”The biggest challenge facing the South African economy is the shortage of skills. Many people are poor and jobless because they do not have skills.” - Deputy President,KgalemaMotlanthe, South Africa.
Ashton’s overview of the South African situation from the 1970’s has reflections on how the economy was different in many respects marginalised from the process of globalisation. It used its policy of apartheid to maintain the political and economical dominance of the white community thus reserving high skilled jobs for the white population. Ashton raises the point of the ‘Asian Tigers’ and their recovery from a slumping economic market but the quandary facing South Africa is very different to that found in the older industrial countries. So the concepts used by the Asian markets and other emerging economies cannot be used in its entirety in South Africa.
In identifying this recovery one has to take into account the different dynamics of the political, labour and educational landscape of South Africa. The post apartheid government began to move from an inward looking, import substitution policy of the previous government to a more outward looking, export oriented policy of full participation in the global markets. (Ashton,2005)
In order to tackle this and other pressing issues that face the country, high on the agenda was the issues of creating jobs for the masses. The government embarked on creating a vehicle to drive the process to address the skills and jobs shortage by revisiting the need to generate high skilled jobs. I will deal in brief the socio-political, economic labour situation that we find ourselves in currently;
The apartheid heritage left a stronghold between race and socioeconomic class that will take decades to erase. From 1948 to 1994, a person’s race motivated occupation, residence and education. Throughout most of the 20th century, race was the central issue in South African politics, but since the end of apartheid attention has focused on other problems in South African society; the most prominent of ‘unemployment’. Although the economic growth performance in South Africa has improved since the end of apartheid, unemployment remains high and poses a major social and economic policy challenge. In 1994 and 2004, the official rate of unemployment in the labour force was 26 percent. Unemployment is particularly concentrated among historically disadvantaged groups and is higher among the rural, female, uneducated, and young segments of the population.
There has been growth in employment in keeping with economic growth since 1994, but there has been no increase in the labour force. The graph below shows population and income percentage contributions of the different races in 1993.
Skills development has been the bedrock of South Africa’s strategies for job creation and poverty relief, it improve workers’ productivity, increases salaries, incomes and living standards for the skilled and unskilled; however South Africa is pigeonholed by an inescapable ‘skills shortage’.
The skills shortage is more challenging than it first appears to be because we are identifying the lowest level of skills in black youth under 35 (74% of the total). Noticeable lack of skill here is the nonexistence of on-the-job practical work experience, is this then skills shortage or employment shortage! Driven by increasing public sector unionisations the primary and secondary education is in crisis and a high school diploma (matriculation) is inadequate preparation for the practical realities of the world of work.
The government has introduced vast arrays of skills development programs to address unemployment and poverty. The Sector Education and Training Authorities (SETAs) were established to ensure that skills needed for all sectors of the economy were identified and the appropriate training made available.
SETA, perceived as the government’s redeemer and funded by a 1% payroll tax, created only 25 000 skills per annum due to the necessary and inevitable failure of government interference in firms’ micro-level hiring and training decisions and maladministration of some SETAs.
From the point of view of skills development the two most cataclysmic sets of laws and regulations relate to wage levels and importation of skills. In South Africa, wage levels are regulated through minimum wage laws and through statutory collective bargaining agreements with trade unions and bargaining councils to raise wages above the market-related level. Unnecessary wage growth increases prevents entry-level workers (typically youth) who don’t have skills and experience to offer employers from offering their labour at a discount in competition with established, experienced and better skilled workers (termed ‘job prohibition’).
Immigration laws and procedures regulate the import of foreign skills and the net effect of these laws and policies is to impose a tax-like deterrent on foreign job seekers. In the 1950s and 1960s foreign engineers, artisans and entrepreneurs were welcomed following the discovery of gold in the Free State, in the 1990s and 2000s high-skilled foreigners are openly discouraged from seeking work in South Africa. This directly affects the skills spectrum of unskilled, unemployed youth and high-skilled foreigners but benefits everyone in between as local professionals earn high salaries, have numerous opportunities because they don’t have to compete for jobs and low wage rates.
