Reversing+Economic+Dualism,+Breaking+Unemployment,+YCL




 * Young Communist League, Discussion Document to the National Policy and Strategy Conference**


 * 11-14 August, 2005, Makopane, Limpopo Province**

=**__Reversing Economic Dualism and Breaking the Back of Unemployment: Alternative Proposal from the YCL__**=

This paper reflects on the unacceptable levels of unemployment crippling young people, their participation in the economy and their dignity. All macro-economic and social policies must place at the centre the central tasks of dealing with poverty and unemployment. Our key objectives in challenging unemployment and struggling for the right to employment for young people are as follows:
 * 1. //Introduction//**
 * To impact on economic and social policies that affect young working class people in our daily lives
 * To advance the struggle for socialism and against capitalism in South Africa and internationally
 * To mobilise and organise young people to fight unemployment and to fight for dignity and our right to decent living standards and conditions

According to Statistics South Africa (2003) in September 2002 there were an estimated 28,0 million people aged between 15 and 65. Among these people 15,9 million were economically active and almost a third (30,5%: 4,8 million) were unemployed according to the official definition. Almost three quarters (70,8%: 3,4 million) of the 4,8 million people who were unemployed were youth – between the ages of 15 and 34 according to the South African definition. Almost a third (31,2%: 1,5 million) of unemployed youth in South Africa fall into the internationally defined category of youth - persons between the ages of 15 and 24.
 * 2. //Unemployment Figures//**

If the expanded definition is used, the overall unemployment rate increases to more than a third (41,8%: 7,9 million) of economically active people. If compared to the results obtained using the official definition, nearly the same percentage of unemployed people is youth (69,6% compared to 70,8%) - between the ages of 15 and 34 according to the South African definition. Again, almost a third (31,6%: 2.5 million) of unemployed youth fall into the internationally defined category of youth (persons between the ages of 15 and 24). The inequality in the distribution of the burden of unemployment across age groups is a matter for concern. While there is a sizable differential between youth and aggregate unemployment rates, there are also noticeable differences in the unemployment rate for identifiable groups of youth.

When considering the unemployed youth population of 5,5 million, the unemployment rates for young women (56,4%: 3,1 million) are higher than those for young men (43,6%: 2,4 million).

The disproportionate levels of unemployment amongst young women require specific interventions to create employment and the conditions for employment for young women.

The unemployment crisis in South Africa has many causes that underscore the need for a comprehensive strategy to address the problem. The problem of unemployment in South Africa is structural — it is characterised by the evolution of the apartheid economy over time. Some of the key causes of the high levels of unemployment include:
 * 3. //Causes of Unemployment//**
 * The evolution of apartheid capitalism which depended on a racially marginalised and exploited workforce to secure profits.
 * The development of extremely capital intensive production processes in a country with scarce capital resources and abundant labour resources.
 * The dramatic decrease in investment in South Africa in the 1980s and 1990s.
 * The decline and labour-shedding practices of important primary industries — agriculture and mining.
 * Lack of investment and job losses in the parastatals during the later years of apartheid.
 * The systematic under-development of skills for the vast majority of the labour force.
 * The continued economic marginalisation of women.
 * The tendency to export low value-added goods using capital-intensive technologies and to import high value-added goods.
 * The promotion of vast income inequalities which constrained domestic demand and the expansion of productive investments.
 * The marginal economic development of the former homelands and the townships.
 * A relatively contractionary monetary environment and the development of a financial sector with uneven industrial and developmental linkages.

The ANC NGC document posing the option of introducing a dual labour market (with dual labour laws or flexibility) smacks of pandering to capital’s lobby rather than genuinely dealing with the problem of youth unemployment. The only sustainable objective is to integrate the economy and do away with inequality and dualism rather than entrenching it.
 * 1. //Responding to debate on Two-tier labour market for youth?//**

Young people are already disadvantaged and exploited, facing discrimination in informal, casual and unprotected employment. Labour intensive sectors already constitute the working poor, earning a pittance.

