South Africa’s shrinking skills is a big growth problem: economist

Dr Azar Jammine, director and chief economist at Econometrix, has criticised the government’s new localisation and re-industrialisation plan, as the country does not have the required skills base to make it successful.

In an interview with the Free Market Foundation, Jammine said that only a small array of ‘skilled excellence’ in the economy is keeping it going, against a vast pool of unemployed, who are unable to add value due to a lack of education and skills.

He said that the government first needs to address some of the fundamental structural issues of the economy before focusing on any manufacturing plans.

“For one thing, it’ll lead to what we experienced – almost a déjà vu – of the final decade of Apartheid, where we saw the ravages of localisation and de-industrialisation in the form of huge import tariffs that resulted in sustained double-digit inflation for more than a decade.”

“It also caused many local manufacturers to feel complacent in having this umbrella of protection provided by the government and not having to compete. That led to large inefficiencies, and we ended up having economic growth of less than 1% per annum through the 1980s as a consequence of this.”

Jammine said that South Africa also has a large labour force that could be more productive than it currently is.

“At the heart of the lack of productivity and why it is futile to think in terms of sparking a manufacturing revival is the very poor levels of skill and education within the majority of the country,” he said “One really needs to look at the educational system at the heart of our structural weaknesses to realise what can be done to turn this country around.

“I have no doubt that if we were to address that issue properly, in no next to no time, we could start screaming up with 5% -10% growth per annum.”

Jammine said there are still pockets of excellence in the schooling system. Still, far too few people have access to these facilities, leading to a small group of skilled South Africans keeping the country going, with a vast pool of people who can’t add value in a world economy that is becoming increasingly digitally intensive.

Leaving South Africa 

While several skilled South Africans still call the country home, many taxpayers are looking to take their expertise elsewhere, warns Xpatweb, a specialist immigration consultancy. The firm conducted its latest critical skills survey for 2021 showing a steady increase in skilled South African professionals wanting to emigrate to other countries.

These professionals leave a significant gap in both the workforce and the fiscus, said Marisa Jacobs, director at Xpatweb.

“By leaving their home country in search of international opportunities, they are impacting workplaces, higher education needs and revenue collection by the South African Revenue Services (SARS), which can have a detrimental knock-on effect if qualified replacements remain in short supply,” she said.

“While the grass might not always be greener on the other side, it does not negate the fact that there is a paucity of educated professionals and experienced staff across many industries that contribute largely towards the economic growth in South Africa.”

The big concern is indeed the sad loss of South African professionals who have chosen to emigrate However, it has also raised another glaring concern. As evidenced in Xpatweb’s Critical Skills Survey, there are companies in dire need of filling key positions to conduct their business.

Failure to find suitable South African candidates for these roles, has resulted in Human Resource professionals casting their lines further afield with the hopes of snagging professionals abroad. However, it’s not as easy as finding the best match in a pool of foreigners and then handing them the job, Jacobs said.

Some of the biggest reasons professionals give for leaving South Africa include:

  • The desire for international exposure;
  • Taking advantage of earning a foreign currency;
  • Gaining global experience;
  • Creating opportunities for their families, which could include a second passport or better education.

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South Africa’s shrinking skills is a big growth problem: economist