The recent row over the VAT increase obscured some of the real issues which go to the heart of the economic policies which have added layers to the mountain of unemployment which disfigures our national landscape and have cratered our economy, writes Tony Leon.
Any sentient South African who watched the 1988 comedy movie A Fish Called Wanda grimaced with recognition.
This happens at the end of the film when the audience is told, and duly chortles, that the arch-villain, Otto West, ends up emigrating to South Africa. And is chosen as the apartheid government’s Minister of Justice.
It was bitterly ironic that a system founded on profound injustice had a ministry proclaiming its virtuous opposite.
Today, nearly 40 years later, we have, as Freedom Day affirmed, and as our Constitution reflects, ditched apartheid, embraced non-racial democracy and signalled that the adage “justice for all” is our national calling card.
Well, that is the theory of the case at least. The reality is startlingly different. We might have left behind the ugly carapace of apartheid but have retained, in our new age, the old idea of Cabinet titular euphemisms and decided that the best antidote for racism is more racism.
‘A distinguished politician’
Cue here, on the eve of the next public holiday (Workers’ Day on 1 May), that we really do have a minister whose title is Minister of Employment and Labour.
No ordinary legislator is the incumbent, Ms Nomakhosazana Meth MP. According to her department’s website, Ms Meth is “a distinguished South African politician”, holding various certificates, who possesses “a wealth of knowledge and expertise, and solid background in public administration and passion for social justice.”
There is no mention in this hymn of praise that Ms Meth has ever held any position outside of government and never ventured forth into the private and business sector where most jobs and employment creation exists.
Historian Paul Johnson once described the “great human scourge” of the twentieth century as being “the professional politician”. The curse lives on and is not confined to South Africa either, well into the first third of this century, too.
Still, absent a background from the world outside of government work, does not of itself disqualify the minister from having a strong view on the hideous scar of unemployment, especially when her ministry’s sole purpose is the opposite: employment and labour.
Weeks after she was installed in office last July, a report revealed that unemployment had hit a record high of 8.38 million people in search of work who could not find any job. Of a labour force of 25 million people, 33.5 percent were unemployed; on the expanded definition (which includes those who have given up the attempt to find work) the figure rose to 42.6% (or around 12 million people).
These statistics—described by analyst Ann Bernstein as “the worst unemployment crisis in the world” are worth reprising. They predate the carnage likely to happen on the employment front here when the Trump Tariffs, our likely exit from AGOA, and our revised downward GDP growth rate forecast kick in.
But at the time when these deadly statistics were published, there was no comment from Minister Meth and certainly no remedial action, and no hint that any of the policies which aggravated unemployment were under review. Or, heaven forbid, would be scrapped.
The recent row over the VAT increase, now shelved courtesy of a court case initiated by the DA and EFF, obscured some of the real issues which go to the heart of the economic policies which have added layers to the mountain of unemployment which disfigures our national landscape and have cratered our economy. A monument to failure and a disgrace in our fourth decade of democracy.
Collective responsibility
These certainly lie outside the control of the misnamed ministry of employment and labour, though as an executive member, Ms Meth – alongside her Cabinet colleagues – holds collective responsibility for them.
Yet, while the front story right now is the abandoned VAT hike and fiscal framework, the background to it was a row between the two largest parties in the GNU, the ANC and DA. These relate to steps to reform the economic conditions which not only aggravate unemployment but choke off the levels of growth which are needed to dent it.
The DA suggested that in exchange for votes to pass the Budget, it required scrapping of policies which impaired growth from localisation to a relook at public procurement, accelerated action for operation Vulindlela reforms, a comprehensive review of public spending and private sector participation in ports of Cape Town and Richards Bay. And as a downpayment on growth and thus reducing unemployment, a decrease in the tax burden over next two years.
None of this touched on the core of ANC’s failed policies to date but at least suggested that even within the stifling confines of state orthodoxy, some reforms were both overdue and in order.
Quite how this modest list could be called “extortionate” as Songezo Zibi, head of the two-seater Rise Mzansi, dubbed this ask is mind-boggling. Though according to veteran columnist Peter Bruce, Zibi is Cyril Ramaphosa’s favourite opposition politician, in line to be next finance minister.
Since the incumbent minister Enoch Godongwana, once hailed as hero by the markets, is naked in the arena where finance ministers stand or fall: the issue of credibility. His whoppers on the Budget, and two failed attempts to pass one, his risible defence in court and humiliating retreat on VAT. It’s a long list. To which we can add that he now has a growth forecast which evaporated even before this Budget passed. (The IMF slashed Godongwana’s rosy projection by 50%) His credibility is shredded; the once admired national treasury, which needs to find ever more buyers for our sovereign bonds, has also not emerged unscathed.
Change of minister needed?
Perhaps a change of personnel at the top might help. But continuing with the same policies which landed us in this deep ditch won’t. Especially if the chosen one simply doubles down on the failed ideologies and dogmas of the ANC. Or dismisses even moderate changes to them as “extortion”.
Back to our minister of employment and labour. To be fair to her, she has not been idling away her time as more than 12 million of her compatriots have been rendered jobless.
This month she gazetted draft regulations which will affect no fewer than 18 economic sectors and any business employing more than 50 people. For example, it requires, using the euphemism “targets”, that within five years, that “white males” may not constitute more than 4.5% of the “skilled technical” category in 12 of the 18 sectors. Fines for noncompliance range from 2% to 10% of turnover of the “offending” company.
On their face, these are unconstitutional since dressing up a quota as a “target” does not meet our courts’ disfavour of racial quotas on the basis that these offend against the constitutional promise of equality and dignity. The regulations also ignore basic economics, intrude the state into every nook and cranny of business and disregard even a schoolboy understanding of the laws of supply and demand. Whoever drafted them, like the minister in charge, clearly has never run or managed a business enterprise.
Doubtless, like other flights of ideological fantasy, such as NHI and expropriation without compensation, these regulations tell us a lot about the thinking at play in the ministry whose entire raison detre is to create employment and not increase unemployment.
Wholesale destruction on the cards
Here, the view of analyst William Saunderson-Meyer, who did a deep dive into the new regulations, is very telling. He writes in Politicsweb:
“The result will not be the transformation and empowerment imagined by the government and the Black Business Forum. Apart from adding to the economic deadweight of surly form-fillers and officious inspectors, the only employment boost will be to the lawyers, accountants and consultants required to help companies implement B-BEE regulations, as well as inevitably circumvent them.
“The end result will be wholesale destruction of jobs, with the DA estimating that 600 000 jobs will be lost. Foreign companies will slowly divest or at least put expansion on hold. Cape Town labour lawyer and former shadow Minister of Labour, Michael Bagraim, tells me that he has already been told by half a dozen international companies, each employing on average around 100 people, that they would “rather shut shop” than comply with the regulations.
“Especially concerned will be the more than 600 United States companies employing over 200 000 people, operating in South Africa. The bulk of them are mid-level concerns that lack the political and financial heft of the giant multinationals to swallow the costs of compliance and ride out the legal and reputational storms they will face back home.”
Like the movie villain in A Fish Called Wanda you can at least laugh through the tears of reality. And at least our belief in euphemism holds fast.
Recently, President Ramaphosa intoned, “South Africa is indeed open for business.” Obviously, his Minister of Employment and Labour never got the memo.
