LETTER: Private-sector led growth must come first

Former senior Treasury official Andrew Donaldson has called on the government to create more public make-work programmes (“‘Think big’ about jobs projects, says former Treasury official Andrew Donaldson,” May 25).

Donaldson suggests that programmes such as the presidential employment stimulus should be thought of as permanent programmes rather than temporary relief measures, adding that more such programmes are needed to balance spending on social grants.

This is missing the point about SA's joblessness crisis entirely, which is this: a host of government policies is keeping the economy crawling along at well under 2% growth, far too little to create new jobs at the scale required.

The moribund economy cannot sustain state spending at existing levels, as our enormous deficits show; further raising spending to subsidise superfluous jobs will limit growth in the revenue-generating private sector even further.

What, then, is to be done? Three things, all of which recognise that private-sector led growth must come first.

First, adopt a no-holds barred approach to ramping up electricity generation fast. Give Andre de Ruyter and his team at Eskom the resources and leeway they need to fight corruption, theft and vandalism; allow them to recruit the critical skills they need, whatever their nationality or skin colour; and let them go after nonpayers hard, to collect the money they are owed for providing a service.

This won't be enough: also move with alacrity to bring independent power producers onstream at short notice. Things are moving far too slowly considering that we are already in a crisis situation and the economy cannot grow without sufficient electrical power.

Second, protect property rights. Abandon the hugely damaging expropriation without compensation (EWC) drive, including the introduction of expropriation courts under the Land Court Bill. Desist from prescribed assets. Move away from the National Health Insurance, which will nationalise the private health sector and make it as dysfunctional as the public health sector. Restore the bilateral investment treaties with our most important trading partners and halt the protectionist localisation and indigenisation policies that cut us off from global markets.

Third, remove the red tape that makes companies loath to hire people. This includes scrapping race-based hiring policies, ending the involuntary extension of bargaining agreements to non-parties, and revising the minimum wage — currently set at the same level as SA's median wage, making it the world's highest minimum wage by that measure. To improve education, redirect the education budget to means-tested education vouchers that people (or their parents) can redeem at any education institution, public or private.

Instead of going for growth, government is doubling down on counterproductive policies. For instance, the Employment Equity Amendment Bill currently making its way through parliament will allow the labour minister to impose binding race quotas, varying by region and industry sector, on all private companies, a move that may well see unemployment breach 50% on the expanded definition.

The Institute of Race Relations has started a petition urging the president to withhold his signature from the law on constitutional considerations when it is presented to him for his assent. No amount of government make-work programmes can help the unemployed in the face of such policy assaults.

John Endres, CEO, Institute of Race Relations

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