Sound policymaking can drive job creation

The digital economy can create the jobs we need, the government needs to create a conducive policy environment.

South Africa’s unemployment crisis affects our youth the most – the group that should be starting their careers and contributing to economic growth. While unemployment continues to rise, our economy is on a path towards greater digitalisation, with more and more businesses digitising processes.

Digitalisation creates opportunities for disruptive new players to enter and transform sectors. The banking and insurance sectors were the first to be turned on their heads, but even sectors like mining and manufacturing are changing. For example, automation in mining means that dangerous and onerous jobs such as deep-level and open-cast mining are increasingly undertaken by intelligent machines controlled from a central facility, often some distance away.

Ubiquitous sensors and sophisticated use of data analytics are also automating manufacturing and making it more responsive to market needs. In both cases, the Fourth Industrial Revolution is seeing unskilled labour replaced by skilled labour.

Other factors like the switch away from fossil fuels in the energy sector and artificial intelligence also play a role across all industry sectors. 

Digital disruption can be a challenge or an opportunity. 
Businesses are taking the disruption message to heart, but we need policymakers to do so, too.

We need policies that support SMMEs’ integration into the digital economy.
One area of focus is the under-reported township economy, which offers informal employment to many South Africans

In a recent speech, Deputy Finance Minister Dr David Masondo noted that switching to electric vehicles would mean substantial job losses in the automotive components industry. The automotive sector accounted for 4.9% of GDP in 2023, while automotive components made up a significant chunk of the automotive industry’s exports in 2022, worth R227.3 billion. The shift to electric vehicles will see the automotive components industry lose its export potential.

Digital economy jobs and policy
In theory, the new jobs offered in the digital economy could offset these job losses, provided the workforce could be reskilled and upskilled.

Digital disruption can be a challenge or an opportunity. Businesses are taking the disruption message to heart, but we need policymakers to do so, too. For example, the long queues at the Beit Bridge and Komatipoort border posts are often caused by processing delays. The digital revolution offers a way to solve the problem while creating jobs.

• What if the rural communities close to the border post were enabled to set up stations where vehicles, particularly trucks, could be digitally processed before they get to the border? This would eliminate the long queues and create jobs where they are most needed. The government can undertake policy interventions to enable this kind of job creation. Such policies should respond to the realities of today’s economy rather than the focus being on redressing the wrongs of the past.

Among these realities are:

• Education: Our education system must produce people with the STEM skills needed for the digital economy. The education policy framework must be revised to enable these skills to be acquired.

• Labour: There is growing consensus that current labour policies are too restrictive and outdated. The focus has to be on getting more people to work.

• Immigration: The right skills are vital, especially when new technology is involved. The smart approach would be to make it easy for skilled individuals to relocate to South Africa and pass on their skills to South Africans. This could result in the creation of new companies and jobs.

• SMMEs: Globally, SMMEs are recognised as the true engines of economic growth and job creation. We need policies that support SMMEs’ integration into the digital economy. One area of focus is the under-reported township economy, which offers informal employment to many South Africans, as described in GG Alcock’s ground-breaking book, KasiNomics.
  • What policies are needed to help this sector formalise and access capital? What policies could create a trusted digital environment to make transacting more accessible and safer? A related issue is access to capital, a perennial cause of SMME underperformance and failure.
  • What policies could assist in making venture capital more available for SMMEs?

The same point could be made of the vast pool of stokvel wealth.

• Social grants: Social grants will likely remain a reality in South Africa for a long time. With ingenuity, policymakers could direct this spending in ways that lead to job creation in the digital economy – for example, putting policies in place to support the creation of digital marketplaces where social grants could be spent safely and cost-effectively.

The move to the digital economy is inevitable. With the right policies, we can turn it to our advantage and create the jobs we need. The only question is whether our policymakers can discard their blinkers and develop policies that create jobs, not castles in the sky.

Source: Business Essentials