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This article therefore presupposes the Fund will be able to achieve the goal
of 150,000 jobs and then looks at the possible unintended consequences.
It advocates an awareness of the possible unintended consequences that
policy makers should plan for and, where possible, mitigate.
By George Lwanda
Volume 31 / 2011
29
ECONOMICS
with poor service delivery in poor
areas, has further fuelled a sense of
exclusion by the poor resulting in what
this article refers to as a them belly
full but we hungry situation.1 It is this
situation, this article contends, that has
invigorated service delivery protests
in South Africa and has inspired
sometimes violent regime change
actions in the Arab world.
That said, the funds strongest
point arguably is the challenge fund
approach which, if appropriately
and transparently applied has the
added potential of improving relations
between government and the private
sector whilst mobilising various
stakeholders of the economy into fruitful
partnerships. Additionally, the job fund
has the potential of strengthening
existing government interventions. Such
interventions include the R20 billion
tax incentives for the manufacturing
This is likely to lead to the fund, as the CEO of the Durban Chamber of Commerce, Andrew Layman
puts it, reeling in the fish at the expense of the small fry.
sector as well as the R10 billion for
job creation projects that the Industrial
Development Corporation (IDC) is
managing. Given this background, it is
only intuitive that any failure to create
jobs will not be due to the lack of trying
and most certainly not out of want of
funding.
Nevertheless the fund still exhibits
some loose ends that need to be
tightened. The proceeding sections
analyse two of these loose ends. The
aim is to contribute ideas on how such
an important government initiative
can improve peoples lives and why
it should be seen in that constructive
light.
The Importance of Establishing the
Counterfactual
It is important to point out that
the articles reasoning is based on a
simplified form of counterfactual
reasoning.
The
importance
of
applying appropriate counterfactual
reasoning in policy analysis cannot
be overemphasised as it provides a
benchmark from which the effects of a
policy intervention can be unpacked.
This facilitates the analysis of salient
30
THE THINKER
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ECONOMICS
A possible solution
A possible way in which the effects of
the identified weaknesses can be dealt
with is for the Job Fund to incorporate
an aspect of regional assistance that
primarily aims at reducing or at least
containing unemployment disparities
across the regions of the country.
This is not easy and will require
more homework on the part of the
authorities. Authorities will have to
understand the South African regional
economies and the disparities amongst
the regions, their causes and, more
importantly, why they persist over time
and why past interventions have not
been so successful.
It is important to point out that whilst
selective regional assistance to predetermined worse off areas is not the
panacea to either unemployment or
disparities in the regional economies
of the country, it will go a long way
towards stimulating regional economies
and alleviating the them belly full but
we hungry affliction.
Conclusion
The Job Fund is, to date,
governments boldest step to show
its commitment towards its stated
aim of creating jobs. Its emphasis on
partnerships lends further credence to
governments seriousness. Additionally
its phased implementation over a
three year period facilitates learning by
The migration of labour from high unemployment areas to areas of relatively less unemployment
has the potential to exert increased pressure on the provision of social services and competition for
resources in the latter areas.
is one in which these new jobs lead to
a high absorption of previously idle
labour resulting in the employment
of previously unemployed labour at
minimal cost to existing jobs.
The importance of this is illustrated
by the fact that the ILO has a dedicated
guideline manual on the tools that can
be used to minimise employment
displacement.
The second weakness lies in the
way eligibility to the Fund has been
formulated. The Job Fund brochure
states that The Fund will not limit
investments to specific sectors or
geographic regions. This is likely to
lead to the fund, as the CEO of the
Volume 31 / 2011
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