SA needs skills-focused education to beat unemployment, says World Bank
The legacy of exclusion has aggravated policy uncertainty and reduced growth, says the institution's latest diagnostic report
SA needs a stronger education system to address the skills constraints hampering employment, the World Bank says.
This comes ahead of the unemployment statistics, which are expected to be released on Tuesday.
The legacy of Bantu education has created a skills shortage that has contributed to low growth, productivity and competitiveness, as well as persistently high unemployment, says a World Bank systematic country diagnostic report for SA released on Monday.
The bank emphasises that the National Development Plan (NDP) could only be achieved by improving the quality of education. The NDP’s goals are to eliminate poverty and reduce inequality by 2030. This calls for sustained growth of 5.4% and a 6% decrease in unemployment by 2030.
According to the report, the legacy of exclusion has aggravated policy uncertainty and reduced growth. It has also kept prices high, especially for the poor, and does not create jobs quickly enough to reduce the high levels of unemployment.
Unemployment remained at a historical high of 27.7% for much of 2017. Analysts expect the figure to remain relatively unchanged despite a slight increase in the number of jobs.
The economy was not yet in a position to suddenly absorb more labour, said BNP Paribas economist Jeff Schultz.
Old Mutual’s head of economic research, Johann Els, said SA’s economy was not growing enough on a sustained basis to drive job creation.
Among the challenges that need to be addressed are political and policy reforms, an increase in confidence and a pick-up in President Cyril Ramaphosa’s investment drive.
The World Bank adds that Ramaphosa’s plan to create a social compact with business, labour and civil society is an "essential foundation" for overcoming exclusion. As part of that plan, Ramaphosa is targeting $100m in new investments over the next five years in order to accelerate job creation.
But even with improved growth and more investment, Els said SA’s skills constraints were a long-term issue. "We’ve had 20 years to fix the education system, but we haven’t because the NDP hasn’t been implemented. There are fantastic policies, but we need implementation," he said.
Department of Monitoring, Planning and Evaluation secretary of planning Tshediso Matona admitted that SA could fall short of the NDP goals. However Matona maintained that the plan was realistic, despite low economic growth undermining the efforts to reduce poverty and inequality.
"If effort is made to restore and accelerate economic growth, the triple challenges of high poverty rates, inequality and unemployment will be addressed," Matona said.