Why the NDP must be redrafted

Failure to get the economics of the National Development Plan right will condemn it to obscurity.

Jobs plan:

1. The plan is not sustainable: success hinges on creating mostly low-quality and precarious jobs outside core productive sectors. It relies almost entirely on small, medium and micro enterprises (SMMEs) and service sector jobs. SMMEs have shown little increase in the share of employment over the last decade. The expectation that 9.9 million jobs will come from SMMEs is highly unrealistic.

Industrial strategy:

2. The plan fails to pursue the vision of reindustrialising the economy, with manufacturing at the centre. It ignores recent consensus around the need for a state-led industrial strategy, which has been successfully pursued by our Brazilian and Chinese partners.

The NDP envisages the share of manufacturing in total jobs shrinking from about 12% in 2010 to 9.6% in 2030. On the other extreme, employment in all services increases by 5 million jobs in the plan, or up from 30% as a percentage of employment to a whopping 40% in 2030.

Of the 11 million new jobs envisaged, nearly two-thirds will come from services, domestic work and the informal sector. Hardly an industrial strategy.

Workers' rights:

3. The plan is premised on undermining worker rights and a low-wage strategy. The key lies in the old treasury agenda of deregulating labour markets. The plan proposes a series of measures to promote a new stratum of ultra-low-paid first-time workers.

Labour market deregulation would be achieved, among other things, through legislative measures aimed at making dismissals easier, allowing free reign to labour brokers, reducing worker rights in SMMEs and broadening the definition of essential services to prevent strikes in large parts of the public sector.

Statistics show that low wages don't create employment. On the other hand, 2.5 million jobs have been created for higher-paid, higher-skilled workers.

Inequality:

4. The plan proposes that the Gini coefficient, which measures income inequality, will only decrease slightly from its current world-beating level of 69% (or 0.69) to an excessively high 60% by 2030. This long-term target (which Brazil has greatly surpassed in fewer than 10 years) is an embarrassment.

The average Gini for OECD (more developed) countries is less than half of this.

The plan proposes to increase the share of income going to the bottom 40% of income earners from the current 6% to a mere 10%.

The ambition of the plan is therefore that nearly half of our people should receive only 10% of the wealth after 18 years of the plan's implementation.

Poverty measure:

5. The plan uses a very low poverty measure of R418 per person, per month (2009 prices), suggesting only those households with an income of less than R2 000 per month are living in poverty.

It argues that, in 2009, 39% of South Africans fell below this level, and that by 2030 no one will fall below this level. But the household subsistence and supplemented living levels are higher.

By these measures, the minimum income a family of five needed to afford basic necessities was around R3 500 per month in 2009.

In December last year, in looking at minimum wages for farm workers, the bureau for food and agricultural production found that farm workers wouldn't even be able to afford enough food to feed their families adequately, if they earned R2 000 per month.

Roughly 50% of South Africans lived below the R3 500 level in 2009.

A more realistic calculation of poverty levels would require projections to be adjusted.

Unemployment:

6. A 6% unemployment target is unrealistic: the plan uses the limited definition of unemployment, which excludes all discouraged jobseekers.

Its figure for unemployment is 25% for 2010, as opposed to the more realistic rate of more than 36%. The 6% target therefore lacks credibility, and would need to be recalculated.

In conclusion, contrary to its marketing spin, the economic dimension of the plan is not coherent or evidence-based, but ideological. It is based on faulty statistics, dubious economic assumptions and incoherent analysis.

Neil Coleman is a Strategies Coordinator in the COSATU Secretariat.

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