are not economically active due to disability, old age or support for children under 18 years of age. What we require is inclusive and sustainable economic growth that will ensure that every citizen participates in the economy of our country. This is eloquently stated in the National Development Plan (NDP) which recognises the importance of SMMEs in job creation, as it specifies that the majority of the 5 million jobs to be created by 2030 will stem from SMMEs.
The NDP itself has shown that small businesses have not been growing their employment rates due to the economic environment, labour environment, financial constraints and skills challenges.
As the NDP aims to create more than 90 percent of the jobs in SMMEs, this requires the development of a bold action plan for SMME development.
For this to happen, the government must create a conducive environment by cutting red tape, relaxing aspects of the labour laws and training young people to become job creators rather than job seekers.
Katleho Bohloa is an economist with the National African Federated Chamber of Commerce and Industry.