Governments the world over, realize that the strength of their economy lies in high-value, high-skill economies and that the first step towards this is to have a well-educated workforce! A once held belief of the working world was that if you were highly skilled – you were highly paid.
Apart from the tragic waste of human potential, my understanding through my own personal experiences as an elected politician and from the many readings offered in this Block, I believe that, education alone is not the lone cure to streamlining a skewed economy; a lot of the work involves correcting past policy misstep. In April 2011, a draft Skills Development Amendment Bill was introduced and is set to be passed sometime in 2012, highlights the aims to develop the skills of the South African workforce and to improve the quality of life of workers and their prospects of work; to improve productivity in the workplace and the competitiveness of employers and to promote self-employment. It is aimed at producing the artisans, technicians and professionals the economy needs.
So we are back at square one, where jobs remain the nation’s number one priority, and in the meantime, the narrow unemployment rate has doubled from 13% in 1994 to 25% in 2010.
Skills development has never been properly debated in South Africa. After nearly two decades of experimentation, the system has failed to deliver either the hoped-for increase in employment or the requisite quantum of skills. In fact, despite massive government intervention and expenditure in this area, all key indicators of employment and skills development have gone backwards. The most valuable lesson emerging from the skills development experiment is that marketable skills are acquired on-the-job, in a practical workplace setting, not in classrooms and lecture theatres.
South Africa for a long time to come will have to maintain the status quo of balancing the ‘new economy’ with the present system, the country cannot afford to be a total ‘serviced based’ economy. The amount of investment in the youth and education will be circumvented if we allow this industry to continue unabated and be flooded with cheap sweat shop Chinese production.
Mark P Naidoo
Bibliography
Department of Labour – Republic of South Africa
Skills Universe – Exploring the New World of Work
Job Creation via Education – IOL Business Report
JIPSA – South African Government Online
Encyclopedia of the Nations – South Africa Overview of Economy
How did Labor Market Racial Discrimination Evolve after the End of Apartheid? - Sandrine Rospabé1
Ashton’s overview of the South African situation from the 1970’s has reflections on how the economy was different in many respects marginalised from the process of globalisation. It used its policy of apartheid to maintain the political and economical dominance of the white community thus reserving high skilled jobs for the white population. Ashton raises the point of the ‘Asian Tigers’ and their recovery from a slumping economic market but the quandary facing South Africa is very different to that found in the older industrial countries. So the concepts used by the Asian markets and other emerging economies cannot be used in its entirety in South Africa.
In identifying this recovery one has to take into account the different dynamics of the political, labour and educational landscape of South Africa. The post apartheid government began to move from an inward looking, import substitution policy of the previous government to a more outward looking, export oriented policy of full participation in the global markets. (Ashton,2005)
In order to tackle this and other pressing issues that face the country, high on the agenda was the issues of creating jobs for the masses. The government embarked on creating a vehicle to drive the process to address the skills and jobs shortage by revisiting the need to generate high skilled jobs. I will deal in brief the socio-political, economic labour situation that we find ourselves in currently;
The apartheid heritage left a stronghold between race and socioeconomic class that will take decades to erase. From 1948 to 1994, a person’s race motivated occupation, residence and education. Throughout most of the 20th century, race was the central issue in South African politics, but since the end of apartheid attention has focused on other problems in South African society; the most prominent of ‘unemployment’. Although the economic growth performance in South Africa has improved since the end of apartheid, unemployment remains high and poses a major social and economic policy challenge. In 1994 and 2004, the official rate of unemployment in the labour force was 26 percent. Unemployment is particularly concentrated among historically disadvantaged groups and is higher among the rural, female, uneducated, and young segments of the population.
There has been growth in employment in keeping with economic growth since 1994, but there has been no increase in the labour force. The graph below shows population and income percentage contributions of the different races in 1993.
