Human Capital and the New Deal - Ebrahim Patel's new economic growth path
After 18 months a 36 page document has been produced by government, setting out its suggestions in relation to economic policy matters and in particular the creation of jobs for the unemployed.A basic difficulty with the plan is that it appears to be trying to make bricks without the necessary straw. This may be allowed for the making of "mampara" bricks, but it won't cut it when it comes to remedying the economic ailments of the nation. Addressing the human capital shortage in the land, one that has built up since the advent of the new democratic order, in a sustainable fashion will require closer attention to the facts. These are summed up usefully by Dr Jan du Plessis of Intersearch in the following terms:
"The number of people who are poor, is just too high (25.7 million people from a population of 49.3 million);
- The number of people who depend on a state grant for their daily survival is not sustainable (13 million with the possibility of an additional 7 million);
- The number of people who are illiterate has become unmanageable (24% of adults over 15 years);
- There is no solution for the number of jobless people. The most recent statistics indicate an official jobless rate of 25,3%. The real rate, according to the Bureau for Market Research at Unisa, has reached 41%. The figure used in the advertising industry for marketing stands on 63%.
- The number of people with HIV/AIDS is terrifying, as it sucks the human capital from the middle sector of society (5.7 million people);
- The large number of people who are going to die from HIV/AIDS may destabilize society eventually ..."
The jobless, at whatever rate one chooses, are not only the unemployed but also the unemployable. For example, in 2007 only 42,000 of the 278,000 black matriculants were able to pass a simply functional literacy test. This out of a total of 1,2 million six year old black learners who started school 12 years earlier. A matric certificate is accordingly no guarantee of functional literacy. The illiteracy rate is likely to be considerably higher than the 24% of adults over 15 mentioned above.
The scourge of HIV/AIDS affects the poor most directly. Yet, if death certificates are anything to go by, nobody ever dies of AIDS in South Africa. A host of AIDS induced ailments are entered on death certificates, making the extent of the plague, and the economic planning around it a logistical nightmare.
As there are only 5,3 million income tax payers left in South Africa, with 1,2 million of them paying 75% of all individual and company taxes, it is self evident that the hugely disproportionate number of people drawing social welfare grants (13 million and rising) is not a sustainable model on which to build a peaceful, progressive and prosperous economic future.
The plan is to create jobs, correctly so. The difficulty is whether there are, amid the ranks of the unemployed, persons who are qualified, skilled and sufficiently experienced to successfully take up the sorts of jobs the government has in mind. It is wonderful to want to massively increase the number of engineers, to name but one example in the plan, but are there enough mathematics students, school teachers and university staff, not to mention infrastructure, to produce the number of engineers to which the plan aspires.
On a more basic level, there are huge question marks over the dysfunctional primary and secondary school education system (our basic education delivery unit for a right guaranteed to all) which render the possibilities of producing the kind of workforce the government has in mind somewhat remote. Not that there is anything wrong with the youth of the country, it is simply a hard truth that precious little learning and teaching goes on in union dominated schools in townships and the rural areas. These are the type of schools to which teachers refuse to send their own children.
Then there is the state of the general infrastructure in the corrupt and cadre infested municipalities of the land. Sanitation is in crisis with only 32 out of over 970 treatment plants functioning as they should in January 2010. Streams of sewerage in streets are a regular feature on television programmes about lack of proper service delivery. The streets themselves are potholed and ill maintained. Electricity supply is of an if-fish kind. Drinking water is all too often of dubious quality and acid mine water threatens the low lying areas of the economic heartland, including Johannesburg itself. Public transport, so vital to getting workers from their homes to their places of work, is less than desirable. Homes, in short supply for the less well off, can not be built fast enough because the necessary infrastructure to support housing estates with roads, electricity, water and sanitation does not exist. Some new homes in unserviced areas stand empty and idle, growing weeds in their barren back yards, mute testimony to the inability of the government to properly plan the access to housing guaranteed to all in the Bill of Rights.
In these circumstances, it was to be hoped that the plan would engage with the facts regarding the state of our human capital and its interaction with the conditions on the ground around the country. A strong focus on education, training and skills development of the unemployed of all ages is sorely needed. Education, education and more education is the answer. Proper primary, secondary and tertiary education of the people of our nation is the sine qua non of any sustainable economic recovery based on the creation of jobs. Government ignores this at its peril.
Paul Hoffman SC
25th November, 2010
