Displaying items by tag: Poverty

High and growing rates of unemployment have been a source of great frustration to policy-makers. Although exports have been buoyant and the 1990s has been the first decade of sustained growth, unemployment has been rising by 2 percentage points each year. If the expanded definition is used, the rate of unemployment reached 41.8% in September 2002.

In a context where the majority of the unemployed are unskilled and the tradables sector has been shedding rather than absorbing unskilled labour, less orthodox avenues of employment creation require investigation. To that end, this paper examines the prospects for employment creation through meeting basic needs. While the latter is an imperative in its own right, because the industries that provide basic needs are non-tradable and have high employment multipliers, particularly of unskilled and semi-skilled labour, the expansion and re-orientation of government expenditure in this area unlocks opportunities for employment creation. The central contention of this paper is that industrial strategies for each of the basic needs sectors are required to realise their potential for employment creation. Three sectors are analysed from this perspective: construction and building, social services and food distribution. These sectors are aligned to existing government programmes where expenditure is projected to increase significantly over the next three years. This means that either through the direct provision or procurement of these goods and services, government has a powerful policy lever to influence the pace and pattern of employment creation in these sectors.

Ultimately, employment creation strategies that are aligned to industrial strategies and that fulfil government's obligation to meet basic needs are more sustainable than the short-term job creation strategies that dominate policy interventions at present. A preliminary analysis of the form that such industrial strategies could take in the construction, social services and food sectors is presented as the basis for a more comprehensive research agenda.

This paper evaluates the impact of globalisation on income distribution in South Africa. There are broadly two ways in which it can affect income distribution and help to address poverty. On a macro level it can stimulate economic growth, create jobs and provide salary income to people previously not employed. In a more direct way it can impact on wages. If unskilled wages increase relative to skilled wages, it should lead to a more equal distribution. Evidence for the period 1993 - 2001 indicates that South Africa experienced highly volatile capital flows, in the form of portfolio flows, with disruptive effects on the exchange rate and interest rates. On a micro level, the opening up of trade led to considerable job losses, especially semi- and unskilled workers. These were brought about mainly by the increasing importance of technology. Job losses because of import penetration were not as significant as could have been expected. On the other hand, exports did help to create jobs, but not enough to offset the negative impact of the previous-mentioned two factors. No evidence could be found that salaries of unskilled workers increased relative to highly skilled workers. Globalisation can only lead to a more equal distribution of income in South Africa if it succeeds in creating jobs and this can only happen if the skills level of our workforce meets the conditions of the market.