If you could sharply improve SA as measured by one metric, which metric would you choose? Why?

The intersection of our politics and economics resembles a traffic circle where potholes block exits and the signposts are obscured by political placards proclaiming platitudes. Despite surveys identifying jobs as the voters’ top concern, our economic debates fixate on growing GDP while the loose relationship between job creation and GDP growth attracts modest attention. 

Economists anticipate prolonged economic wobbling amid ultra-elevated unemployment, yet we lack workable plans for growing both jobs and the economy. Instead, the ANC remains electorally dominant despite the party continuing to rely on messaging that emphasises the legacies of apartheid, particularly inequality. 

ANC support traces to its past accomplishments and its current use of state resources to spread patronage. This is expected to again be sufficient to save the former liberation movement from being ousted from the Union Buildings. If our thirty years of experimenting with democracy hasn’t produced a functioning economic dialogue, might a single benchmark provide sufficient clarity and focus to spur workable solutions? 

While other governments would have initiated dramatic policy corrections long ago, our now deeply entrenched youth unemployment crisis has been tolerated as collateral damage from the ANC’s quest to control the economy. Therefore, youth unemployment is a formidable contender for the metric we should most want to improve.

How we measure youth unemployment conforms to international norms but there are pros and cons in using standardised economic metrics. While standardisation adds tremendous value by supporting comparisons, designing a specific solution requires testing a specific diagnosis.

Permanently marginalised

In every country, some healthy young adults will become permanently marginalised; however, in all but the most troubled economies, the numbers will not be significant. Conversely, the portion of young adults being permanently marginalised in South Africa is so outrageously high that it undermines economic prospects while threatening the nation’s stability.

In a healthy economy, remaining unemployed several years after leaving school is rare and, with much persistence, such jobseekers can still expect to find employment with reasonable prospects. As unemployment is the norm among our twentysomethings, a majority of them are already, or will eventually become, long-term unemployed. Then most will become permanently marginalised while many will turn to crime. 

There aren’t plausible scenarios whereby most of these people eventually become meaningfully employed. Employers will consistently favour younger job applicants or those with experience − and high absorption of new-entrants into the labour markets is not anticipated by anyone anytime soon.

Whereas precision remains elusive, we can grasp the big picture. Roughly a million South Africans leave school each year and among those seeking employment about 40% will succeed within a couple of years. Those who remain jobless will include many who never sought employment or gave up. Therefore, each year the number of young adults entering the queue that leads to permanent marginalisation is in the vicinity of a half million. A modest portion of them will beat the odds and eventually find meaningful employment while most will not.

Many millions of young South Africans have already been condemned to being permanently marginalised economically. A conservative estimate would suggest that each year this group is expanding by at least 300,000. 

Some will bristle at the suggestion that people’s life prospects can expire in their twenties but out of a thousand people who remain unemployed, say, ten years after leaving school, very few will ever achieve anything resembling their potential. Shortening the timeframe to seven years changes little. 

Other countries as developed as South Africa need not bother tracking how many permanently marginalised young adults they have because they have so few. We are an outlier in this regard to an extraordinary extent. 

The number of “young adults permanently marginalised” should be our most thoroughly scrutinised metric. 

Liabilities of the state

Commentators attribute our economic stagnation to factors such as high interest rates. Meanwhile, most of our young adults, our most valuable asset, have become liabilities of the state, as so many of them rely on grants to eat. How did this happen?

Corruption and incompetence played significant roles but the core explanation is that the landscape of our political economy is shaped by the ANC framing its electoral strategy around patronage. The deleterious effects of this on employment, poverty and GDP data are blurry. If, however, we had been tracking the epidemic of twentysomethings being permanently marginalised, we would have been much quicker to appreciate how and why our economic policies were hopelessly misconceived.

Tracking permanent marginalisation spotlights why neither healthy economic growth nor adequate employment growth is reconcilable with the ANC’s localisation fixation. When a massive portion of a country’s young adults are becoming permanently marginalised, a localisation-focused policy response will be profoundly counterproductive. This is amplified by how economic growth today is fuelled by intense global integration.

Localisation, like BEE and other redistribution-focused policies, are justified politically as measures to redress inequality. Yet, thirty years after apartheid, the World Bank ranks South Africa as the country with the most unequal income distribution. 

The ANC uses inequality to justify the redistribution policies which support its profoundly pervasive patronage. As a consequence, we top the charts for youth unemployment and inequality. Yet where we are truly peerless is at permanently marginalising young adults. Others don’t track this because it is so rare. What is our excuse?

Sufficiently robust

If StatsSA had been tracking the numbers of permanently marginalised young adults, it is not inconceivable that our policy makers at the Department of Trade and Industry and elsewhere would have had a rethink. Yet, for them to embrace real change they would need to be able to envisage a growth path sufficiently robust as to justify their de-emphasising their aggressive patronage-centric model. 

To inform such a growth path we need a runner-up candidate for the most insightful metric to explain our economic underperformance. Countries which have long been sustaining high growth have a high portion of their young adults adding value to exports destined for affluent consumers. Aside from our automotive manufacturing sector, which is highly distorted by a web of controversial regulations, our policy makers reject this path in favour of localisation. 

They might not know what will kill them, but most people know when they have entered their last decade. As pro-patronage policies make our economic growth dependent on domestic demand notwithstanding most of our young adults being permanently marginalised, either our democracy or the ANC has begun its last decade.

We must track the number of young adults permanently marginalised and this must provoke fresh solutions.

[Image: Salem Ochidi from Pixabay]

The views of the writer are not necessarily the views of the Daily Friend or the IRR.

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For 20 years, Shawn Hagedorn has been regularly writing articles in leading SA publications, focusing primarily on economic development. For over two years, he wrote a biweekly column titled “Myths and Misunderstandings” without ever lacking subject material. Visit shawn-hagedorn.com/, and follow him on Twitter @shawnhagedorn