SA unemployment stays stubbornly high

Johannesburg - Unemployment and inequality are the biggest problems facing the South African economy, the Organisation for Economic Cooperation and Development (OECD) said on Monday.

"Capital income is rising in South Africa, access to public services is improving, social conditions are strengthening, and crime rates are falling," OECD secretary-general Angel Gurrie said.

"But unemployment remains stubbornly high and the distribution of income continues to be very skewed."

Gurrie said at a Midrand news briefing - also attended by Finance Minister Pravin Gordhan - that the problems South Africa faced were prevalent in other developing nations.

National Development Plan

"Real income growth has been sluggish compared to most other middle-income countries. As your National Development Plan identifies it, there is a burning need for faster progress, more action and better implementation."

Gurrie was presenting a report on an OECD study into South Africa's economic growth since the dawn of democracy. It had conducted two similar studies in the past.

The latest study identified weaknesses in the labour market and weak competition in the product market as some of the problems affecting growth.

"One of the main messages of the survey, echoing previous ones, is that reforms should allow labour market outsiders, those without a job, to be taken into consideration when deciding on wages and work conditions," Gurrie said.

Education and green growth

The study also identified education and "green growth" as two areas in which South Africa could boost its economic growth in the long-term.

"The educational achievements of most South Africans remains below standard.
Poor education standards are part of the legacy of apartheid," he said.

"It will take time to overcome this legacy. But the good news is that this process is underway."

Gurrie commended South Africa for its success in increasing access to education.

"There is now an urgent need to raise the quality of education. South African students fair poorly in standardised international tests."

In addition too few high school graduates qualified to go to the university.

Strengthening school management and improving vocational training were some of the recommendations made by the study, he said.

Electricity and the rand

Gurrie said South Africa’s reliance on coal-generated electricity put the country behind its competitors.

Taxes needed to be introduced to control carbon emissions, he said.

He also warned that the volatility of the rand was an impediment to investors.

"It makes it very difficult to plan... whether are you going to be selling domestically or are going to export. These are the questions that business [people] ask themselves and the volatility [of the rand] does not help."

Gordhan welcomed some of the proposals made by the OECD report, but said there were areas South Africa disagreed with.

"You can’t manage the exchange rate. There are external circumstances and internal circumstances," Gordhan said.