Health, education, labour relations hurting SA competitiveness: WEF

The latest World Competitiveness Index ranks SA 56th out of 144 countries, with several areas of concern.

South Africa's slide to 56th in the Global Competitiveness Index outlines starkly what is going wrong with the country and what needs to be fixed.

The picture is grim. It is like a large flashing red sign that says: "Uneducated, unhealthy, over-regulated: invest at your peril."

South Africa, Mauritius (39th) and Rwanda (62nd) are the only three African economies that make the top half of the survey of 144 countries. Nigeria may have recently been adjudged the continent's largest economy, but it has slipped to 127th in the competitiveness rankings.

The report evaluates "the set of institutions, policies and factors that determine the level of productivity of a country".

The swathe of statistics used by the World Economic Forum (WEF) to compile the index paints a picture of South Africa as a country with a First World business and financial infrastructure living side by side with very poor delivery of skills and health.

First the good news: the report says South Africa's financial markets, its securities regulation and corporate management continue to rank with the best in the world. In fact, our auditing rates as the very best in the world, with the efficacy of corporate boards and the protection of minority shareholders very close behind.

Also among the best in the world are the soundness of our banks and our strong antimonopoly policy.

We do fairly well at innovation, and have decent scientific research while we pretty much muddle our way around most other categories.

But all of these good scores are severely undermined by a swathe of red numbers when it comes to three areas in particular: health, education and the labour market.

South Africa scores dead last - 144th out of 144 countries surveyed - for the quality of its maths and science education. There are war-torn countries where the state is failing that fare better.

The overall quality of our education system comes in at 140th, and we are rated 117th for internet access at schools.

Also devastating are our scores for health, with our tuberculosis cases per 100 000 people ranked the second worst in the world.

We are close to last when it comes to Aids-infection rates.

Also striking is just how lowly we rank when it comes to labour-market efficiency.

We are dead last in the category "cooperation in labour-employer relations" and second last for hiring and firing practices. When it comes to pay and productivity we rank 136th out of 144.

Caroline Galvan, a senior manager and economist at the WEF, says: "One of the key messages coming out of our report is the importance of smart investments in skills and innovation.

"Economies that consistently rank high in the competitiveness rankings are those that are able to develop, attract and retain talent, and can constantly introduce new products and services into the market."

Galvan says South Africa's most critical challenges relate to developing its human capital base. "This requires, first of all, ensuring a healthy workforce, developing talent and skills and introducing more flexibility into its labour market."

The report's authors remark: "It is being launched at a time when the global economy seems to be finally leaving behind the worst and longest-lasting financial and economic crisis of the last 80 years." But they also warn that growth prospects for emerging economies are dimming.

"After several years of doing very well and leading global growth, their performance may be affected by a changing environment characterised by greater difficulty accessing capital as well as lower prices for the commodities that fuelled past growth - a trend that is also likely to affect many developing economies."

The warning lights are flashing, but is anyone taking heed?

The National Treasury's Jabulani Sikhakhane says there will be no public comment by Finance Minister Nhlanhla Nene on the report, although it may be discussed internally.

President Jacob Zuma's approach to criticism of economic performance appears to be to restate that the economy is an "apex priority"; his remedy is to call on the world to change its attitude to South Africa.

He recently addressed South African diplomats in Pretoria, saying: "We have set a growth target of 5% by 2019. Such a target would enable us to get more South Africans employed. It is not an easy target to meet, given the global economic climate, but as government, business, labour and society in general we need to use all the expertise and resources at our disposal to meet this goal.

"We may also need to change our attitudes. We need to adopt a more positive and optimistic attitude because nothing is impossible if we work together, putting our country first."

The government's inability to confront the labour market problems that so starkly mark us out as an uncompetitive economy is striking, to coin a phrase.

Instead, Zuma seems to believe that if we repeat what he calls "our good story of success" the world will come to believe that surveys such as this are simply wrong about the economy.