About this site

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

Job creation - the role of the public sector

The current debates on job creation focus on various policy measures that essentially add up to attempts to tinker with the market in a capitalist system, hoping to unlock resources and open up initiatives for creating employment. Whilst such attempts are not to he dismissed, we should be mindful of their shortcomings.

Briefly these can he summarised as follows:

     they rely on the goodwill and co-operation of capital, and are therefore vulnerable to attempts to undermine them;

     they usually create low paid jobs, and often jobs of a temporary nature; and

     in the context of globalisation, these jobs are usually not of any strategic value to the domestic economy, that is, they are usually in sectors like services or mining, and do not help to promote a strong economy.

A healthy relationship between government, capital and labour can go some way towards alleviating the unemployment crisis of this country, but only if there is a clear strategy that links labour market reform, government trade, industry, fiscal and monetary policy, and the role of the state as entrepreneur.

In addition to this, we as socialists need to be absolutely clear that creation of jobs cannot he left to the market. It also cannot he simply a question of reforming the market.

Public sector

The only source of capital reserves great enough to make a significant dent in the unemployment statistics of our country, apart from what is in the hands of the largest capitalist enterprises, lies with the state. The public sector, which includes the parastatals, the public service and local government, already makes up almost 50% of the economy. The crisis of the public sector is well documented, but to argue that privatisation and contracting out are measures that will assist in solving this crisis is simply ridiculous. All this will lead to is reduced employment levels, and will thus add to the burden of the government in terms of job creation.

Measures to reform the public sector must include:

     policy to reform the running state enterprises; and

     policy to inform the transformation of the public service and local government administration.

State enterprises Increasingly, the global debate about reforming these enterprises has shifted in favour of those who argue for privatisation. In the context of SA's challenges, these views are actually of little relevance, although the extent to which they inform our own policy discussions is clearly significant. From the position of a country which is undergoing a major period of reconstruction and attempting to ensure massive development, within the context of globalisation, it would seem obvious that the state needs, not less involvement in the economy, but more. All the "success" stories of growth in the post-World War II era - Germany, Japan, South Korea, Taiwan, etc. - have been characterised by massive state involvement in the economy. This has not been purely as a regulator, but also as a researcher, developer and entrepreneur.

In the South African context, with hostile capital both in the international and domestic sense, job creation cannot be left to the private sector. Even the involvement of the state in the economy as part of the "golden triangle" (government-business-labour) will not be enough. A major initiative needs to be under-taken to create various kinds of employment opportunities.

In the first instance, the spending on infrastructure - water, electricity, sewerage, roads - is clearly not going to create the desired levels of employment unless the state expands its role in this regard. This does not mean expelling the private sector, but unless the state sets up companies that will take charge of this process, development will be slow and job creation slower. Even at the level of housing delivery, it is clear that the state needs to intervene and create a state housing corporation to provide low cost mass housing. This can follow a number of models, among them delivery through local government. But the capacity needs to be developed to ensure that this can be done.

The essential point is to ensure that the state plays the role of entrepreneur where capital has failed. This was done by the apartheid regime to attempt to counter the ANC's strategy of isolation, with companies like Iscor and Mossgas. The apartheid state also used major public enterprises to drive development in general - Eskom and Telkom. Despite the shortcomings of some of these efforts, they did ensure that capacity was developed and that work was created for the NP's constituency.

We need to go beyond such a scenario, to one where the state begins to look for niches in the markets, both domestic and foreign, and takes advantage of these. A certain amount of venture capital could be put aside to develop industry in key areas - electronics, chemicals, transport, tourism, etc. These need not be run as state departments, but as business ventures which must perform according to the dictate of the market. Their edge will he created by the fact that management and workers in these industries will be driven by more than the profit motive and the desire for higher wages. Harnessing patriotism for the collective benefit of the country should not be scoffed at, as seems to be the fashion at present.

Public service and local government administration

As this area is extremely complex, a few general points will have to suffice. In the first instance, we need to ensure that moves to contract out are stopped. The problems of the public service - rigidity, its rule-driven character, excessive bureaucratisation, etc. - can all be dealt with in the framework of the public service. In fact, the solution to these problems lies in extending the definition of the public service to include local government administration, creating a simplified grading and salary structure, and moving to a performance orientated service with procedures for monitoring service delivery and ensuring that departments are given much more autonomy in the delivery of services to maximise efficiency.

If these measures are followed, public service can be improved, thus opening the way for the expansion of such services. Of course, the question of affordability does come into the picture, but the move to reduce the salary differential will deal with this if it is bravely and vigorously implemented.

Expanding the role of the state

The thrust of my intervention is to argue for expanding the role of the state. This runs counter to the general trend in the debates that seem to be determining the path in our own country. The essence of my argument is simple: capital is, by and large, unpatriotic. It has no desire or need to create employment. The government, by virtue of the ANC's majority, is in a prime position to utilise the state's resources to drive development and create meaningful employment. The state can act as an entrepreneur and ensure that investment opportunities are maximised and the public sector is expanded. If we are to succeed in creating employment then this must be central to the government's strategy.

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.