When President Cyril Ramaphosa unveiled the ANC’s 10-point plan to “reignite growth in the economy” recently, he promised to “massively scale up the Presidential Employment Stimulus and other public employment programmes”.

This may sound like a bold response to South Africa’s unemployment catastrophe, but it reflects a familiar pattern of offering state-funded “work opportunities” as a substitute for real job creation.

In its 2024 election manifesto, the ANC promised to create 3.5 million “work opportunities” — 2.5 million through expanded public employment programmes and another one million through youth enterprise support in townships and rural areas.

These are not sustainable jobs. They are temporary, sometimes part-time, state-funded placements that end after a few months.

Based on the best available evidence, it takes about 2.8 million of these “work opportunities” to generate the equivalent of just 250 000 full-time jobs, or 300 000 if some are part-time. So the president’s commitment to the electorate, priority No 1 on the ANC election offer, the centrepiece of the party’s promise, was the paltry equivalent of 300 000 low-wage jobs over five years.

This is a pitiful response to a national emergency that has left more than 12 million South Africans without work — the deepest, most persistent unemployment crisis in the world. For 17 years, 1 000 people have joined the unemployment queue every single day.

Temporary jobs

Over the same period, the government has rolled out a growing number of public employment programmes: the Expanded Public Works Programme, the Community Works Programme, and, in 2020, the Presidential Employment Stimulus, which includes the Basic Education Employment Initiative and the Social Employment Fund. On any given day, these programmes provide some 600 000 “work opportunities”, that is, short-term relief. But they have not — and cannot — generate the millions of jobs South Africa needs.

The reason is simple. These are not jobs created by a growing, labour-absorbing economy. They are temporary, fiscally unsustainable and leave the vast majority of participants unemployed again after a few months.

There is nothing wrong with government providing temporary work opportunities for the poor. But the president’s insistence on scaling up these schemes — as if they represent a strategy for full employment — reveals an inability to grasp the scale of the challenge facing the country and move decisively to fix it.

The real test of seriousness about South Africa’s jobs crisis is whether the government is prepared to confront the structural barriers that prevent the economy from creating jobs at scale.

The Centre for Development and Enterprise’s (CDE) new report, South Africa’s unemployment catastrophe: A call for urgent action, sets out what needs to be done. The first and most important step is to raise the rate of economic growth.

 There is no substitute for growth. At 4 percent growth, South Africa could create around 400 000 net new jobs a year. Combined with reforms to make growth more labour-intensive, the country could expand employment by millions within a decade.

Amendments to the LRA

That requires bold decisions on four fronts.

Labour market reform must make it easier for firms to hire.  South Africa’s current system protects insiders and condemns millions to permanent exclusion.

The Labour Relations Act should be amended to allow a 12-month probation period during which dismissal is restricted only for automatically unfair reasons.

The automatic extension of bargaining council agreements to firms that never signed them should end. Restrictions on temporary employment services — which once created entry points for disconnected young people — should be reconsidered.

Fixing the skills system is equally urgent. Billions are spent every year through dysfunctional SETAs and failing TVET colleges, yet the skills pipeline remains broken. SETAs should be scrapped and levy funding redirected to employer-driven apprenticeships and high-quality training aligned with business needs. TVET curricula must be overhauled, industry partnerships strengthened, and work-based learning made central to the system.

Suffocating red tape

Creating a better environment for small businesses will require more than rhetoric. Red tape continues to suffocate the firms best able to absorb labour. The government should implement a modified SME test, modelled on those used in many OECD countries, requiring policymakers to estimate the costs of new regulations on small firms and provide costed alternatives. The Presidency’s Red Tape Reduction Unit failed precisely because it was a top-down exercise. Reform must start from the bottom up — with the businesses themselves.

Removing obstacles to informal sector growth is also critical. In most developing countries, the informal economy provides a vital safety net for millions. In South Africa, it accounts for only about 20% of jobs. Instead of harassing informal traders, local governments should make it easier for them to operate — for example, by scrapping restrictive licensing and zoning rules.

Informal work is precarious and low-paid, but it plays an essential role in poverty alleviation and should not be treated as an enemy of development.

These reforms are difficult because they require the state to relinquish control, confront vested interests and abandon policies that have failed. But without them, South Africa will remain trapped in a cycle of stagnation and exclusion.

Time for reform

The president’s 10-point plan speaks of inclusive growth, but expanding public employment programmes will not deliver it. The government cannot fund its way out of this crisis. It can only grow its way out.

The choice before South Africa is stark. We can act with urgency, embrace reform and create a pathway to inclusive prosperity, or we can condemn another generation to the despair and anger of joblessness. The time for hesitation, compromise and prevarication has long gone. The time for reform is now.

Ann Bernstein is Executive Director of the Centre for Development and Enterprise. This article is based on CDE’s new report: “South Africa’s Unemployment Catastrophe: A Call for Urgent Action.”

This article was published on News24