No relief for the bag lady of Braamfontein

THE elderly woman was dragging her two battered suitcases, one red and one black, along Braamfontein's Jorissen Street this week.

It is the sort of sight that is all too common in South Africa. Perhaps one bag was her backup for the journey ahead, but I doubt it. Nor was she off to the Big Apple. It was, instead, another reminder of where things have gone badly wrong.

The picture was one of struggle: for survival, a job, and relative progress and prosperity.

More than a quarter of South Africans are out of work, a figure that creeps up closer to 40% if one includes those wanting, but not actively searching for, a job.

Those politicians who peep out from over their razor wire and high walls, behind their darkened windows in their irritatingly wayward cavalcades, or outside their carefully orchestrated stadium appearances, might occasionally glimpse these scenes, and their consciences might be pricked.

But in a social setting where consumption signifies success, and elite gratification matters more than basic needs, most politicians apparently could not care less.

Instead of job opportunities, we are fed a regular diet of visions, plans, objectives, summits and other pooh-bah occasions of little practical help to our Braamfontein bag lady and the many like her.

The National Development Plan, released late last year, aims to right some of these wrongs.

The plan has much to recommend it as a generational initiative, aiming at transforming SA society by 2030. Infrastructure, skills, disease, the environment, rural growth, telecom costs and bandwidth, corruption, etc - all of these get a mention in the diagnosis of the problem and the solution. It's all good stuff.

However, there are three main problems with the plan.

First, it's a long-term fix to an immediate challenge.

Second, the state is at the centre of much of the action. If it was competent, this might be a good thing; if it's not, then a big, incompetent state is worse than a smaller, inept one.

Government expenditure has risen by 5% of GDP over the past decade to total more than 30%, and government salaries to 42% of government revenue from 31% in 2007.

The choice between investment and consumption is tilting, unsustainably, in favour of the latter, a choice the plan acknowledges is a bad one.

And, third, related to both of the above, while admittedly too low growth and too few jobs is a complex issue, there are dangers in trying to do everything at once. Fixing the core problems first requires sequencing and getting stuff done. Here the plan hides the issue of labour productivity among myriad recommendations.

Perhaps it's too much of a hot potato for government allies to handle, but you are not going to create unskilled (or low-skilled) jobs without making it easier to fire, and cheaper to hire, people.

Between the blogs, YouTube appearances, glossy pamphlets, tome-like plans and squawking heads, there are two basic economic paths for SA.

One, concentrate on its comparative advantages (things that cannot be got elsewhere, such as minerals, agriculture, tourism and even location) or, two, strengthen its competitive advantages. These are not, of course, mutually exclusive. But the former is largely what we have done since 1994, even though, mainly for reasons of poor infrastructure and predatory legislation, we have not gained as much from the commodity super-cycle as others have achieved.

While central to our economic wellbeing, this model relies on the state to efficiently distribute resources, not least to those 15 million South Africans now receiving some form of state welfare.

Ensuring greater competitiveness is much more difficult, since, in essence, it means encouraging those companies to invest who have the options of going to 200 other countries worldwide.

And in the first few rungs of the development ladder, where most countries start their job-creation and development path, it's all about the relationship between labour costs and labour productivity.

"We did not struggle to work in sweatshops," is the rhetorical counter to this reality, a contemporary, "Let them eat cake."

Of course, those saying this are not dragging their bags through Braamfontein but through the first-class check-in or VIP facility en route to their limos and suites. There is nothing governments hate more, it seems, than being well-informed.

• Mills is completing a book on jobs and growth with Jeff Herbst of Colgate University.