It is failure on the jobs front that is staggering.   Since the ANC came to power, unemployment (including “discouraged” work-seekers) has doubled from 3.7-million to 7.6-million, yielding a rate of 36%.   No doubt reflecting a view also widely held, Manuel recently told the Daily Maverick that “if we don’t at least double the size of our economy, then there won’t be labour absorption and then the big risk is that tens of millions of unemployed and frustrated young people will burn the country down”.

John Kane-Berman, the CE of the South African Institute of Race Relations, wrote an article  Social spending is now a permanent temporary job substitute which first appeared in Business Day today.


FINANCE Minister Pravin Gordhan is not the first minister to warn that “social spending is not a substitute for job creation”, but an interim measure.   Former president Thabo Mbeki, President Jacob Zuma and former finance minister Trevor Manuel have expressed similar sentiments.

Yet “social protection” spending has risen substantially.   It now constitutes almost 16% of the budget, compared with 9% when the African National Congress (ANC) came to power.   Although it is widely believed that growing “service delivery protest” shows that the ANC has failed to fulfil its promises of “a better life for all”, the increase in social grants, along with such things as free schooling, water, electricity and housing, suggest that the story of failure is a half-truth.

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When he was president, Mbeki suggested that 6%-9% average annual growth was needed.   Now we’re down to the 5% mentioned in Gordhan’s recent budget speech and which is targeted by the National Development Plan (NDP).   Gordhan said the NDP had highlighted the need “to reduce the cost of doing business for small and emerging enterprises”.   This has been a theme of innumerable previous budget and state of the nation speeches.   A “blueprint” for encouraging small business was in fact announced by the Department of Trade and Industry six months after the ANC came to power.

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A day or two later he challenged business to “come to the party”.

But the government itself is not actually at this “party”.   If it was, it would not be contemplating tighter labour law and punitive black economic empowerment proposals, or imposing 52% minimum-wage increases on farms, or threatening to inflict “strategic state ownership” on mining, or planning to compel commercial farmers to hand over some of their land to the state.

Gordhan said: “We recognise the key role that private companies play in our economy.”

The Treasury observed that job creation would depend largely on the private sector, which accounted for 77% of formal employment.

These are encouraging remarks, but until their implications for policy actually sink into the Cabinet and the ANC, social spending will remain the government’s answer to poverty and inequality for a long time to come — or at least until the money runs out.