South African students say trade policy is not a silver bullet for unemployment

South Africa is currently preparing for the National Budget Speech, and the usual analysis will rightly focus on fiscal numbers, policy trade-offs, and macroeconomic conditions.

Yet one of the most valuable perspectives often sits outside the immediate spotlight: how emerging economists understand these choices, and how they believe policy should respond to the country’s lived economic realities.

Through the Nedbank and Old Mutual Budget Speech Competition, now in its 54th year, we are afforded a rare window into this thinking.

This year’s undergraduate and postgraduate submissions revealed a generation that is neither ideological nor simplistic. Instead, students demonstrate a nuanced appreciation of economic trade-offs, institutional limits, and the complexity of policy implementation.

At the undergraduate level, entrants interrogated whether trade protectionism, notably higher import tariffs, can realistically stimulate job creation in a developing economy such as South Africa.

Their responses show a clear departure from binary debates. Rather than advocating for blanket protectionism or uncritical liberalisation, many students argue for targeted, temporary and performance-linked interventions.

A recurring insight is that tariffs may offer short-term relief to vulnerable sectors but cannot substitute for deeper structural reform.

Students consistently highlight that without reliable infrastructure, skills development, efficient logistics, and policy certainty, protective measures risk entrenching inefficiency rather than enabling competitiveness.

Several essays point out that tariffs can, without intention,  raise input costs for downstream industries. The result would be the erosion of employment gains elsewhere in the economy. In this sense, students caution against viewing trade policy as a silver bullet for unemployment.

From the perspective of a financial institution, it is important to situate this argument within South Africa’s broader labour market reality.

South Africa’s unemployment challenge is deeply structural, shaped by skills mismatches, spatial inequality, and long-standing infrastructure constraints.

Trade policy alone cannot resolve these challenges; well-targeted infrastructure development has the potential to play a catalytic role.

Large-scale investment in areas such energy, transport, water and digital infrastructure can create labour-intensive employment in the short to medium term.

Over time, such investment can also contribute to higher household incomes and improved economic confidence.

What is striking is the degree to which undergraduates already grasp the importance of sequencing.

They recognise that selective protection can play a role, but only when embedded within a broader industrial strategy that prioritises productivity, innovation, and export competitiveness.

This perspective aligns closely with global evidence and suggests that policy literacy among young South Africans is maturing.

At the postgraduate level, the focus shifts from trade to monetary policy, with students evaluating South Africa’s inflation-targeting framework and the debate around lowering the target band.

Here too, the analysis is measured rather than rigid.

While some students argue that a lower or narrower inflation target could strengthen credibility and support long-term investment, others caution that such a shift may impose real economic costs in an economy characterised by high unemployment, inequality, and supply-side inflation pressures.

Across submissions, there is a broad sentiment that South Africa’s inflation dynamics differ materially from those of advanced economies.

Students repeatedly note that local inflation is driven less by excess demand and more by structural factors such as administered prices, energy costs, exchange-rate volatility, and logistical constraints.

Against this backdrop, they question whether tighter monetary policy alone can deliver inclusive growth.

International comparisons feature prominently in the essays, but not as prescriptions to be copied wholesale.

Instead, students emphasise the importance of institutional credibility, transparent communication and gradualism.

Experiences from countries such as Brazil, India, New Zealand, and Canada are cited not to advocate for immediate policy shifts, but to underline the risks of abrupt changes without fiscal discipline, structural reform, and clear forward guidance.

Perhaps the most important common thread across both undergraduate and postgraduate work is a deep awareness of trade-offs.

Students understand that every policy choice carries distributional consequences. They are acutely conscious of how inflation, interest rates, and tariffs affect households, particularly those already under pressure.

This sensitivity to social impact is paired with a practical recognition that macroeconomic stability remains essential for long-term development.

For us, as institutions committed to South Africa’s economic future, these insights are encouraging.

They suggest that the next generation of economists is equipped not only with technical knowledge but with contextual intelligence and a strong sense of public responsibility. The essays remind us that policy debates benefit when they move beyond slogans and confront complexity head-on.

Listening to these voices is not just a symbolic act. It is an investment in better policy conversations, stronger institutions, and a more informed national debate.

John Manyike, Head of Financial Education at Old Mutual, and Isaac Matshego, Senior Economist at Nedbank.

BUSINESS REPORT