Shifting the growth path to achieve employment intensive growth in South Africa

Abstract

‘Employment intensive growth’ has become a centrepiece of government policy and implies that at any given level of growth, the economy needs to become more labour absorbing. State intervention (or the lack of it) is examined in two areas that are important for employment – agriculture and manufacturing. In the case of agriculture, it is argued that declining and ineffective state support has accelerated the rationalisation of commercial agriculture and failed to regenerate agriculture in the former Bantustans. With regard to the manufacturing sector, we argue that since 1994 the government has set a multiplicity of objectives but, de facto, there has been a surprising level of continuity in the overly generous assistance for heavy, capital-intensive industry. This paper argues that the negative impact of previous ‘distortions’ requires much more than a levelling of the playing field via market-based reforms. Pro-employment policies have to be placed at the centre of the policy agenda.