OECD report warns on SA's unemployment figures
Thématique :
sud afrique
South Africa would have to move about two-million unskilled workers off its unemployment roll, in order to reach its goals of halving unemployment by 2014, through its Accelerated and Shared Growth Initiative (Asgisa), a report stated on Tuesday.
The Organisation for Economic Cooperation and Development’s (OECD’s) economic assessment survey of South Africa noted that this would require a substantial increase in the demand for unskilled labour, a major reduction in the supply of such labour, or a combination of the two.
The report stated that the increase in unemployment levels during the 1990s had been caused by an increase in the supply of less-skilled workers, while labour demand had also not kept up.
Improvements in basic education, a reduction in crime, and improvements in product market regulation to stimulate economic activity in the informal sector, as well as changes in municipal laws and regulations that could ease urban migration and facilitate informal employment, were all measures that could improve South Africa’s unemployment figures.
However, the survey highlighted that unless the country could improve labour market participation, employment rates would remain low in comparison with international standards, even if the unemployment rate was reduced to a single-digit figure.
The survey showed that, to some degree, Asgisa had taken a combined approach into consideration, with language in its industrial policy motivating the stimulation of labour-intensive activities, while concern regarding the volatility and the level of the exchange rate indicated recognition of the danger of macroeconomic conditions holding back demand for unskilled labour.
However, the survey reported that another thrust of the industrial policy promoted capital- and skill-intensive sectors, and that there were no clear interventions that could address exchange rate volatility, meaning there was not much in Asgisa that could have a meaningful impact on the demand for unskilled labour in the country.
The survey recommended that a number of policy actions could be needed by South Africa in order to meet its Asgisa goals.
EDUCATION
The education system was marred by undertrained and demotivated teachers, a lack of infrastructure, books and equipment, the impact of HIV/Aids, and the fragmentation of the school system along ethnic or language lines, which were all likely to take a long time to resolve.
The survey proposed that an increased and reorientated spending in infrastructure, equipment and books; moving the compulsory age of schooling to 18; and resolving the unbalanced public-private schooling system, would address the relegation of the majority of the black population to unemployment, employment in the informal sector, or unskilled manual labour in the formal sector.
The mixed public-private schooling system allowed for individual schools in the State-funded system to charge fees and supplement the numbers of teachers, which maintained the disparity in outcomes and opportunities between different parts of the schooling system.
Further, the OECD suggested that the teaching of English in South African schools needed to be strengthened, while schools also had to carefully consider the objectives rather than the cultural identity when deciding on a language of instruction.
The OECD said that a possible reflection on the quality of education in South Africa could be that since the mid-1990s, completing high school conveyed less of an advantage in getting a job than it did before.
“Whereas in 1995 the impact of gaining the matric [certificate] was significant, by 2005 that was no longer the case,” said the report.
It added that by 2006, a post-secondary qualification was needed to boost the probability of one getting a job.
Meanwhile, the survey indicated that public training schemes could play a more important role as an active labour market programme by offering training to the unemployed.
The survey added that these could currently not be expected to make any significant impact on halving unemployment by 2014, and that initiatives such as the Joint Initiative for Priority Skills Development and the National Skills Development Programme (NSDP) were small-scale or struggled with implementation problems.
However, the report said the NSDP had shown some potential to increase its flexibility and to reduce administrative costs.
MOBILITY
Meanwhile, the survey indicated that a number of measures could ease capital market constrains on rural-urban migrants or jobseekers.
This included subsidised education/training loans or job search loans that could possibly work on the same principles of student loans, where they are repaid only if employed.
Prioritising the development of infrastructure, aimed at addressing the residual problem of spatial misallocation of workers, could also make a difference, as shorter and safer commutes for workers could help to reduce reservation wages.
Also, an increased availability of urban housing for working class blacks could reduce search costs and improve job matches, the survey stated.
EMPLOYMENT PROTECTION LEGISLATION
The survey noted that while South Africa’s employment protection legislation (EPL) appeared to be flexible, the implementation of the laws often led to the perception that the system was rigid, especially with regard to firing personnel.
As a result, these perceptions could have restrained hiring, stated the report.
Further, an overburdening of the Commission for Conciliation, Mediation and Arbitration (CCMA) appeared to have contributed to the use of formalistic judgements and long delays in some cases.
The report proposed that limiting access to the CCMA to non-managerial workers, greater use of combined conciliation and arbitration (conarb) procedures, expanding the provisions for compulsory conarb hearings, and restricting the number of reviews of wrongful dismissal cases by the Labour Courts, could assist in improving the CCMA process.
IMPROVING COMPETITION
On the labour demand side, it could be a positive step for the country to foster more competition throughout the economy, as this was associated with greater innovation and productivity growth over the long term.
However, the reduction of product market rents accruing to a few large firms was also expected to weaken the power of labour market insiders, which would subsequently lead to increased employment in these and other sectors.
This was also expected to create new employment opportunities for previously disadvantaged individuals.
