A new report by the Centre for Development and Enterprise (CDE) calls for additional policy reforms to tackle the country’s “unemployment catastrophe”, which is excluding more than 12.5-million people who want to work from participating in the economy.

As things stand, fewer than four in every ten working age adults is employed, the report shows.

The proposed reforms include politically sensitive proposals in relation to labour-market rules, including  halting the extension of bargaining council agreements to firms not party to them, as well as the scrapping of sector education and training authorities (Setas) in favour of private training initiatives.

The proposals largely contradict those contained in the African National Congress’s (ANC’s) most recent economic policy statement, unveiled a day earlier by President Cyril Ramaphosa, with the CDE especially critical of the ANC’s proposal to scale up public employment programmes.

In fact, CDE executive director Ann Bernstein argues that such schemes, which offer temporary work opportunities, tend to divert the focus away from the structural reforms required to create the millions of permanent jobs needed to address South Africa’s jobless crisis.

“Work opportunities are not real jobs,” she asserts, noting that it takes 2.8-million such positions to result in 250 000 full-time jobs.

The two reports are also at odds in relation to small business development, with CDE arguing that at least half of existing yearly funding, which it pegs at R6-billion, should be redirected to the private sector to support enterprise development by means of a competitive process.

The recommendations included in the CDE report are captured under the four themes of labour-market reform, fixing the skills system, unleashing the dynamism of small business, and removing obstacles to informal sector growth.

Besides halting the practice of extending bargaining council agreements, the CDE’s other labour market proposals include a call for an amendment to the Labour Relations Act to allow a 12-month probation period for new workers to make dismissals easier, as well as a recommendation to remove restrictions on labour brokers.

It also repeats an earlier CDE call to establish an experimental special economic zone at Coega, in the Eastern Cape, where some labour-market regulations would be removed to stimulate labour-intensive manufacturing.

Describing the skills outcomes from the country’s Setas as “dismal” and expensive, the CDE also proposes overhauling the technical and vocational education and training colleges to align them more closely with the needs of business, and replacing the Setas with employer-driven apprenticeships and private training schemes.

The report also calls for a survey of small firms to help inform regulators as to what red tape is hampering their progress so that such regulations could be simplified or removed.

In addition, the CDE says more needs to be done to support informal sector growth, including by encouraging city governments to zero-rate licences for street traders, exploring the provision of transport subsidies to such traders and supporting the densification of cities.

While Bernstein is not opposed to the current partnership between government and business to tackle problems such as electricity insecurity and logistics bottlenecks, she is critical of the lack of transparency surrounding the relationship.

She also believes it is preventing business from speaking out as strongly as it should on the policy issues that are undermining growth and job creation.

“I am certainly not saying that the business-government partnership has no value, and anyone who argues that would be wrong.”

However, she believes the business-government partnership has tended to silence business in public about the country's challenges.

“The President is finally saying we're in an economic emergency, we are saying the unemployment situation is catastrophic. In this context, business should be speaking its mind,” Bernstein avers.

“The time has come to start talking about what a labour absorbing economy looks like, and what it would take to get us there. This includes making difficult decisions about the rigidities that hobble the labour market, the failure of skills development programmes, and the many barriers in the way of small and informal businesses,” the CDE report adds.