There is much to celebrate from the last 21 years in South Africa.
The systematic, legislated exclusion of the majority of South Africans from sharing the country’s wealth resulted in one of the most highly unequal societies world-wide, where race largely determined life chances. There have been notable improvements in access to education, to public health clinics, and to electricity and clean, piped water. All of these efforts are reflected in absolute poverty levels: only 11 per cent of South Africans experienced hunger in 2011, for example, down from a quarter of the population just 10 years earlier.
Yet, for all of the above progress, things have not gone as well as they might have. The foundations of these improvements are shaky. Furthermore, if reforms are not made now, many of the ambitions that the ANC and its supporters had when coming to power in 1994 will remain unrealized, leading to a more cynical and potentially unstable country.
The gains made since 1994 have been accomplished in part through increases in government spending that have strained a narrow tax base. Government expenditure is pushing public debt ratios towards unsustainable margins, approaching 50 percent of gross domestic product. Some estimates put social grants and state jobs together accounting for all government revenue by 2026, assuming average yearly revenue growth of around ten per cent. As then Finance Minister Pravin Gordhan warned in 2013, ‘high levels of government debt put upward pressure on interest rates and can have other effects that undermine growth and investment in the economy’.
The key problem is South Africa’s level of joblessness, which threatens to be the new apartheid, where life chances are determined by access to employment. Since 1994 South Africa has created jobs, just not enough for its growing population. Between 1994 and 2014 the number of employed almost doubled to 15.1 million. Yet, the number of unemployed (as defined broadly) increased even faster from 3.7 million to 8.3 million. In 1994, there were 2.2 people employed for every unemployed person. By 2014, the ratio had fallen to only 1.8. As a result, unemployment, using the expanded definition, has risen from 31.5 per cent in 1994 to almost 36 per cent 20 years later, and to nearly 70 per cent among South Africans under 35 years old.
If the unemployment crisis is not addressed, it will be impossible to lift many millions of people out of poverty. Especially in light of the Arab Spring – fuelled in good part by youths who believed that they had no future – the stability of South Africa cannot be assured given compounding issues of insecurity, unemployment and lack of investment. It is by growing the number of jobs, not increased government spending, that South Africa will thrive.