FOR South Africa to stimulate the economy, some of the local government departments will need to be more innovative, says George Sebulela, president of the South African United Business Confederation (Saubc).
Sebulela was speaking to Business Report on challenges facing the youth in the country, who are battling to enter and succeed in the local economy because of the country’s low economic growth.
As an example, he said the Department of Trade, Industry and Competition could offer big tax incentives to those who invest in the local economy.
“Playing devil’s advocate, I think about saying all the companies in the industrial area of Babelegi – a special economic zone – will not pay tax for the next 10 or 20 years. We want their money in South Africa, so that they can create jobs. That is what we want and not not only to collect tax. Anyway, we are not collecting it (tax) now.
“Rather than just relying on the SA Revenue Service (Sars), the mining industry and other industries, let us create jobs and skills. Let us not impose tax in special economic zones. One just puts their business there and takes the income at 100 percent. If you are still saying people must pay tax, they do not see the benefit of investing,” Sebulela pointed out.
The other challenge was that South Africa’s currency was very weak against other currencies.
“An investor coming with dollars to invest in the rand will see low returns. It will take a long time for them to recover their investment,” he said.
“Many, young people are under severe pressure and struggle within South Africa’s labour market.
“At the beginning of June, Statistics SA said the youth in South Africa continued to be disadvantaged in the labour market, with an unemployment rate higher than the national average.
According to the Quarterly Labour Force Survey (QLFS) for the first quarter of this year, the unemployment rate was 63.9 percent for those aged 15 to 24, and 42.1 percent for those aged 25 to 34 years, while the current official national rate stood at 34.5 percent.
The agency said that although the graduate unemployment rate remained relatively low in South Africa compared to those of other educational levels, unemployment among the youth continued to be a burden, irrespective of educational attainment. Year-on-year, the unemployment rate among young graduates (aged 15 to 24 years) declined from 40.3 percent to 32.6 percent, while it increased by 6.9 percent to 22.4 percent for those aged 25 to 34 years in Q1, 2022.
Stats SA said South Africa had more than10 million young people aged 15 to 24 years and, of these only 2.5 million were in the labour force, either employed or unemployed. The largest share (7.7 million or 75.1 percent) of this group of young people were those who were out of the labour force (ie inactive). The main reason for being inactive was discouragement; that is they had lost hope of finding a job that suits their skills or in the area they reside.
Some 37 percent of this group were disengaged from the labour market in South Africa. According to the agency, participation in employment, education or training was important for the youth to find employment and achieve self-sufficiency. Of the 40 million working age population in Q1: 2022, more than half (51.6 percent) were youth aged between 15 to 34 years. The current national absorption rate was recorded at 37.3 percent and remained lower for young people at 9 percent among those aged 15 to 24 years.
Sebulela said South Africa needed to bring the right people to lead the government, and replace those that it believed were not.
Gone were the days, when the country could have people who were not suitable for jobs due to some kind of favouritism and tokenism that existed in the structures.
“You need to bring the right people who are innovative, progressive, have the right qualifications and experience to lead those particular jobs,” Sebulela said.
He said the same principles should apply to the government that applied in the corporate sector when employing someone, that of a candidate driven by experience, academic qualifications and the value you can add in that industry.
The same must apply to the government, because gone are the days of cadre deployment, which “I think is being abused. It is now populism and no longer about experience and skill”.
To grow the local economy, the country needed a multi-facet of different skills and departments working together on the basis of common values.
“If you are going to have people who are unqualified, inexperienced, lack vision and leadership, then you have a problem. Even when others come with innovative, technical solutions that kind of person does not understand those. Then you cannot build a progressive society like that.”
Sebulela said there were various policies that needed to be challenged like the Public Finance Management Act, so that the country could now create a machine that works and is not an obstacle.
“We need policies that are pro-active and that can be implemented,” he said.
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