Skills development has been the bedrock of South Africa’s strategies for job creation and poverty relief, it improve workers’ productivity, increases salaries, incomes and living standards for the skilled and unskilled; however South Africa is pigeonholed by an inescapable ‘skills shortage’.
The skills shortage is more challenging than it first appears to be because we are identifying the lowest level of skills in black youth under 35 (74% of the total). Noticeable lack of skill here is the nonexistence of on-the-job practical work experience, is this then skills shortage or employment shortage! Driven by increasing public sector unionisations the primary and secondary education is in crisis and a high school diploma (matriculation) is inadequate preparation for the practical realities of the world of work.
The government has introduced vast arrays of skills development programs to address unemployment and poverty. The Sector Education and Training Authorities (SETAs) were established to ensure that skills needed for all sectors of the economy were identified and the appropriate training made available.
SETA, perceived as the government’s redeemer and funded by a 1% payroll tax, created only 25 000 skills per annum due to the necessary and inevitable failure of government interference in firms’ micro-level hiring and training decisions and maladministration of some SETAs.
From the point of view of skills development the two most cataclysmic sets of laws and regulations relate to wage levels and importation of skills. In South Africa, wage levels are regulated through minimum wage laws and through statutory collective bargaining agreements with trade unions and bargaining councils to raise wages above the market-related level. Unnecessary wage growth increases prevents entry-level workers (typically youth) who don’t have skills and experience to offer employers from offering their labour at a discount in competition with established, experienced and better skilled workers (termed ‘job prohibition’).
Immigration laws and procedures regulate the import of foreign skills and the net effect of these laws and policies is to impose a tax-like deterrent on foreign job seekers. In the 1950s and 1960s foreign engineers, artisans and entrepreneurs were welcomed following the discovery of gold in the Free State, in the 1990s and 2000s high-skilled foreigners are openly discouraged from seeking work in South Africa. This directly affects the skills spectrum of unskilled, unemployed youth and high-skilled foreigners but benefits everyone in between as local professionals earn high salaries, have numerous opportunities because they don’t have to compete for jobs and low wage rates.
Governments the world over, realize that the strength of their economy lies in high-value, high-skill economies and that the first step towards this is to have a well-educated workforce! A once held belief of the working world was that if you were highly skilled – you were highly paid.
Apart from the tragic waste of human potential, my understanding through my own personal experiences as an elected politician and from the many readings offered in this Block, I believe that, education alone is not the lone cure to streamlining a skewed economy; a lot of the work involves correcting past policy misstep. In April 2011, a draft Skills Development Amendment Bill was introduced and is set to be passed sometime in 2012, highlights the aims to develop the skills of the South African workforce and to improve the quality of life of workers and their prospects of work; to improve productivity in the workplace and the competitiveness of employers and to promote self-employment. It is aimed at producing the artisans, technicians and professionals the economy needs.
So we are back at square one, where jobs remain the nation’s number one priority, and in the meantime, the narrow unemployment rate has doubled from 13% in 1994 to 25% in 2010.
Skills development has never been properly debated in South Africa. After nearly two decades of experimentation, the system has failed to deliver either the hoped-for increase in employment or the requisite quantum of skills. In fact, despite massive government intervention and expenditure in this area, all key indicators of employment and skills development have gone backwards. The most valuable lesson emerging from the skills development experiment is that marketable skills are acquired on-the-job, in a practical workplace setting, not in classrooms and lecture theatres.
South Africa for a long time to come will have to maintain the status quo of balancing the ‘new economy’ with the present system, the country cannot afford to be a total ‘serviced based’ economy. The amount of investment in the youth and education will be circumvented if we allow this industry to continue unabated and be flooded with cheap sweat shop Chinese production.
Mark P Naidoo
Bibliography
Department of Labour – Republic of South Africa
Skills Universe – Exploring the New World of Work
Job Creation via Education – IOL Business Report
JIPSA – South African Government Online
Encyclopedia of the Nations – South Africa Overview of Economy
How did Labor Market Racial Discrimination Evolve after the End of Apartheid? - Sandrine Rospabé1