Economist Dawie Roodt says the solution to job creation in South Africa is to stop trying to create jobs and rather focus on growing the economy.
Leading up to the National Elections 2014, many political parties, including the ANC, main opposition, the Democratic Alliance and Malema-led newcomers, the EFF have been playing on political rhetoric surrounding job creation.
As part of its manifesto, EFF leader Julius Malema made a lot of lofty promises, including making all jobs permanent, and boosting salaries across the board.
The DA, meanwhile, has laid out its own plan to create six million “real jobs” over the next 10 years, while the ANC has promised to ramp up its BEE policies.
Speaking to BusinessTech, economist Dawie Roodt opined that the only way to create jobs in South Africa is to boost the economy.
Previously, Roodt told BusinessTech that “‘job creation’ is just a political slogan that parties use to disguise their lack of vision on economic issues”.
“Job creation is the easiest thing in the world to do – just ask 1,000 people to dig 1,000 holes,” Roodt said.
The only way new, sustainable jobs can be created is as a result of growing the economy, he said.
The job problem
“Unemployment isn’t the problem in South Africa – employment is,” Roodt said.
The rush to create jobs (to boost employment) is pushing companies to hire people to ‘dig holes’ – usually at costs that are unsustainable by the business.
According to Roodt, labour legislation – a fundamental part governing businesses – makes it incredibly difficult to employ people by making labour expensive.
“The quickest way to make something unattractive (on a mass scale) is to make it more expensive,” Roodt said.
Telling businesses to employ more people for the sake of job creation is like telling those businesses to use more electricity, “it just doesn’t make sense,” Roodt said.
The only way to encourage businesses to hire more people is to grow the businesses to a point where they have to employ more people – and that can only be accomplished by growing the economy, Roodt said.
“The way to do that is to remove the obstacles in the private sector’s way – mainly placed there by the state.”
Roodt said that labour legislation and tax policies in the country are doing a lot of damage, killing economic growth – and the political stance against privitisation was holding a lot of development back.
“The state is the single biggest threat to the economy…its policies are like a wet blanket, smouldering growth.”
“These things are a political question – there is always conflict between politics and the private sector,” Roodt said, adding that it was not only a South African issue, and that the trend was a global one.