New Employment Growth Path

Consideration should be given to changing the name to New Employment Growth Path as employment creation is the main objective. In addition, the South African experience provides ample evidence that higher economic growth will not necessarily translate into sustainable jobs growth.

New Employment Growth Path 2) The government’s objective is to create 5 million jobs over 10 years. The channel of job creation is via higher economic growth. Thus, job growth should follow from higher economic growth. As stated in 1) above, it is not a certainty for high economic growth to generate more jobs. Job creation is influenced by many factors and is not a prerequisite for economic growth. The use of capital and technology can also be drivers of economic growth.

New Employment Growth Path 3) The government states many options as to how to achieve the target of 5 million jobs. It ranges between 4% growth to 7% growth. Though not explicitly stated in the document, the government has publicly stated that it prefers the 7% option. This means that the government does not prefer the option of increasing job absorption, in other words the employment intensity of growth. What this means is that the government prefers the option of 0.5% growth in jobs for every 1% economic growth. Opposed thereto, if job absorption can be improved to 0.75%, only 4% growth will be needed to create 5 million jobs. This option will reduce the pressure on economic growth to rocket, but will reduce poverty. Furthermore, if the economy can growth at 7% and job absorption is increased to 0.75% some 8.5 million jobs can be created making a severe dent into unemployment and poverty.

New Employment Growth Path The main problem is that the New Growth Path is a framework without clear purpose, no empirical research to determine why unemployment remains high and no evidence based testing to determine the policy options with the highest probability of achieving whatever the objective is