OPINION: Prioritise policy certainty over slogans, rhetoric
If we were to set a specific annual target of reducing the current unemployment rate by 1percentage point every year, then we would reach full employment (about 5percent unemployment) in about 20 years, from the current 26.7percent (30 years if we use the expanded measure of 36.6percent, which includes those who have given up searching for jobs).
The National Development Plan (NDP) set the following targets for unemployment: 2010 (25percent); 2015 (20percent); 2020 (14percent); 2030 (6percent). It is basically a 1percentage point reduction annually, to full employment in 2030.
A 1percent fall in unemployment every year is surely doable? That is about 330000 net jobs at the current population levels.
Simply projecting growth, revenue and expenditure at the annual budget speech does very little to give us direction. What is needed is a national goal towards which we can all work.
It would also give much needed policy certainty.
Now that we are getting into election mode, we can help encourage policy certainty by turning a deaf ear to any party campaign that does not explain clearly how they will create jobs and reach specific unemployment rates in the short-term and every year for at least five years.
Perhaps it is also time for the president to task the National Treasury and the Department of Planning, Monitoring and Evaluation with jointly instituting a Presidential Job Creation and Co-ordinating Committee.
This committee should have ministers of all economic ministries as well as heads of the institutions managed by the Treasury (PIC, Land Bank, Development Bank, etc) participating and working towards a specific short-term unemployment rate.
With all eyes collectively fixed on the Guptas for the past few years, we have ignored many things critical to our national welfare. Unsurprisingly, we have missed the NDP unemployment targets by an embarrassing margin. Most South Africans are probably not even aware of those targets.
We have wallowed in policy uncertainty for too long. As Finance Minister Nhlanhle Nene reminded us in his Budget vote speech, “the National Treasury is the custodian of the long-term prosperity of South Africa”, charged by the constitution “to ensure transparency, accountability, and sound financial controls in the management of the country's public finance”.
This "control", to be effective, must be driven by a specific goal. Perhaps if we had annual targets instead of the five-year targets in the NDP, then that would help focus our national attention and unify the country behind one clear objective.
The SA Reserve Bank website reads thus: “South Africa formally introduced inflation targeting in February 2000 one of the features of an inflation-targeting framework is the greater degree of transparency it brings to monetary policy.”
They could very well add that it also brings policy clarity, sanity and predictability.
This can be seen with the recent fall of the rand, increase in the oil price and resultant up-tick in inflation. The likely direction of interest rates if this persists, is clear to all, because we all know the SA Reserve Bank’s targets. South Africans can adjust their borrowing and investment plans accordingly.
That is policy certainty at its best. Clear and simple.
Nene mentioned in his Budget vote speech that, “the Government procurement of goods and services stood at approximately R900billion in 2017/18”. Additionally, the budget for economic development set by Minister Gigaba is R200bn for 2018/19.
This should surely be enough to create jobs and end unemployment and poverty in a predictable way.
Thankfully, the country is already moving in the right direction with a renewed sense of hope. “For the first time in a very long time, it appears that economic growth will be higher than projected at the time of the Budget review,” said Nene.
President Cyril Ramaphosa has set his sights on about R1trillion in foreign investment, a clean-up of government and improvement of service delivery.
It is all encouraging, except that we have no idea how we will measure his success at the end of the year, or five years after the elections, assuming he returns.
Reaching a clear unemployment target would do.
Karabo Mashugane is the chief executive of 20/20 Insight - specialists in B-BBEE advisory, supplier development and SME financing.
The views expressed here are not necessarily those of Independent Media.
- BUSINESS REPORT