A long walk to economic parity for South Africa

JOHANNESBURG - Sam Khumalo works feverishly in the muggy heat, sifting through mounds of garbage for empty bottles and other materials for recycling as flocks of black-faced sacred ibis circle hungrily above.

After failing to secure a formal job because of his lack of schooling and skills, the 32-year-old father of two has been eking out a living for the past two years scavenging in mountains of rubbish from Johannesburg's affluent suburbs.

Although the South African economy is enjoying its longest expansion on record, millions of poor South Africans such as Khumalo have nothing to celebrate.

"There are no jobs anywhere, that's why I am here. I collect empty bottles, paper, cardboard, scrap metal and anything that can be recycled. I sell them and the money helps me to buy food for my family. I cannot afford luxuries."

Khumalo, who was laid off from his factory job five years ago, said he earned up to 130 rand ($29) a week, depending on how hard he worked or what he found.

His tale is all too familiar in a country where unemployment is officially estimated at 26.5 per cent and is seen as a potential threat to social stability. At some rubbish dumps, people even scavenge for food.

Patrick Craven, spokesman for the powerful Government-aligned trade union Cosatu, said the poor majority had seen negligible benefits from the boom.

"Some are even worse off than before because they have lost their jobs."

Africa's largest economy grew by 4.5 per cent last year, after 3 per cent in 2003, driven by strong household consumption and a rise in disposable income thanks to the lowest interest rates in more than a decade and a booming property market.

The economy is expected to grow by 5 per cent this year.

Retailers have reported strong sales growth, and vehicle sales are expected to reach a record this year.

"This economy is very strong and it's pumping. It is enjoying the longest expansion we have seen in our economic history," said the National Treasury director-general, Lesetja Kganyago.

But Cosatu says few new jobs are being generated, adding that those that are being created are poorly paid and temporary.

Some analysts, however, see evidence that the tide has turned and that growth is beginning to create more jobs - although perhaps not fast enough to soak up the waves of new entrants who are flooding the job market.

Data released this month by Statistics South Africa showed that the country's non-farm sectors created 99,000 new jobs in the third quarter of this year, a rise of 1.4 per cent.

Craven said many of the new jobs were low-wage and insecure.

But the Government is adamant the economy is creating permanent jobs and says the problem lies with a poor skills base.

A joint survey from the South African Government and the World Bank said this month that a skills shortage and the relatively high cost of labour were seen as the biggest obstacles to investment in the country.

Investment in South Africa remains low, at between 15 and 16 per cent of gross domestic product - well below the 25 per cent level the Government is aiming for to reduce unemployment and poverty.

The survey also identified rigid labour laws, exchange rate instability and crime as key constraints.

Economists say the economy will continue to generate jobs in the short- to medium-term as the Government seeks to reach its target of 6 per cent growth by 2010.

The strategy will be driven by a 320 billion rand ($73 billion) public spending programme over the next three years.

Cosatu says the Government should provide a basic income grant for the unemployed and will continue pushing for salary increases above the Government's 3-6 per cent inflation target.

It wants to bridge the large income gap that still exists between a rich elite and the poor more than a decade after the end of white apartheid rule.

The Government, which already provides state pensions and grants for children, opposes handouts.

"Our own approach in this respect is to ensure that the majority of our people depend on their own participation in ordinary economic activity for their livelihood, not transfers from the state," said Kganyago.

"Give people dignity. When you talk to people they want to take charge of their own destiny and you have got to grant them that opportunity. Unless we deliver education and health to the poor, then growth will not be shared growth."

Jobs remain scarce

* South African unemployment stands at 26.5 per cent.

* Most jobs being created are poorly paid and temporary.

* Investment remains low, at between 15 per cent and 16 per cent of GDP.

* That is well below the 25 per cent level the Government is aiming for to reduce unemployment and poverty.

* Other constraints on growth include rigid labour laws, exchange rate instability and crime.

- REUTERS