Empty promises no solution to fixing structural issues

Political parties are making promises to create jobs. Picture: Tracey Adams /IOL News

Political parties are making promises to create jobs. Picture: Tracey Adams /IOL News

Published Feb 3, 2024


Prof. Bonke Dumisa

South Africa is already in the national elections silly season where all politicians and political wannabes will be competing on how they will significantly reduce unemployment in South Africa and how many free things they will dish out to everyone, as if money grows on trees.

For example, one small political party started by a politician who is one of the many who were frustrated out of one big opposition political party, has just produced a 44 page Jobs Plan Booklet.

They spent a lot of space dealing with (a) growing the economy for jobs; (b) reforming education for jobs; (c) building a capable state for jobs; and (d) creating a safe environment for jobs. In their manifesto they promise to build a strong and sustainable economy that benefits all South Africans, fast tracking the growth of SMME sector by increasing the financing and the availability of venture capital.

Expect all the other hundreds of political wannabes to compete on these promises of more freebies in their efforts to remove the ANC from power. They say these will be the most contested national and provincial elections since our very first post-apartheid democratic elections in 1994 where there the African National Congress won the majority national vote on the promise of “a better life for all.”

It is important that we briefly look back on what the ANC promised in 1994 and some subsequent elections. In their “better life for all” they promised (1) jobs (2) housing (3) electricity (4) clean water and (5) social welfare. Some of these ANC promises were ostensibly based on the Freedom Charter “dreams”. The overzealous adoption of some of these promises is partly why South Africa is where it is today with unsustainable national government debt levels currently at over R4.8 trillion as at the beginning of this year, and estimated to surpass R6 trillion in 2026.

When the ANC took over in 1994, it is estimated that only about 20% of black South Africans had access to electricity, as against the majority of the other race groups who already had access to electricity. The ANC’s stated promise was that the vast majority, say over 90 percent, of the previously disadvantaged blacks had to have direct access to electricity as soon as practically possible.

Good news is that at least 89.3% of all South Africans already had access to electricity by the year 2021. The problem with this “noble ideal” of electricity for all was that it was done without any proper planning and also with a lot of corruption in this process. When the ANC pushed for the electrification of many places which were not electrified before; they increased the distribution of electricity from 20% of the black population to close to 90 percent using the very same generation capacity as what they used before; this was unsustainable.

Corruption at Eskom meant there were challenges with maintenance and even with the quality of the two new power stations built now in the post-apartheid era. That is partly why we have been subjected to continuous load shedding for at least the past six years.

Another reason why the government is battling with unsustainable debt levels is because of a bloated public sector wage bill, where the 1.2 million of public sector workers are accountable for over a third of the R1.6 trillion of the government expenditures. Is this sustainable? The answer is no, especially because most of the public services, like the health sector, utilities, and even the education sector, do not necessarily meet the expectations of the public.

South Africa is a country of contradictions. We have over 28m people who are on various forms of social welfare grants in this country where we have less than eight million taxpayers who actually pay personal taxes. We have a diminishing pool of these taxpayers who actually pay personal taxes, because many of top bracket taxpayers are emigrating because of a number economic and political challenges we face in this country.

Lawlessness is one of the major reasons for people emigrating. Corruption in almost everything in South Africa means load shedding is worsened by people who steal Eskom’s copper cables with impunity. There are growing water shortages in the country, purportedly partly because of high levels of corruption in that sector, including allegations of outsourced service providers who sabotage the very infrastructure they are supposed to maintain, with allegations that they were creating more work for themselves, and also creating work for water tank owners who are part of the syndicates that run the water sector.

This is also a country where we spend more than $1 billion a day just to clear debt service costs before paying the principal debt. We continuously have a budget deficit of around R400 billion a year. Having given this factual financial data about the South African economy, the question that we need to honestly ask is where will all the money come from to finance all these jobs and freebies that all these wannabe politicians are promising you?

Let me repeat myself like a broken record: we have a structural unemployment problem in South Africa. We have a serious jobs-skills-mismatch problem in the country. We produce many university graduates and high school products who do not have the necessary skills to match the required needs of the South African economy. This is primarily the major reason why the various job-creation initiatives of the government have dismally failed; because people have expected the government to spend the money it does not have to create unsustainable jobs.

To demonstrate the seriousness of our economic situation, let me remind you that the health sector always reminds us that there are very high vacancy rates for doctors in South Africa; the problem though is that the government cannot afford to employ those many unemployed doctors, because departmental budgets have been slashed.

One other major problem we have with job creation initiatives is that many South Africans unfortunately have a very myopic way of looking at our government expenditures. When people get opportunities to be part of these job creation opportunities they start demanding that these must be full-time jobs, with “a living wage” and all the usual benefits and exaggerated total costs to the employer.

The time has come for South Africans to face the reality in our country, with the expanded definition of unemployment at over 40%; people must be very productive at work if we are to create more sustainable jobs. It is not the business of government to create jobs. The role of government is to create a conducive environment for the private sector to thrive in and create jobs.

*Prof. Dumisa is an independent economic analyst

**The views expressed do not necessarily reflect the views of Independent Media or IOL