Other proposed measures that was expected to boost demand for less-skilled labour in South Africa was the further development of learnerships, and lengthening the maximum allowable probation period of workers.
The Organisation for Economic Cooperation and Development’s (OECD’s) economic assessment survey of South Africa noted that this would require a substantial increase in the demand for unskilled labour, a major reduction in the supply of such labour, or a combination of the two.
The report stated that the increase in unemployment levels during the 1990s had been caused by an increase in the supply of less-skilled workers, while labour demand had also not kept up.
Improvements in basic education, a reduction in crime, and improvements in product market regulation to stimulate economic activity in the informal sector, as well as changes in municipal laws and regulations that could ease urban migration and facilitate informal employment, were all measures that could improve South Africa’s unemployment figures.
However, the survey highlighted that unless the country could improve labour market participation, employment rates would remain low in comparison with international standards, even if the unemployment rate was reduced to a single-digit figure.
The survey showed that, to some degree, Asgisa had taken a combined approach into consideration, with language in its industrial policy motivating the stimulation of labour-intensive activities, while concern regarding the volatility and the level of the exchange rate indicated recognition of the danger of macroeconomic conditions holding back demand for unskilled labour.
However, the survey reported that another thrust of the industrial policy promoted capital- and skill-intensive sectors, and that there were no clear interventions that could address exchange rate volatility, meaning there was not much in Asgisa that could have a meaningful impact on the demand for unskilled labour in the country.
The survey recommended that a number of policy actions could be needed by South Africa in order to meet its Asgisa goals.
EDUCATION
The education system was marred by undertrained and demotivated teachers, a lack of infrastructure, books and equipment, the impact of HIV/Aids, and the fragmentation of the school system along ethnic or language lines, which were all likely to take a long time to resolve.
The survey proposed that an increased and reorientated spending in infrastructure, equipment and books; moving the compulsory age of schooling to 18; and resolving the unbalanced public-private schooling system, would address the relegation of the majority of the black population to unemployment, employment in the informal sector, or unskilled manual labour in the formal sector.
The mixed public-private schooling system allowed for individual schools in the State-funded system to charge fees and supplement the numbers of teachers, which maintained the disparity in outcomes and opportunities between different parts of the schooling system.
Further, the OECD suggested that the teaching of English in South African schools needed to be strengthened, while schools also had to carefully consider the objectives rather than the cultural identity when deciding on a language of instruction.
The OECD said that a possible reflection on the quality of education in South Africa could be that since the mid-1990s, completing high school conveyed less of an advantage in getting a job than it did before.
“Whereas in 1995 the impact of gaining the matric [certificate] was significant, by 2005 that was no longer the case,” said the report.
It added that by 2006, a post-secondary qualification was needed to boost the probability of one getting a job.
Meanwhile, the survey indicated that public training schemes could play a more important role as an active labour market programme by offering training to the unemployed.
The survey added that these could currently not be expected to make any significant impact on halving unemployment by 2014, and that initiatives such as the Joint Initiative for Priority Skills Development and the National Skills Development Programme (NSDP) were small-scale or struggled with implementation problems.
However, the report said the NSDP had shown some potential to increase its flexibility and to reduce administrative costs.
MOBILITY
Meanwhile, the survey indicated that a number of measures could ease capital market constrains on rural-urban migrants or jobseekers.
This included subsidised education/training loans or job search loans that could possibly work on the same principles of student loans, where they are repaid only if employed.
Prioritising the development of infrastructure, aimed at addressing the residual problem of spatial misallocation of workers, could also make a difference, as shorter and safer commutes for workers could help to reduce reservation wages.
Also, an increased availability of urban housing for working class blacks could reduce search costs and improve job matches, the survey stated.
EMPLOYMENT PROTECTION LEGISLATION
The survey noted that while South Africa’s employment protection legislation (EPL) appeared to be flexible, the implementation of the laws often led to the perception that the system was rigid, especially with regard to firing personnel.
As a result, these perceptions could have restrained hiring, stated the report.
Further, an overburdening of the Commission for Conciliation, Mediation and Arbitration (CCMA) appeared to have contributed to the use of formalistic judgements and long delays in some cases.
The report proposed that limiting access to the CCMA to non-managerial workers, greater use of combined conciliation and arbitration (conarb) procedures, expanding the provisions for compulsory conarb hearings, and restricting the number of reviews of wrongful dismissal cases by the Labour Courts, could assist in improving the CCMA process.
IMPROVING COMPETITION
On the labour demand side, it could be a positive step for the country to foster more competition throughout the economy, as this was associated with greater innovation and productivity growth over the long term.
However, the reduction of product market rents accruing to a few large firms was also expected to weaken the power of labour market insiders, which would subsequently lead to increased employment in these and other sectors.
This was also expected to create new employment opportunities for previously disadvantaged individuals.
Other proposed measures that was expected to boost demand for less-skilled labour in South Africa was the further development of learnerships, and lengthening the maximum allowable probation period of workers.
