Labour policies need urgent work
A prominent local economist has warned that policies could plunder SA into another recession
CURRENT labour legislation is believed to be doing little to nothing in helping Zululand’s exceptionally high 40% youth unemployment rate.
Prominent local economist Dr Irrshad Kaseeram and CEO of the Institute of Race Relations Dr Frans Cronjé believe the policies are not only hampering job creation, but without immediate reform, they could also plunge the country into another recession, further exacerbating the unemployment crisis.
This comes after StatsSA recently revealed the sharp contraction in economic growth of 1.2% in the first quarter of this year.
‘If the authorities do not introduce structural and policy reforms, we will not be able to attract the required investment in order to achieve sustainable growth,’ said Kaseeram, Associate Professor at the University of Zululand.
‘These reforms are required to boost business confidence, attract much needed foreign investment and reduce the cost of borrowing through an improvement of our credit rating, or at the very least, prevent us for attaining junk status.
‘To raise employment rates, especially among the youth, and improve the supply of electricity are the two most important structural reforms that government must undertake in order to make the economy more competitive.
‘Our present labour policies are too onerous for small, medium and micro enterprises that have the potential to mop up most of the unskilled labour, which constitutes the bulk of those who are unemployed.’
Saving sectors
Cronjé said central to the economic decline are the plights of mining and agriculture.
‘Both sectors are being undermined by hostile and counter-productive policy-making.
‘Ideology is still too dominant a factor in government policy-making and there is a reluctance to accept that ideology does not work in the real world.
‘Despite statements about the importance of growth, there is very little on the policy front to suggest that the Cabinet is serious about securing an economic turnaround.
‘What we would like to see in the next quarter is certainty around mining policy, changes to labour legislation – specifically the introduction of strike ballots, a reworking of foreign investment protections, and a complete redraft of pending expropriation legislation.
‘If these steps are not taken it is difficult to see how South Africa will avoid entering a recession, which would almost certainly trigger a sovereign rating downgrade by year-end putting the country into a sharply negative economic spiral.’
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