Skill scoreboard needed for jobs growth

South Africa needs a 'skills scoreboard' to help it achieve its goal of halving unemployment within a decade, according to STANLIB economist Kevin Lings, who says skill constraints remain the No.1 obstacle to sustainable growth.

With South Africas GDP growth target set at 6%, Lings believes a mechanism is needed that will keep South Africa focused on skill incubation.

South Africa's economy grew at an impressive 5% in 2006 and as averaged growth of around 5% over the past three year - fuelling hopes that unemployment could be significantly reduced in line with the strategic goals set by President Mbeki despite concerns from business around skills constraints.

In fact over the last 3 years the economy has added approximately 1.5 million jobs on a net basis. However, the focus on trying to achieve sustained growth above 4.5% makes it vital that the skills bottle-neck be broken, says Lings.

The concept of skills benchmarking is prompted by the Reserve Banks success in focusing attention on inflation targeting.

"A regularly updated scoreboard is a powerful way of building understanding of public policy and obtaining the buy-in of all role-players," says Lings. "SARB has shown how with inflation targeting".

'Scoring our skills success will be more complex, but we urgently need to keep tally. If we win big in the skills league we simultaneously tackle poverty and bring down unemployment."

Key elements in skills benchmarking would include:

*  Public spending on adult education, training and retraining;
*  Private sector training investments;
*  The numbers of graduates in technical and engineering disciplines produced annually by our universities and technikons;
*  The numbers of qualified engineers, technicians, specialists and professionals retained by South Africa;
*  The numbers of skilled workers who emigrate to South Africa or come here on contract. 
 

Lings says South African business has major concerns over skills constraints.

The Department of Trade and Industry (DTI) in partnership with the World Bank commissioned a study of 800 South African formal sector employers, with a sample bias toward value-adding manufacturing and construction sectors where significant jobs growth might be achieved.

Each firm was asked to name the factors which inhibited its investment in new factories, modern equipment and business expansion.

Lack of skills was top of the list, with more than 35% of companies naming this factor as the biggest brake on new investment. This was more than twice the level noted for cost of financing (interest rates) and nearly three times higher than access to finance.

Says Lings: "For well over a decade, the major concern has always been interest rates. Until recently, our rates were at a 25-year low, but still the level of fixed investment spending as a percentage of GDP remained at only 18% - pathetic for a developing economy.

"Investment in private non-residential construction as a proportion of GDP - items like factories, industrial parks, offices and warehouses - is close to its lowest level in more than 30 years.

"What's stopping the private sector putting more money into new productive capacity? Part of the answer is the dearth of skills. It's becoming a national crisis." 

Lings adds: "A businessman is not going to buy new machines if they will stand idle or be under-utilised because skilled personnel can't be found to operate them. We have to invest more in building our skills-base. Even then, it may be necessary to attract foreign specialists to fill some gaps and foster knowledge-sharing."