In 2005 the National Treasury appointed an international advisory panel known as the Harvard group of economists to help identify binding constraints on shared growth, and propose policies to overcome them and monitor development. a recently released report of their findings, the group warned that the growth acceleration seen since 2004 may not be sustainable.
“To maintain overall growth and employment, the country will need to rapidly increase exports,” they said.
Looking at recent trends, the group noted that increased domestic spending on non-tradables such as real estate, finance and services has been financed through a rising current account deficit. However, the lack of investment in tradables shows that SA’s external borrowing is not being used to finance a capacity to produce exports with which to repay debt.
And growing the capacity to export, said the team of economists, goes hand-in-hand with job creation. With only 42% of South Africa’s working-age population employed and those not working being predominantly black, women, young and poorly educated, the group suggests a shift in focus, from ownership and management under BEE to job creation and skills transfer.
“The growth strategy of the Accelerated and Shared Growth Initiative for SA has to be based on the people that SA has and not the people it wished it had,” said the group.
Building a skills base
This does not mean SA should neglect its skills base, but it could turn the tide on mining, manufacturing and agriculture, the three sectors most intensive in unskilled labour, where the majority of jobs have been shed since 1994.
“High-skilled and low-skilled workers are strongly complimentary, not substitutes,” said the report. The shortage of highly skilled workers causes a lower demand for low-skilled workers. In agriculture the number of job losses in relation to the number of farmers who have left the sector since 1994 is testimony to this statement.
To grow exports and so allow the poorly educated and unskilled to participate in the country’s growth, the Harvard experts made a number of recommendations. “The relative cost and riskiness of labour relationships are more damaging to the tradable than the non-tradable sector.
In the non-tradable local market, costs are passed on to the consumer, but in tradable activities foreign competitors face a different labour code,” said the report. It suggests union strategy must recognise the trade-offs between higher wages for the already employed and greater employment creation, especially in the tradables sector.The report also notes infrastructure bottlenecks in transport and energy, highlighted by growing local demand.
“The economy has invested very little in transport and energy since the 1970s, and it shows. Whether it’s road, rail, port or pipeline congestion, or electricity shortages, the economy is clearly demanding an expansion of capacity.” and while suggesting weak municipalities should use national departments where local delivery falls short, the economists said government should adopt ISO 9000-type certification standards, and leverage the rich experience of the SABS to create standards of service and feedback mechanisms to allow the gradual improvement of selected government processes. – Jasper Raats
Wine worker of the year
Twenty-three-year-old Edwin Mathambo has won the Wine Cellars SA Cellar Worker of the Year award, a competition that was initiated two years ago to reward outstanding cellar workers for their dedication to the industry.
Mathambo is the right-hand man to Bonnievale Wine Cellar’s winemaker Esmarie Smuts and his responsibilities include winemaking and cellar management. Smuts said Mathambo is an asset.
“He has the rare combination of being able to flourish under pressure and also to work as a strong team member,” said Smuts. “His discipline and passion for work is encouraging to the rest of the team.” Mathambo regards his award as a great honour. “I’ve only been in the industry for five years and definitely didn’t expect something like this at my age,” he said. added that Smuts is an excellent mentor and that he has a great team that allows him to live up to his high standards.
Mathambo has completed the introductory course on South African wines through the Cape Academy and last year he visited France as part of the exchange programme between the Western Cape government and Burgundy. He dreams of becoming one of the world’s best winemakers.
From the short-list of 22 candidates, the other three finalists were Abraham Pretorius (Calitzdorp Wine Cellar), Johanna Damons (Robertson Winery) and Henry Links (Windmeul Cellars). – Glenneis Erasmus