Sector strategies for employment creation: construction, social services and food

Paper presented at the TIPS/DPRU FORUM 2003, The Challenge of Growth and Poverty: the South African Economy Since Democracy, 8-10 September, Indaba Hotel, JohannesburgHigh and growing rates of unemployment have been a source of great frustration to policy-makers. Although exports have been buoyant and the 1990s has been the first decade of sustained growth, unemployment has been rising by 2 percentage points each year. If the expanded definition is used, the rate of unemployment reached 41.8% in September 2002. In a context where the majority of the unemployed are unskilled and the tradables sector has been shedding rather than absorbing unskilled labour, less orthodox avenues of employment creation require investigation. To that end, this paper examines the prospects for employment creation through meeting basic needs. While the latter is an imperative in its own right, because the industries that provide basic needs are non-tradable and have high employment multipliers, particularly of unskilled and semi-skilled labour, the expansion and re-orientation of government expenditure in this area unlocks opportunities for employment creation. The central contention of this paper is that industrial strategies for each of the basic needs sectors are required to realise their potential for employment creation. Three sectors are analysed from this perspective: construction and building, social services and food distribution. These sectors are aligned to existing government programmes where expenditure is projected to increase significantly over the next three years. This means that either through the direct provision or procurement of these goods and services, government has a powerful policy lever to influence the pace and pattern of employment creation in these sectors. Ultimately, employment creation strategies that are aligned to industrial strategies and that fulfil government's obligation to meet basic needs are more sustainable than the short-term job creation strategies that dominate policy interventions at present. A preliminary analysis of the form that such industrial strategies could take in the construction, social services and food sectors is presented as the basis for a more comprehensive research agenda