Trade and industrial policy
Over the past 15 years Government has promoted cooperatives at national and provincial levels with the aim of enabling small producers to tap into mainstream economic activities. Tens of thousands of cooperatives were formed in processes with officials’ performance appraisals based on the number of new cooperatives being formed. A 2014 study in the Free State indicates a very low survival rate of cooperatives and little evidence of job creation. This accords with earlier findings of an EU-funded study at the national level.
There is a widespread view that countries no longer need to industrialise in order to develop. However, in South Africa manufacturing remains the core driver of GDP growth and direct employment while other sectors – particularly many services sectors – are likely to increase employment on the basis of growing demand flowing from a growing GDP. A nuanced understanding of the direct and indirect linkages through which diversified manufacturing growth can boost economy-wide employment is essential.
In spite of policy statements prioritising labour-absorbing growth, de facto policy support has favoured heavy industry and been damaging for employment. Industrial policy should be less concerned with ‘beneficiation’ and technological upgrading and more concerned with promoting economy-wide efficiency. In the context of massive unemployment, this means tilting the playing field towards labour-absorbing growth to mobilise the huge potential of an under-employed and poorly-skilled workforce.