OECD calls for ‘serious structural reforms’ in SA
SA needs at least 2% growth to begin to tackle unemployment and serious structural reforms
SA needed at least 2% growth to begin to tackle unemployment and serious structural reforms, the Organisation for Economic Co-operation and Development (OECD) said on Monday.
OECD secretary-general Angel Gurria said ensuring a better future for all South Africans required increased access to higher education, a stronger and fairer labour market, deeper participation in regional markets and a regulatory framework that fostered entrepreneurship and allowed small businesses to thrive.
According to the OECD Economic Survey of SA, released on Monday, SA’s growth forecast for 2017 is 0.6% and for 2018 it is 1.2%. This comes after the Reserve Bank cut its economic forecast for 2017 by half from 1% to 0.5%.
"That’s not going to make or break SA. It’s double last year but it’s half of next year and it’s still very low," Gurria said.
"You need opportunities to come up. Where are they going to come from? We need a cruising speed for growth that is much higher than we have today in order to absorb all the young men and women who are seeking opportunities."
SA’s unemployment rate was at a 14-year high of 27.7% in the first quarter of 2017.
Gurria said SA had a paradox that required skills development. Red tape remained a burden on small businesses and the quality of education and lack of experience contributed to gaps in entrepreneurial skills.
"You have a bunch of people unemployed and at the same time, companies are complaining they can’t get the necessary skills," Gurria said.
"How are you going to have a foreign investor come to SA if they don’t think you have an abundance of skills?"
OECD recommendations include opening vital sectors, introducing a national minimum wage and developing apprenticeship and internship programmes. "Low growth has kept unemployment high at 27% … [but] even people with jobs have this phenomenon of in-work poverty because the wages are so low. We need to open up that conversation."
Finance Minister Malusi Gigaba said the OECD survey was released at an opportune time when SA was tackling unemployment and inclusive growth through the 14-point action plan, which "makes a genuine attempt to respond to some of the challenges raised in the [survey] to provide political and policy certainty, raise consumer and business confidence, reignite growth … and thus begin the path of raising our growth levels faster, bigger, inclusively and on a sustainable basis".
Gurria welcomed Gigaba’s action plan. "It’s a very important and interesting beginning … because it is so comprehensive. It shows the arrival of Gigaba meant a new approach with clear deliverables."