In results just released, South Africa’s economic competitiveness has improved for the second year consecutively. South Africa improved from a position of 53rd two years ago to 48th last year and currently to a better position of 44th, out of a total of 58 countries that were selected. The progress is an indication of the resilient nature of the South African economy despite the impact of the global economic and financial crises last year. The results are from the World Competitiveness Yearbook (WCY) 2010, which is published by the Switzerland’s Institute of Management Development (IMD) with information provided through Productivity SA. The IMD’s WCY ranking is an annual report on competitiveness of selected countries and is recognised internationally as the leading survey of competitiveness between nations. The publication’s detailed results are published in the 2010 edition of the World Competitiveness Yearbook.
“Our strong competitiveness is being linked to the increased level of portfolio investment assets and direct investment stocks inward, as investors divert their investments to emerging markets that were not too exposed to the financial crises in a bid to protect their investments. The improvement is also due to a better labour market flexibility, improved current account balance, better inflation outlook and cost of living index” Commented Mr Sello Mosai, Executive Manager of value chain competitiveness at Productivity SA.
This edition of the IMD annual Yearbook rates the ability of 58 industrialised and emerging economies’ “to create and maintain an environment that sustains the competitiveness of enterprises”. Country data was evaluated this year through 327 distinct criteria, grouped into four competitiveness factors: Government efficiency, business efficiency, economic performance, and infrastructure.[1]
We should be worried that, South Africa further declined in employment creation, exports and GDP in real terms, although this is a result of the effects of the global recession in the second and third quarter of 2009. There was also a reduction in business efficiency from 30th position to 31st position. Business efficiency was the only competitiveness factor where South Africa performed poor as compared to the previous year. It is extremely encouraging to see that, South Africa performed well in the other three competitiveness factor.
South Africa’s performance strengthened in government efficiency where we improved five places from 26th to 21st and in infrastructure, where there was improvement three places from 54th to 51st amongst the 58 countries sampled. This shows that the investment of the S.A government in energy, transportation and infrastructure development through its Industrial and economic policies interventions is making progress.
Comparing South Africa’s overall competitive ranking with the so-called BRIC countries (i.e. Brazil, Russia, India and China), South Africa performed better than Russia (51st position), but poorer than China (18th), India (31st) and Brazil (38th). Amongst other comparator countries, South Africa performed better than Colombia (45), Mexico (47), Greece (46) and Argentina (55) but performed poorly as compared to Australia (5), Malaysia (10), New Zealand (20) and Chile (28).
Unemployment has been a major issue in South Africa, with a recent release by Statistics SA showing that the unemployment rate increased from 24.3 percent in the fourth quarter of 2009 to 25.2 percent in the first quarter of 2010, with a total of 171,000 jobs lost in the first quarter of 2010. This statistics coupled with the fact that Youthful unemployment in 2009 was 48.2 percent in a labour force of about 17.1 million, is a course for concern. Efforts are being made by government, labour and business alike to redress the deteriorating unemployment situation in the country and also create labour intensive jobs. The main focus and top priority of the government is therefore to create sustainable jobs for the unemployed and particularly jobs for the youth population. Especially considering the fact that worsening unemployment situation could have a potential ripple effect and compound other socio-economic problems
There is need to intensify training, research and development, further education, training and internship programmes to up-skill recent graduates from the university and prepare them for the job market. The government in partnership with the private sector is building on the long term skill base of potential graduates and more students are enrolled in strategic programmes that will be beneficial to them. Other areas such as the retail, security, cleaning and the informal sectors can be supported financially, as these sectors also have huge potential of creating sustainable jobs for the less skilled. Furthermore, government support for companies with both strong backward and large employment multipliers will ensure that sustainable but less specialised and skilled jobs are created.
The importance of job creation in South Africa in particular and Africa in general was highlighted recently when the South African minister of labour hosted the African Employers conference in Johannesburg. The conference was attended by other labour employer representatives across Africa and the theme was to create employment for economies that were recovering from the global recession. An action plan for job creation and employment in Africa to be presented to a group of twenty (G-20) labour ministers’ summit was developed
As Mr. Sello Mosai further commented, “Coupled with the unemployment dilemma, South Africa is also faced with the challenge to improve its competitiveness, and productivity, by further diversifying its export base and also attracting investment flows. As consumption gradually recovers, due to the global economic recovery, the challenge for South Africa is to create quality labour intensive jobs that will improve living standards, as our export becomes more diversified and competitive.”
Mr. Mosai concluded, “South Africa can improve on and even better its competitiveness position next year. Especially given the current economic conditions where there is improved national and international demand for our products, a stable economic environment, reduce inflationary pressures, promotion of public and private investment to build capacity, imminent competition in key industries, encouraging a stable exchange rate, and further developing the skills of our people to expand our asset base.”
Ends.
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