President should re-examine idea that state does not create jobs – SACP

Alex Mohubetswana Mashilo |

11 February 2022

Party says the state, including the government in all spheres, is an employer of note in South Africa

SACP initial response to the State of the Nation Address

11 February 2022

The President said the South African economy benefited from a clear and stable macroeconomic framework in 2021. However, it was in the third quarter of 2021 when unemployment in the country rose to its highest level in our democratic dispensation, since 1994. The lowest unemployment rate in terms of the official definition that excludes discouraged work-seekers was in 1995. However, that was a whopping 16.5%. Unemployment increased to crisis-high annual rates of above 20% starting in 1996, the year in which the government adopted the economic policy called Growth, Employment and Redistribution (GEAR).

Since then, South Africa consistently failed to create employment to reduce the official unemployment rate to 20% and further down towards securing the right to work for all. Throughout, the bigger picture of unemployment represented by the expanded definition that includes discouraged work-seekers was consistently higher than the narrowly defined official unemployment level. When the expanded unemployment rate sky-rocketed to 46.6% in the third quarter of 2021, it affected a population of approximately 12.5 million active and discouraged unemployed work-seekers.

This is a disaster, a societal crisis and a hotbed of many of the social and political problems the country experienced. The immense majority of those affected are black, with Africans the overwhelmingly hardest hit. In terms of gender, at 51% unemployment rate for women is 8.2% higher than the unemployment rate for men at 42.8%. In terms of age categories, the youth is the most affected at 77.4% for those aged 15 to 24 and 55.3% for those aged 25 to 34.

Fundamental change


The SACP has been campaigning for a fundamental change in our economy. We therefore welcome the President’s acknowledgement of the need for it. However, there must be no policy space or instrument left without critical examination and scrutiny. If economic policy is based on science, no one can disagree that the unemployment crisis affecting the increased millions of the unemployed population reflects the failure of the macroeconomic framework enforced since 1996 as well as its continuing legacy.

There can be no fundamental change in the economy without a fundamental change in the macroeconomic framework under which South Africa experienced an increase in unemployment levels to crisis-high rates of above 20%, 30% and 40% since 1996.  This should be a key aspect articulated in the social compact the President said should include all South Africans.

To be fundamental, the change that South Africa needs must go to the root of the matter. This must include a major review of key policy areas or instruments, such as international trade and industrial policy, and cross-border capital transactions, monetary and fiscal policies. In industrial policy, it is crucial to strengthen sectoral master plans, especially their employment impact, and to consolidate a comprehensive industrial policy and strategy, to drive industrialisation. This needs infrastructure support, but without an enabling macroeconomic framework, industrialisation will more likely face the failure it has seen since 1996. Instead of industrialising, South Africa has been experiencing de-industrialisation.

While infrastructure development is crucial, it must be pioneered in sustainable ways, including finance. Financialisation of infrastructure will create problems, while the sections of finance capital that will benefit from it will laugh all the way to the bank.