Arguing that young people should accept lower wages and lower employment standards simply means capitulation to higher profits for capital on the backs of young workers. This would lock young people into poor quality jobs which would affect then entire economy, by exerting downward pressure on all jobs. Poor employment conditions and wages are already a strong feature of the economy – the role of the state is to protect these workers and raise the standard of employment, not to condone rampant exploitation.

The solution to unemployment does not lie in reducing the cost of labour, rather it lies in directing more capital towards employment-generating investment. It lies in directing state resources towards employment creation and improving the quality of lives of workers and the poor.

The proposals suggested below are based on the following assumptions about the overall objective of developing these policy platforms:
 * 2. //Proposals for Youth Employment Creation//**
 * To develop and push for policy proposals that, if adopted, would achieve the desired objectives. For this particular document of youth employment creation, the objectives of the proposals themselves would be on the one hand actually increasing youth employment, and on the other hand moving the economy in a direction that we would want more broadly, in other words contributing to an economic structure, activities etc that move us towards socialism.
 * To influence the policy perspectives of the SACP – this could include ensuring that these SACP policy perspectives take on youth issues more comprehensively (for example that the SACP economic perspectives adequately address the issue of youth employment creation), as well as in a broader sense influencing (radicalising) the SACP policy perspectives as the YCL sees fit.
 * Thirdly, to provide a mobilising platform for the YCL to organise youth around and popularise the YCL itself.

Of course these objectives would be complementary to a large extent, but there could also be tensions between them. For example, the types of policy proposals that have the greatest chance of actually influencing government policies and being implemented (at least in the short- or medium-term), as per the first bullet point, may not necessarily be the same proposals around which the YCL could most successfully mobilise youth. (These broad thoughts would presumably relate to the documents in various areas of policy, and would be a political issue regarding what the whole process is primarily intended to achieve.)

Regarding ideas for youth employment creation, we are proposing five pillars:

1. Increasing the amount of capital available for productive investment in South Africa. 2. Increasing the “employment intensity” with which this capital is utilised. 3. Increasing the share of employment that goes to youth. 4. Focused employment creation for young women 5. Creating socio-economic conditions for development of the economy.

The rationale here is that capital is necessary for the productive processes for which labour would be employed. We need to increase the share of surplus that is reinvested in production, by reducing the leakages of surplus to capital flight, conspicuous consumption of capitalists, unproductive investment, and so on. There are two broad ways of doing this. One is to regulate or influence private capitalist decisions over what they do with “their” surplus – indirectly through measures such as the strategic use of differential tax rates, or more directly for example by stipulating limits on capital export (as we have, although they are too loose) or on the reinvestment of profits in certain kinds of activities. A second way is for the state to socialise surplus, or a share thereof, and take its own decisions as to what to do with it and how to productively reinvest it. Neither of these is inherently more “radical”, and both are already done to a certain extent.
 * 1. //Increasing the amount of capital available for productive investment in South Africa//.**

Specific policy measures for this first pillar could include:
 * Stronger capital and exchange controls to limit the leakage of capital abroad
 * Discouraging conspicuous consumption of capitalists, though measures such as luxury taxes and controls on the imports of luxury goods
 * Prescribed asset measures to socially regulate a portion of private investment
 * Higher corporate tax rates, with some of the additional revenue from this being used for public investment projects – thus taking the decision of what to do with at least a portion of the surplus out of the hands of capitalists and into public hands
 * More broadly, a socialisation of investment
 * Stronger regulation of the financial sector, as a key commanding height of the economy, so as to ensure that a greater proportion of national savings are directed into productive investment.
 * Nationalisation of strategic sectors, especially where it is clear that private capitalists in these sectors are not co-operating by reinvesting surplus and creating employment.
 * Running a higher fiscal deficit can also increase the capital available for public investment.
 * The organisation of an increasing share of production through co-operatives.

