CCMM515 | Bringing Along Change | Socio-economic Challenges of South Africa and Policies That Could be Implemented | | John JH Scheffer 22770933 | |

14 April 2015 Class Participation Assignment for CCMM515 |

Introduction
Since the dawning of a new era in 1994 South Africa has faced many challenges. Naturally change brings a long a new frontier and as one would expect many rough terrains. South Africa has thus far been a colossal beast charging through the constant strife of these rough terrains despite the constant lashing of its riders ever since it received its independence, however many fear the last straw is about to be placed on this beasts back.
Current affairs threaten the future economic viability of South Africa and although recent assertions have been made to ensure the economic growth, the governments have done little or nothing to achieve these goals. Whether because of sheer incompetence, narrow vision focused on the past or the lack of proper management is arguable however there is little to be achieved by discussing the shortcomings of the government. This essay focuses on a more challenging viewpoint where the current socio-economic challenges of South Africa will be discussed and the policies that could be implemented to resolve these issues. The propositions in this paper are proposals that would be suggested for implementation as policies to resolve socio-economic issues if I were president.
The Unemployment Issue
Unemployment has been a large issue that South Africa has had to deal with in the past years. It is generally accepted that South Africa has one of the highest unemployment rates in the world. Although it is difficult to prove the validity of this claim it is not difficult to see that South Africa has quite a dilemma when addressing the labour force issue. If the facts are placed on the table South Africa is currently dealing with an unemployment rate of 25% which is a considerable number when taken in to account a population of roughly 15 million people.
According to Arora and Antonio Ricci the unemployment rate in South Africa in 1994 is estimated to have been around 20% and have escalated at around 1.25% annually while the labour force has shown a growth of 4% annually. According to other resources it might have been as low as 7% before 1994, however this may be largely inaccurate since a large portion of the population was not taken into account when statistical analysis was done. It is not difficult to see that South Africa is dealing with a large unemployment issue if these numbers are taken into account, however the question remains: how should this issue be resolved?
There are specifically two issues that need to be addressed: 1. South Africa has one of the highest labour costs in the world and 2. South Africa’s labour legislation allows for too much free-play on behalf of unions.
According to Trading Economics (2014) South Africa has a Labour Cost Index Point of 376.5 compared to other countries such as South Korea and Australia which rank between 90 and 110 Index Points. Furthermore South Africa has allowed Unions too much control of the labour market and this has to a large extent influenced the first issue as well. This has caused businesses to take into consideration nonsensical union costs and the costs of strikes etc. In May, 2013, Labour Minister Mildred Oliphant revealed that a total of 17.3-million working hours were lost in 2012 to illegal or unprotected strikes. 99 strikes were recorded, of which nearly half were illegal or unprotected. Of a total of 118,215 workers involved in these, 100,847 (85%) were in the mining sector.
The proposed policy here is that the Labour Relations Act needs to be revised, namely bargaining procedures and protection against dismissal. Allowing fewer powers to unions and employees for bargaining will allow for affordable labour which should directly affect the employment rate as businesses will be allowed to hire more employees at cheaper rates. This will also not limit the financial motivation of entrepreneurs starting small businesses. Of course this does not mean completely removing these laws but allowing employers more control over employees will allow for economic incentives and ultimately economic growth.
Another policy to help economic growth is to create economic incentive for entrepreneurs by dedicating monies towards investment of entrepreneurial ideas. This is already being done however it has for the large part been poorly implemented. However if the correct policies were implemented and proper steps were taken that provided entrepreneurs not only with the funds but also the tools and education to complete tasks this could lead to future economic growth.
Lastly, it is of a strong conviction that the Broad-Based Black Economic Empowerment Act, Employment Equity Act and generally speaking Affirmative Action has been largely unsuccessful in implementation thus far. A large portion of managerial positions and ownerships still pertain to white South Africans. This begs the question: are these policies still worth pursuing? It would seem that the current government system has changed a pursuit of correcting previous political wrong doings into a personal vendetta. This has caused the goals of the National Development Plan to focus largely on this grudge rather than on attaining the goals as set out by the UN. Thusly too much resources, time and meaningless effort has been spent trying to correct the previous injustices where the population largely consists of 13% white people and 73% black people. Naturally a person is forced to ask themself does having the majority of the 13% employed really pose a threat or does it imply a proper functioning society, where it can be naturally assumed that the minority will have the majority of jobs.
Schooling Our Future
Education is a challenge that South Africa has tried to address but has failed to overcome since 1994. The regular change in curriculums alone is witness to the failure of a quick-fix solution. Thus far there has been compensation for the low pass rate of grade 12 students by generally lowering the standards. This in itself was not a solution but a quick way to deal with a serious lack of education in the country. However the realization has come that South Africans still have a huge problem when it comes to education.
Currently South Africa sits with a grade 12 pass rate of 41.7% which is clearly indicative of a lack of proper education. Furthermore Graeme Bloch claims that only a staggering 35% of South Africans are literate. These numbers are naturally shocking and clearly subject to a much larger problem which is not only lack of proper education but lack of proper implementation.
