What will the campaigns of the EFF, MK and any upcoming ANC breakaway parties emphasise in the 2029 elections? If the ANC and the DA, along with big business, continue to focus on growing GDP without a robust plan to spur large-scale job creation, how difficult will it be for parties outside the ruling coalition to benefit by spinning an updated version of Jacob Zuma’s “white monopoly capital” campaign? 

Whereas pre-election surveys identified jobs as voters' top concern, our government of national unity (GNU) is continuing the ANC’s and big business’ preference for prioritising investment-led growth. While policies and practices which attract investment flows should certainly be encouraged, the most damaging effects of our unemployment crisis are on track to compound through to 2029. This favours radical political parties at GNU members’ expense.

ANC policy makers have entrenched the world’s highest unemployment rate and our unemployment bulge is concentrated among young adults. When more than half the people leaving school each year remain unemployed several years later, the vast majority of them become permanently marginalised.

Youth unemployment

Other countries go to great lengths to avoid prolonged unemployment crises far less severe than ours as, even under best-case scenarios, remedies leave many lives irreparably damaged. Under less favourable scenarios, a country’s socio-political fabric will be stressed to the point of breaking. Law and order and constitutional protections become increasingly vulnerable. 

Discouraged workers can be identified by asking them if they have sought employment within the prior four weeks. Determining if someone has become permanently marginalised isn’t as simple, yet it is clear that millions of our younger adults will never acquire and apply meaningful skills. While we can agree on definitions and estimate the size of this group, we cannot predict which individuals will never become productive. Similarly, we can estimate the portion of heavy smokers who will eventually succumb to lung cancer even though we can’t confidently identify such people just because we know they smoke two packs per day.

Each year at least an additional 200,000 South Africans, mostly in their mid to late twenties, quietly and anonymously, become permanently marginalised in that their prospects for ever becoming skilled workers evaporate. For this number to decline meaningfully through growing GDP would take more than a decade. If, say, 5% growth was maintained for five years, far more school leavers would find employment but the backlog would remain largely intact. Meanwhile, median economic forecasts suggest that SA’s per capita GDP will stagnate this year, next year and in 2026.

Ruling elites of commodity exporters

To fund government expenditures, pay for imports and service debt, political elites in most countries need the vast majority of their younger adults to be productively employed. Conversely, those governing resource-rich countries have often secured political support by exploiting identity politics and making many young adults dependent on the state. Such traditional forms of patronage are threatened by today’s services-driven global economy along with the expansion of communication channels.

Our broad post-1994 challenge was to transition from our economy being excessively reliant on commodity exporting and this contributing to most South Africans being permanently marginalised. It has long been clear that this was only doable through integrating into a welcoming-but-demanding global economy. As so many countries have demonstrated, such broad economic transitions require that a significant portion of young adults integrate into global supply chains. 

On the one hand, our timing was perfect as globalisation, with its unprecedented capacity to swiftly uplift lower-skilled workers by the hundred of millions, began gaining tremendous momentum in the 1990s. On the other hand, our political transition, resource wealth and racial divides made South Africa ideal for exploiting patronage politics. 

The formidable trio of Mandela, Mbeki and Manuel explored policies to balance the pursuit of healthy economic growth with the political imperative for redistribution. While they resisted the temptation to aggressively redistribute, a workable vision for sustaining high growth alluded them. 

Looking back, it is obvious that we needed to aggressively integrate into global supply chains, as this was the common denominator among the dozens of countries that achieved profound upliftment while sustaining high growth over the past three decades. This was, however, ultimately rejected in favour of the ANC expressing their isolationist biases through policies they now term “localisation”. 

Removing sanctions made it seem that we were integrated into the global economy but we only integrated into global supply chains in sectors highly distorted by government interventions to favour unions - a form of patronage - such as automotive, pharmaceutical, steel and aluminium production. Such favoured sectors, along with raw materials, were to dominate our exports. This is nearly the opposite of specialising to achieve competitive advantages by adding value within niches of global supply chains. 

Our mining and agricultural capabilities are impressive yet they offer quite limited potential to expand employment or to broadly upgrade skills. Almost all of the countries with very poorly skilled workforces are commodity dependent - and poor. South Africa is an extreme case in that not only do we have the world’s most severe unemployment crisis, but our unemployment is concentrated among young adults. And, according to the World Bank, we also have the world’s most extreme income inequality - and this remains true even if the data for whites are excluded. 

The colour of capital

Jacob Zuma’s embrace of “white monopoly capital” sloganeering was profoundly disingenuous in that the economic hardships which a majority of South Africans tolerate daily aren’t the fault of our private sector CEOs or investors. They trace directly to ANC policies which ensure obscenely high levels of unemployment and poverty and the ANC has never been a white organisation. But Zuma has exited the ANC and the ANC has aligned with a party that is favoured by most white voters.

Prior to Zuma’s ‘nine lost years’, Thabo Mbeki and Trevor Manuel advanced policies which resembled reasonable compromises but could never deliver broad prosperity. A commodity boom produced roughly 5% annual growth for the five years ending in 2008 but this boom was fueled by China’s massive growth through adding value within manufacturing supply chains - the inverse of the ANC’s embrace of isolationism and reliance on commodity exports. Our new GNU government hasn’t yet gelled around accelerating job creation. Will it, or will localisation remain a central feature and will most of our young adults continue to become permanently marginalised?

What has fundamentally changed for the ANC is that their electoral strategy of placing great reliance on patronage is no longer viable economically or politically. There is pressure within the GNU for policies which will reduce dependencies through creating jobs while parties like the EFF and MK will fervently embrace patronage politics in 2029. A creative public relations firm will have little difficulty updating the “white monopoly capital” slogan and such messaging will resonate with the still growing portion of voters who are economically stranded.

The viability of our GNU rests on its spurring millions of jobs. This can happen through far greater global integration. In fact, it can only happen through far greater global integration.

@shawnhagedorn      shawn-hagedorn.com