time for take-off
Jobs summit: all talk, now for action
The jobs summit hasn’t delivered significant policy changes, but it has energised business and the government to tackle the jobs crisis together — something that could pay big dividends down the line
Anyone who was expecting last week’s jobs summit to deliver a grand bargain between business, labour and the government on policy reform that would shift the economy onto a more labour-intensive path would have been disappointed.
Those concerned primarily with economic efficiency and SA’s fiscal sustainability would have been equally dismayed by President Cyril Ramaphosa’s summit undertaking to place a moratorium on public sector retrenchments.
Nobody wants nurses, teachers, policemen and technical personnel to be axed — indeed, critical frontline posts should be filled urgently — but that is not where the fat lies in SA’s 1.3-million-strong bureaucracy.
There has been excessive hiring and salary creep at a managerial level over many years. Ramaphosa has now guaranteed these overpaid, midlevel pen-pushers sheltered employment — something the fiscus can ill afford.
Despite this, the summit still delivered for those hoping for a range of scalable, creative solutions to some of the blockages that prevent the unemployed from entering the economy.
"I’m really heartened," says Nicola Galombik, executive director of Yellowwoods and founder of the Harambee youth accelerator.
There are two main reasons why she thinks the summit will reduce SA’s 27% unemployment rate. First, the social partners have agreed to a focused, practical plan, complete with targets and a mechanism to hold each other accountable for delivery.
The agreed monitoring mechanism includes a presidential jobs committee — "the presidential jobs brains trust" — to ensure effective implementation of the summit agreement.
Second, the summit adopted several "breakthrough solutions" that will make it easier for young people to land their first job.
Critics complain that the 80-page summit framework agreement, signed by Ramaphosa and all the social partners, contains too many ad hoc projects when what is really needed are systemic policy reforms to reduce the cost of doing business, ease the skills shortage and make it easier for firms to hire and fire workers.
They doubt the summit will achieve its target of adding 275,000 jobs a year to the 300,000 the economy is currently creating.
But Business Unity SA CEO Tanya Cohen thinks the targets are conservative and "quite doable", saying the summit deliberately chose to "underpromise and overdeliver".
Galombik agrees that many of the new initiatives could have huge spin-offs in terms of job creation. She also believes that some do amount to systemic change, if not outright legislative reform.
A good example is the summit’s recognition that SA has to make it easier for young people to get credentials so they have just enough training to get onto the bottom rung of the work ladder. Then they can learn on the job.
Harambee has proved the importance of this approach through its "pathway manager", which focuses on transitioning young people whose skills can be quickly upgraded without formal study into jobs. It focuses on work-readiness and interview preparation and facilitates short courses, such as basic training for Word, Office and Excel.
"Sometimes you need a co-ordinated effort to address broken linkages in the value chain, not policy change," says Galombik.
She points out that small firms are becoming less labour-absorptive because of the risk that hiring a young person will not work out. Changing the Labour Relations Act won’t make this risk go away because it revolves around finding, supporting and managing an untried young person to perform successfully in a work environment.
Harambee’s pathway manager addresses this risk upfront. Though it’s not new, having the pathway model adopted by the summit strengthens Harambee’s ability to institutionalise and scale up what it’s learnt. It could also unlock some of the R16.6bn that flows annually through the sector education & training authorities into accredited training — funds used mainly to upskill people who already have jobs.
The model will be used to raise the employability of 1.5-million economically excluded young people by 2022. Of these, Harambee and its partners expect 500,000 to be placed in jobs.
The same kind of work-readiness and flexible entry-level skilling programmes will be used to expand the pool of workers available to the business process outsourcing (BPO) sector.
SA’s BPO sector is considered globally competitive, but only employs 40,000 people compared with 1.5-million in a country like the Philippines. The BPO sector agreed at the summit to a co-ordinated effort to create 50,000 more jobs over five years. This includes visa reform to make it easier for large BPO investors to set up shop in SA and import the scarce skills they need.
The summit was unable to resolve the issue of immigration reform per se, but urged the presidential jobs committee to do so within a month. Many international studies show that allowing skilled foreigners into a country creates more jobs for locals, but organised labour is sceptical.
Cohen, like Galombik, regards the summit as a success, with the caveat that the intention was never to agree on wholesale policy restructuring, given the three-month preparation time.
Unlike previous summits, in which business felt it was being pushed into trade-offs that it would end up trying to avoid, this time business was a part of the process. Indeed, most of the initiatives are joint programmes between business and the government.
"From a business perspective the biggest problem is the distrust between the public and private sectors," says Cohen. "The summit played a huge role in taking us forward on a common path."
She acknowledges that this doesn’t negate the need for some difficult conversations about the structure of the economy. There is a commitment to do so in time.
"As business we emphasised that we’re in a job-shedding phase and we have to look at how to restructure the economy.
"It won’t happen through this cluster of initiatives, but we’re still quite encouraged because there are new, innovative ideas and a willingness to work together for the common good," she says.
Among the 70 initiatives announced, a few stand out. These include:
• A R15bn-R30bn investment project driven by Sibanye-Stillwater to build a large agri-industrial cluster on the West Rand with training facilities and hostels for 3,000 people;
• A commitment to speed up the granting of water rights and registration of medicines to stimulate investment, including by multinational pharmaceutical companies;
• The lifting of red tape to allow the private sector to train 50,000 nurses over eight years;
• A project by the KYB Enterprise Incubator and the Gauteng government to create 2,400 early-childhood development centres as sustainable micro-businesses, delivering an approved curriculum to 24,000 children over two years; and
• A blended finance model by the Agricultural Business Chamber and the Banking Association SA to make up to R1bn a year in commercial bank finance available to match government land redistribution grants on a 1:1 basis to help bankable emerging farmers acquire land from willing sellers. The two partners have been trying since 2015 to get the government’s buy-in. The summit’s endorsement of the initiative should give it the political legitimacy to proceed.
Ann Bernstein, executive director of the Centre for Development & Enterprise, welcomes the rapprochement between business and the government and the creation of the presidential jobs committee, as it could mean jobs become a higher priority for the government.
She also acknowledges that some of the big projects could be significant. However, her view is that "SA doesn’t need fine-tuning on the performance of individual firms, sectors or value chains. Many policies need to be completely overhauled and, without this, SA remains trapped in a stagnant economy with huge unemployment."
In closing the summit, Ramaphosa said the only thing that matters is "implementation, implementation, implementation". Given SA’s poor record of policy execution, and the failure of previous engagements to drive real change, many delegates couldn’t have wished for the summit to have ended on a better note.
"We have to be incredibly vigilant about implementation. If we start squabbling or losing momentum I would be very disappointed," says Galombik. "If we could just implement a few of these initiatives effectively over the next two to three years it could create huge opportunities."