For any given amount of capital productively invested in the economy, there could be a range of employment outcomes, with varying “employment intensity” of the utilised capital. We need to increase the number of jobs created for any given level of capital stock. This has both a sectoral dimension – capital invested in a sector such as textiles or agriculture will be far more labour-intensive than capital invested in a sector such as beverages or basic iron and steel – as well as a production-technology dimension, across sectors.
 * 2. //Increasing the “employment intensity” with which this capital is utilised.//**

Specific policy measures for this second pillar could include: o Use of prescribed asset measures to channel investment into particular sectors o Public investment in desired sectors o Active industrial policy to cultivate up- and down-stream linkages o Sector-summit processes… o Strategic use of trade policy, including tariffs, to protect desired sectors o More coordinated use of DFIs such as the IDC o Use of industrial incentives and disincentives to promote both investment in the desired sectors as well as labour-intensive production methods o Skills development to promote labour-intensive production and reverse the trend towards the substitution of labour with capital o Socialisation of non-wage costs such as transport and healthcare, so as to increase the productivity of labour and possibly relax some pressure on wages, so as to encourage labour intensification.

We can make a case that, given the relatively high rates of youth unemployment relative to overall unemployment, special measures should be put in place to favour the employment of youth (as with blacks, women, disabled, and rural people).
 * 3. //Increasing the share of employment that goes to youth.//**

Such measures could include:
 * labour market policies such as…
 * promotion of youth co-operatives
 * national youth service (explore Youth Brigades)
 * instead of deepening the dual labour market (ANC NGC discussion document), overcoming the existing dualism in the labour market and the economy at large.

To create both more and better jobs for young women, a comprehensive range of policy interventions are required.
 * 4. //Focused employment creation for women//**
 * An integrated policy development approach which takes into account all the roles women play in the economy and fundamentally challenges unequal gender relations and gender stereotypes.
 * Mainstreaming women in development strategies: Women’s concerns and the objective of gender equity must be directly integrated into all economic development policies and programmes. These should counter the ongoing marginalisation of women’s concerns and ensure that resources are used in a gender-sensitive manner.
 * Gender-sensitive macroeconomic and industrial policies should include an explicit analysis of any gender-biased impacts, such as the impact rapid trade liberalisation has on sectors in which women hold a substantial number of jobs.
 * Harmonising work and family responsibilities: There should be equal sharing of family responsibilities; employers must provide facilities and offer flexible working time arrangements to accommodate parental responsibilities; and governments should provide social support services and infrastructure to enable families to cope with family and work responsibilities.
 * Targeted job creation for women: Unless women are actively targeted for job creation it is unlikely that they will benefit. Mechanisms such as quotas and incentives for employment of women could be explored.
 * Public sector employment: The public service is a major employer of women, and the quality of jobs created in the public sector can potentially play a major role in promoting gender equality. Public sector cutbacks mean that women will lose their jobs as well as crucial social services.
 * Public works programmes: PWPs can provide short-term, targeted poverty relief for women. If linked to a longer-term development programme, there can be additional gains in the form of sustainable benefits for women. PWPs should target the development of infrastructure that would benefit women.
 * Anti-discrimination legislation and developing a regulatory framework: Employment equity legislation can help to prevent discrimination and break down the structures of segmentation faced by women. Legal aid and education programmes should be available for women to challenge any infraction of their basic economic rights.
 * Education and training: Programmes should specifically target the needs of women and contribute to breaking down occupational segregation.
 * Access to productive resources for women: This includes land, natural resources, capital, credit, infrastructure, technology and skills.

The socio-economic policy framework and choices of the state will impact on the extent to which the economy is developmental in nature. We define developmental as referring to the upliftment of people through state resources and support, which enables them to become actively engaged in the economy (as drivers rather than survivors). In other words, we reject the notion of ‘a developmentalist state’ that narrowly seeks to create conditions for capital to invest profitably, with the hope that this will lead to job creation.
 * 5. //Creating socio-economic conditions for development of the economy//**

Specific proposals related to employment include:
 * State intervention in sectors that are labour-intensive and where jobs are threatened (e.g. textile and mining)
 * Industrial strategies focused on employment creation (e.g. value of the rand)
 * Retention and expansion of employment in public sector and state owned-enterprises
 * Measures to make retrenchments extremely costly to employers o Public works programmes

Measures for creating socio-economic conditions for economic development include: o Free basic services o Social grants, including BIG o Extension and decommodification of services and infrastructure (transport, electricity, etc) o Access to childcare
 * Extension of social wage
 * Access to free and accessible health care, including care, support and treatment for HIV/AIDS
 * Free and quality education
 * Land redistribution