Vol.3 No.30, 18 December 2003
The Elusive Million Jobs
President Mbeki has pledged his government to produce a million jobs in the foreseeable future. Minister Manuel’s recent budget is intended to focus that direction. This is not simply an election ploy as cynics would suggest, but an alignment with a new international understanding that economic growth – the mantra of the 90s – is not a sufficient policy objective. Even the World Bank and the IMF now focus upon ‘poverty alleviation’. So far they have shown scant understanding of how and why their prescriptions fail to spread the fruits of growth. Nor do Manuel’s critics who simply juxtapose current ideas of growth with social democratic policies of tax and spend.
Growth must be defined. Some kinds of growth lose jobs. Growth in the past quarter century has exponentially widened the gap between rich and poor everywhere. The fruits of growth have siphoned up to the owners of capital. The middle classes and the poor have been subsidising the rich. This has been most marked in countries where deregulation is most entrenched – where capital markets are most free, labour most ‘flexible’, taxation least upon the rich, government investment lowest on public amenities like health and education.
In the United States, even the middle classes have lower incomes in real terms than they did twenty-five years ago, and their asset base has shrunk. A growing proportion of Americans, including one in seven children, lives in serious poverty – dependent for instance, on charitable soup kitchens. The top 5% galactically rich owns and earns more than the bottom 90% of Americans. The same pattern applies in Russia, in Britain and those parts of Asia, Africa and Latin America where the American prescriptions for growth have been adopted, willingly or not. Those countries that have been able to resist some of those policies have seen a less violent trend to inequality – notably China and some parts of Europe.
This pattern is not contradicted by news that employment is growing in some countries like the US. New jobs are virtually all temporary, casualised and pay substantially less than those lost through the current model of growth. Their beneficiaries now live permanently on the edge of poverty.
The same will apply, under present circumstances, to the million jobs envisaged by our government. The planned public works programme will employ people for three months only. The hope is that in that time they will have learnt skills and confidence to go out and get themselves jobs. Aside from the inherent logistic difficulties, the plan has two fatal flaws.
First, the problem is not lack of skills but lack of jobs. Over a million people who used to be employed – the possessors of skills and experience – now vainly seek jobs. Our Universities and Technicons annually produce successful students who cannot find jobs. The government’s claim that our problem is lack of skills is simply untrue: it echoes similar claims by governments elsewhere. In the current economy, giving people skills and education simply creates a more skilled and educated class of unemployed people.
Second, the idea that growth should be ‘export-led’ lies at the heart of international joblessness. It has been so firmly entrenched in global market mainstream theory that it has become an unquestioned article of faith. But it does not work. Even our booming motor export industry, which generates mouth-watering profits, has created overall comparatively few new jobs. That is because there has been a 30% increase in labour productivity based on high capital intensiveness. If the engine of growth must be international competitiveness, then capital intensive production must follow. You cannot compete internationally unless you use state of the art technology. That means shedding people. Those people cannot be absorbed in other technologically based enterprise.
Hence global joblessness. Hence the fact that new jobs are all in low-paid, casualised service work – check-out, catering, labouring, tourist hotel staff – hourly paid work that desperate people will take because more and more of them have nothing better in prospect.
If we are to seek decent livelihoods as the major policy objective our focus must shift from exports to the home market, the home economy, local economic development. That will involve some hard decisions.
First, we need to protect enterprise that offers decent jobs and quality output but that cannot compete with subsidised or slave-waged imports. We should place tariffs on these imports equivalent to their subsidy and so enable our enterprise to pay respectable wages. We should drop the illusion that powerful economies like the US and the EU will respond to our pleas to open their markets if only we allow them in.
Second, we should prevent our capital from leaving our country at will. Our capital was made in South Africa and it should be available for investment here – unless there are seriously good reasons why its export will benefit South Africa. Many countries successfully control the movement of capital. A by-product is that their enterprise is not subject, like ours, to the unpredictable vagaries of currency fluctuations. Our open exchanges have not brought us the promised foreign direct investment. That is because owners of capital use a range of criteria for investment, many of them political and irrational, and often purely speculative. Meanwhile our exporters and our importers struggle to price their products in the face of unpredictable currency movements.
Finally we must focus policy on reducing income inequality by getting purchasing power into the hands of poor people. Studies over time have shown that countries with the least income inequalities produce the most consistent growth and the widest prosperity base – hence also the least problems of alienation and social dysfunction. An economy thriving in that way produces government revenues without an increase in the rate of tax.
The Basic Income Grant is the surest and most direct way to spread income. Together with other localising economic mechanisms, it is the surest way to get local markets and local economies going. Deliberate investment in poor regions will increase the market for our own enterprise, making us less dependent on imports and exports. Export-led growth must give way to national and local market led growth.
© South African New Economics Network 2006. Page generated at 17:07; 24 September 2006