Reform to help jobless youth: OECD
|Published
A bakkie moves off after loading unemployed builders and painters from a roadside for work in Cape Town. EPA/NIC BOTHMA A bakkie moves off after loading unemployed builders and painters from a roadside for work in Cape Town. EPA/NIC BOTHMA
Johannesburg – South Africa has to undertake tough reforms and make hard spending decisions for its unemployed youth to stand any chance to prosper in the job market.
This is according to Angel Gurria, secretary general of the Organisation for Economic Cooperation and Development (OECD), who spoke at the launch of the OECD SA economic survey in Midrand on Friday.
“Millions of young South Africans are eager to work, and their potential must not be wasted. Their future is precious enough to justify tough reforms and hard spending choices,” said Gurria, who launched the survey alongside finance minister Nhlanhla Nene.
The OECD also recommended that the South African government focus on tackling infrastructure bottlenecks and improving business regulation to boost job creation, which would then create inclusive growth.
“Since 1994, South Africa has made great progress in reducing absolute poverty by rolling out social grants for pensioners, the disabled and children. Access to education, housing, water, electricity and other services has been greatly broadened. As a result, well-being has increased substantially. A sound macroeconomic framework with a stable fiscal position, inflation targeting, a floating exchange rate and largely unimpeded international capital flows underpinned this progress and has earned South Africa the confidence of financial markets,” the OECD said in the survey.
It however noted that growth had not been inclusive due to insufficient employment growth, as job creation was held back by regulatory entry barriers for new suppliers, who could offer better and cheaper services, and by the legal extension of collectively agreed wages, contributing to an insider/outsider divide in the labour market.
The OECD recommended that when it came to addressing infrastructure bottlenecks, the first area should be focused on electricity generation, an area in which the OECD recommended bringing in independent power producers.
The OECD noted that reforms were under way to tackle infrastructure bottlenecks and support small businesses. It said state-owned enterprises such as Eskom had ongoing capacity problems, but that the government was making large investments to rectify these challenges.
It said new public management techniques promised to improve spending efficiency, but as public ownership of companies, it was still significant this could be a potential source of inefficiency.
The OECD recommended that policy implementation should focus on the objectives outlined in the National Development Plan and as a priority, obstacles to job creation should be removed. To do this it suggested a focus on infrastructure investments with the highest social returns. In terms of spatial planning it recommended that the government should improve employment opportunities by expanding affordable public transport, including integrating minibuses into the public transport system, and building new, denser settlements closer to economic centres.
In terms of government regulations it recommended that there should be regulatory impact analysis on small businesses in order to reduce the regulatory burden, eliminating entry barriers and promoting competition.
The efficiency of the labour market could be improved by establishing a public employment service as a one-stop shop for job seekers to lower the cost of job search and hiring costs for employers.
To reduce the number of man days lost due to strike action, the OECD suggested that the role of mediation and arbitration should be made use of more often to ensure that wage negotiations were less confrontational, and to mitigate strike action to the point that strikes become a thing of the past.
According to Andrew Levy of Employment Publications, the number of work days lost due to industrial action rose to 11.8 million in 2014 compared with only 5.2 million in 2013. The only two years in which more workdays were lost due to industrial action were 2007 and 2010, which saw large public-sector strikes taking place.
ANA