To truly resolve the issue of education a policy needs to be implemented with a proper curriculum that is attainable for both teachers and students. Furthermore teachers need to be better prepared to school students. It is not so much a lack of education in teachers but a lack of preparation in the specific curriculum. The constant changing of curriculums in the past years has created a barrier to adaptability for teachers and has caused much confusion in the learning system. A policy needs to be implemented where teachers are specifically prepared to teach a curriculum that is consistent, attainable and that works.
Lastly, the budget for education needs to undergo a transformation as well. Large funds have been delegated to the department of education in the past however this is not enough. Education is a function that equips the people of the future with the necessary tools to attain the infrastructure that South Africa wishes for. The current government has not yet realized the full weight of this statement and has largely been dumping funds into a broken system that does not produce results in an effort to achieve goals without the understanding of the importance of reaching these goals. More funds should be provided to build schools, educate teachers and research new methods. It would also be beneficial to increase the salary of teachers in an effort to motivate and create more satisfying state of affairs for teachers.
New Horizons for Businesses
South Africa’s growth in the past has been highly resources concentrated and thusly has moved South Africa into a direction of possible nationalization, land ownership policies, export and import policies and once again strict labour laws. All these policies have been noted to initiate much controversy and debates around them have kept much of these policies from being implemented without delay. This causes one to question whether the country should be moving in such a direction at all. Inclusive in this reasoning is the validity of whether these policies would in fact stimulate any economic growth or rather cause businesses and economic incentives to languish.
This all motivates towards another strategy rather than the previous controversial movement. The policy proposed is rather one that will allow for employee shared ownership, remove policies having an effect on investments (international and national), privatizing of public departments (for example Eskom), and stricter environmental policies. Employee shared ownership has proven in the past to motivate employees towards better production, not withstanding that personal interest in the organization motivates participation in decision-making and the sustainability of an organization. Implementing policies that allow for employee shared ownership will also resolve the land ownership issue as farmers possessing untapped lands will be allowed to give shared control to employees to govern farming instead of the governments current ploys to replace ownership of farms.
Furthermore any policies on foreign and international investments need to be revisited and possibly removed. These policies have thus far created much doubt amongst investors and only caused a decline in economic growth. It would also be beneficial to privatize many of the public departments especially since the current system has proved unable to reach its goals in service delivery. Privatizing departments such as Eskom will allow not only for investment but innovation and growth to take place. This can also stimulate competition between companies providing services and competition will ultimately mean a growth in the economy. There is also a strong indication that this may solve another problem South Africa has been dealing with: the uneven performance of public service. Lastly stricter environmental policies need to be implemented, not limited to the reasoning that South Africa has been tapping into resource areas without much regard for the impact on the environment but including the innovation a growth of new markets that these policies might encourage.
A Nation Divided
The last challenge to be discussed, although not the last challenge South Africa faces, is one that South Africa has for a large part of its history carried around as pulpous disease. The diverse cultural heritage of South Africa adds to the beauty of its nation but has unfortunately for the most part also added to much of its strife. Since before its independence in 1910 South Africa has been struggling with the issue of uniting its many different cultures and currently it is still dealing with this challenge. So the question is proposed: how do you unite such a nation?
This is rather a difficult question to answer and one that South Africa’s governments have been trying to deal with for much of the past few centuries, and it is arguable whether this is really a question worth answering. The proposition is made that it would be better perhaps to assume that South Africa will for the large part of its future stay a divided nation and therefore it would be better to focus on the many different complications of this division.
According to Leader.co.za one of South Africa’s leading socio-economic challenges is its divided society. This has added many other problems that South Africa faces, this being poor health care, poor distribution of health care and other resources, spatial issues that broaden the wage gap, and poorly located infrastructure.
In dealing with these situations policies need to be formed that will better regulate the income of taxes, this will decrease corruption to an extent and also offer more funds to be distributed to such the health and education sectors. Once again privatizing these public sectors would also be beneficial to both the economy and the country; however care should be taken to create policies that also regulate the supply and costs of health care and education.
Policies also need to be implemented that restructure the management systems. The current system is failing miserably and this is due to a large extent to the nepotism in the leading parties. It would be better to restructure the system completely and employee new people into positions, it would be costly but offer great gain in the future.
Conclusion
South Africa has been facing many socio-economic challenges since its independence in 1910, however it has dealt with these issues rather comfortably thus far. Currently however it would seem that the bar is bending under the weight of corruption and poorly implemented policies. Change is an opportunistic challenge; it is what is done with opportunity that determines the success of the challenge. Perhaps change is what the nation needs once again.

Bibliography
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ARORA, V. & ANTONIO RICCI, L. 2006. Unemployment and the Labour Market. https://www.imf.org/external/pubs/nft/2006/soafrica/eng/pasoafr/sach3.pdf Date of access: 1 April, 2015.
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