Government ‘is failing the poor’

Mbeki adviser decries economic ‘agenda’

THE government’s indecisiveness and confusion is robbing SA’s young and poor of their future.

This was the message last week from Harvard professor Ricardo Hausmann, who chaired the panel of international and local economists who advised former president Thabo Mbeki’s government on economic growth strategy.

Prof Hausmann, who was in Johannesburg to attend an Investec Asset Management forum, said the South African economy was being held hostage by a “counterproductive” agenda that disguised itself as progressive.

“It is as clear now as it was in 2004 that black economic empowerment is more about making the top of society black than about making the bottom of society better,” he said.

“Ideally you want to achieve both, but the way the emphasis has been on the first and not the second — having shareholders, having members on the board, or having senior management at the top, but not … creating opportunities at the bottom — suggests that they have an agenda.”

Stanlib chief economist Kevin Lings said SA had many initiatives aimed at redistribution such as black economic empowerment and affirmative action. But while these had been beneficial, the

benefits had not been sufficiently broad-based.

“These initiatives have not benefited the population broadly enough. They have not been able to draw the youth into the labour market, for instance,” Mr Lings said.

Prof Hausmann, who is director of Harvard’s Center for International Development and a professor at the Kennedy School of Government, spent considerable time in SA between 2004 and 2010, chairing the panel that advised the government on the Accelerated and Shared Growth Initiative for SA between 2005 and 2008. This was his first visit to SA since 2010.

“I have been disappointed, not at SA’s ability to write plans. I have been disappointed at the performance of actual policies. The policies often go in the opposite direction of the documents,” he said.

The failure of the government to act on policies that were supportive of economic growth showed that the government had priorities other than including marginalised members of the economy. “There is no political commitment to shared growth,” Prof Hausmann said.

One of his biggest criticisms was the government’s failure to address the skills constraints on the economy. “Contrary to what the government seems to believe, these skilled people are the complement of unskilled people and will lead to job creation,” he said.

The policies often go in the opposite direction of the documents

“Yet the country just approved an immigration law that goes in the opposite direction to that.”

He argued that SA should, in the short run, relax its immigration policy to attract skilled people who would grow the economy.

The unemployment rate of those without matric is about 50% compared to 3% for those with tertiary qualifications.