DUMA GQUBULE: Government and business need to expand their scope
22 October 2024 - 05:00
UPDATED 22 October 2024 - 09:20
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After presenting “Vision 2035: a Plan to Achieve Full Employment”to an SA Special Risk Insurance Association (Sasria)strategy session last week, CEO Mpumi Tyikwe asked me over lunch why I had said very little about the role of the private sector. I did not have time to give a full response, but the first point to make is that government and nobody else has the macroeconomic policy tools to take SA on the path to achieving full employment by 2035.
US public intellectual Noam Chomsky once said: “That’s the standard technique of privatisation: defund, make sure things don’t work, people get angry, you hand it over to private capital.”In SA, from 2009 to 2023, there was a crippling public sector investment strike as the government cut spending 25%. Everywhere, in cities and towns across the country, public infrastructure is collapsing.
Now there is an absurd view that we can financialise everything, including public services, infrastructure and nature, and that the private sector can provide the stimulus the country desperately needs. But markets are designed to cherry-pick prime customers and more than 80% of SA’s population is sub-prime and cannot afford to pay for public services and infrastructure.
The World Bank said in 2023 that 62.6% of the population lived below the upper middle income country poverty line.Soon, the private sector will be demanding subsidies to run fire stations and public parks and there will be a hierarchy of citizenship. The user pays principle disenfranchises citizens who have constitutional rights.
In health, according to Stats SA’sgeneral household survey, 15.7% of the population had medical aid cover in 2023. A breakdown by race showed that 71.7% of white people had medical aid cover compared with just 9.8% for black Africans. However, the latest Council for Medical Schemes industry report shows that only 22% of the people with medical aid had comprehensive cover.
This means the private sector provides comprehensive cover to only3.5% of the population. The rest of the population with medical aids have partial cover and hospital plans and have to incur large out-of-pocket expenditure. The industry’s so-called compromise position is an evil plan for government toforce all the people who would have contributed to the National Health Insurance fund to join medical aids. Since the private sector has already creamed prime customers and 78% cannot afford comprehensive cover, how do they expect the rest of formally employed people to pay?
The mind boggles that people are paid so much money to make proposals that will result in the continuation of healthapartheid. The recently launched government-business partnership said accelerated implementation of structural reforms could increase GDP growth to 3.3% in 2025 and create 1-million additional jobs by 2030. The private sector refused to set up a committee that would focus on jobs and decided to focus on a limited set of issues where it would benefit. What difference do they think 1-million additional jobs by 2030 will make in the context of a blazing inferno of 12.4-million unemployed people and a labour force that is growing by more than 700,000 people a year?
An average of 12international and local GDP forecasts show that the economy will grow 1.7% in 2025 and 1.8% in 2026. This means there will be no additional 1-million jobs. Next week, the medium-term budget policy statement will put an end to the partnership’s silly forecast that is based on implausible assumptions.
In the wake of the July 2021 riots, Sasria paid 20,000 claims totalling R31bn. SA will burn again if the government and business do not move beyond the limited ambitions of their partnership and come up with better proposals to grow the economy.
The private sector must look beyond its narrow interests and also develop policy proposals that will benefit all South Africans.
• Gqubule is research associate at the Social Policy Initiative. He writes in his personal capacity.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
DUMA GQUBULE: Government and business need to expand their scope
After presenting “Vision 2035: a Plan to Achieve Full Employment” to an SA Special Risk Insurance Association (Sasria) strategy session last week, CEO Mpumi Tyikwe asked me over lunch why I had said very little about the role of the private sector. I did not have time to give a full response, but the first point to make is that government and nobody else has the macroeconomic policy tools to take SA on the path to achieving full employment by 2035.
US public intellectual Noam Chomsky once said: “That’s the standard technique of privatisation: defund, make sure things don’t work, people get angry, you hand it over to private capital.” In SA, from 2009 to 2023, there was a crippling public sector investment strike as the government cut spending 25%. Everywhere, in cities and towns across the country, public infrastructure is collapsing.
Now there is an absurd view that we can financialise everything, including public services, infrastructure and nature, and that the private sector can provide the stimulus the country desperately needs. But markets are designed to cherry-pick prime customers and more than 80% of SA’s population is sub-prime and cannot afford to pay for public services and infrastructure.
The World Bank said in 2023 that 62.6% of the population lived below the upper middle income country poverty line. Soon, the private sector will be demanding subsidies to run fire stations and public parks and there will be a hierarchy of citizenship. The user pays principle disenfranchises citizens who have constitutional rights.
In health, according to Stats SA’s general household survey, 15.7% of the population had medical aid cover in 2023. A breakdown by race showed that 71.7% of white people had medical aid cover compared with just 9.8% for black Africans. However, the latest Council for Medical Schemes industry report shows that only 22% of the people with medical aid had comprehensive cover.
This means the private sector provides comprehensive cover to only 3.5% of the population. The rest of the population with medical aids have partial cover and hospital plans and have to incur large out-of-pocket expenditure. The industry’s so-called compromise position is an evil plan for government to force all the people who would have contributed to the National Health Insurance fund to join medical aids. Since the private sector has already creamed prime customers and 78% cannot afford comprehensive cover, how do they expect the rest of formally employed people to pay?
The mind boggles that people are paid so much money to make proposals that will result in the continuation of health apartheid. The recently launched government-business partnership said accelerated implementation of structural reforms could increase GDP growth to 3.3% in 2025 and create 1-million additional jobs by 2030. The private sector refused to set up a committee that would focus on jobs and decided to focus on a limited set of issues where it would benefit. What difference do they think 1-million additional jobs by 2030 will make in the context of a blazing inferno of 12.4-million unemployed people and a labour force that is growing by more than 700,000 people a year?
An average of 12 international and local GDP forecasts show that the economy will grow 1.7% in 2025 and 1.8% in 2026. This means there will be no additional 1-million jobs. Next week, the medium-term budget policy statement will put an end to the partnership’s silly forecast that is based on implausible assumptions.
In the wake of the July 2021 riots, Sasria paid 20,000 claims totalling R31bn. SA will burn again if the government and business do not move beyond the limited ambitions of their partnership and come up with better proposals to grow the economy.
The private sector must look beyond its narrow interests and also develop policy proposals that will benefit all South Africans.
• Gqubule is research associate at the Social Policy Initiative. He writes in his personal capacity.
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