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Johannesburg – Firms are employment generating projects and their growth could address the youth unemployment problem, but there is growing antagonism towards them, said former deputy finance minister Mcebisi Jonas.
He was speaking at the launch of a series of reports by the Centre for Development Enterprise that deal with tackling youth unemployment. Jonas said youth unemployment is a national crisis and new, radical measures should be taken to confront it.
He also highlighted that there is an “ambivalence and antagonism” towards the private sector.
“I feel the state is in competition with the private sector, rather than working in a symbiotic way in the interest of the economy.”
Youth unemployment accounts for 70% of total unemployment in the country. The youth have not been beneficiaries of employment. Firms have not been employing enough young people even though the youth population has grown by 2.6 million since 2008, he explained.
Jonas said firms are investing elsewhere because they want more policy certainty. “There is too much uncertainty across the system.”
“Large firms are investing elsewhere, in liquid financial markets rather than fixed capital.” This is a huge problem which needs to be addressed in a "robust way" to "lubricate" fixed capital investment, he explained. More should be done to reduce the cost and increase the ease of doing business.
Jonas added that there is an over-fascination with state capitalism. He said there is nothing wrong with state capitalism if it works. It can only work in a “corrupt-free” state, with good corporate governance which operates with the bottom line in mind.
State capitalism within the context of corruption and state capture just misdirects resources from job creation which could have benefited youth.
Other points that need addressing include the education system in order to achieve growth and sustainable job creation in the future.
The lack of diversity in the South African economy is another issue. After 1994 little effort was made to diversify the economy which is highly financialised, energy intensive and extractive and “extremely concentrated”, he said.
South Africa is also struggling with a “no-skills” problem and low skill development should be a factor in education and training.
Exceptional leadership
Lastly, Jonas explained that leadership is needed to solve the youth unemployment crisis. Good leadership will stimulate needed investment and growth to get the job numbers.
“This requires exceptional leadership,” he said. This is "authentic and accountable leadership and not a small group of powerful individuals condemning the country".
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