We Can Beat Unemployment Through Public Jobs Programs, Says Former Treasury Official

Employing more people in the public sector is the way to fight the jobs disaster, economist Andrew Donaldson said on Tuesday. The number of people participating in employment programs such as the Expanded Public Works Program (EPWP) could increase fourfold in six years, he said.

Speaking to financial journalist Alishia Seckam at the Think Big Series, hosted by PSG, Donaldson said South Africa’s public sector employment programs were too small and unambitious.

Read: A budget for growth and jobs

Donaldson is a Senior Research Associate in the Southern African Labor and Development Research Unit (SALDRU) at the University of Cape Town, and was previously Deputy Director General at the National Treasury responsible for the Office of Budget and Public Finance.

After a decade of sustained job growth between 2000 and 2010, when unemployment fell to just over 20%South Africa’s unemployment rate has steadily increased, standing at 35% in the fourth quarter of 2021, according to the latest quarterly labor force survey.

Donaldson argued that state-funded jobs programs are the best way to ensure sustained economic growth and that South Africa can afford these programs.

Since 2015, jobs offered through the EPWP, the main means of job growth in the public sector, have declined.

The program now provides the equivalent of 300,000 full-time jobs, which represents less than R10 billion in wages per year, according to Donaldson.

“When you compare that with what we spend on social transfers, on income support for the poor, our employment programs are really way too small,” Donaldson said.

The R350 Covid-19 Distress Social Relief grant, recently extended for another 12 months, will cost R44 billion a year alone.

However, the youth employment program of the Presidential Job Recovery Program, launched in the second half of 2020, offers hope. In six months, 300,000 young people were hired in schools, doubling the number of jobs under public employment programs.

“It tells us that you can be ambitious, you can think big when it comes to public employment,” he said. For Donaldson, this should be extended to other sectors, including train safety.

He said these new jobs should be permanent and not temporary like in the EPWP. The people employed were “doing useful things,” he said.

“They prevent fires, they help in schools, they provide community health services, they offer early childhood development programs. These are not temporary needs.

People in these programs should be paid at least minimum wage, he said.

Municipalities should play a major role and coordinate with businesses in their region. To begin with, programs should be inexpensive and labor intensive.

Public sector payroll

When asked if South Africa’s public sector wage bill was not already too high, Mr Donaldson replied that doubling public employment program wages would amount to 5% of the public sector wage bill. . Despite the difficult fiscal climate, he said, these programs need to be prioritized and prioritized to grow over time.

He argued for a balance between household income support, such as social grants, and employment programs. Income support alone, he said, is not enough to create a more equal society.

He also called for more interaction between the Ministry of Labor and the Unemployment Insurance Fund (UIF) in the development of support for job seekers.

“We need to invest in a more equal economy. We are sometimes a little preoccupied with the new opportunities of the fourth industrial revolution… Water services, investments in housing, improved transport, telecommunications, these investments are still incomplete. We still have a lot of investments to make; the creation of opportunities that contribute to the improvement of living conditions in things that the world has known how to do for a hundred years.

“If we rely solely on income support and our social assistance system to provide redistribution, we will find that is not enough.

“You cannot build a sustainable future, decent livelihoods and a more equal society unless you progress through investment, job creation, opening employment opportunities to all and to the systematic reduction of the unemployment rate,” Donaldson said.

“We need to set targets for that and we need to make sure our growth is more balanced than it is now.”

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