September 1, 2012

Today I met with my Development professor Anthony Black to try and see his views on the recent progress of Broad Based Black Economic Empowerment. The first thing he said to me was that you simply cannot empower anyone; it is up to them to prosper.  This was the first mistake of BBBEE, the idea that handouts and special treatment could act as reparations and rectify a damaged history. Even if the idea proved successful and educated, driven blacks found themselves in positions of influence, power and governance to create better lives, there are only a certain amount of positions available.

Anthony Black, Professor of Development Economics

rest in the same position as before. Many critics have even cited BBBEE as a tool to bolster the ANC and secure votes, projecting the image that they are working hard to secure the futures of the majority.

Of course there are positives to the BBBEE program claims Professor Black. The most important of the scorecard aspects is the emphasis on skills development. This is the area in which there could be positive externalities and hopefully an improvement in the unemployment rate.

For this class I wrote a book review on UNDP’s an Employment Targeted Program for South Africa. One of the most startling facts brought up in the book is the heavy reliance on capital intensive methods over labor. The first inference of a high unemployment rate is that there is an abundance of labor available. It begs the question as to why companies have opted increasingly to go with capital intensive methods in South Africa. Perhaps not the only answer, but many agree that there is a sever lack of skills in the current labor market, especially as capital flight continues. It is more convenient and feasible to employ machines to do work than train a multitude of employees from scratch with little to no education. That being said, incentives such as that in the BBBEE to encourage skills development could greatly increase the participation rate of the unemployed and help match them to job openings.

As the unemployed become skilled and find long term employment, not seasonal and temporary work such as the building of roads, it will also help eliminate the stigma of lethargy associated with the unemployed, lending credibility to the BBBEE program.

August 12, 2012

When writing my proposal for this scholarship, I read a lot of work by Moeletsi Mbeki, brother to former President Thabo Mbeki. This was my first glimpse at the face of cynicism towards Broad Based Black Economic Empowerment, and I was determined to find its proponents as well. It seems however that even more than before B-BBEE has become synonymous with lethargy, entitlement and corruption.

Moeletski Mbeki

The topic came up in my growth and development class, and the most intriguing part of the discussion was the clear divide between the white and black students. The white students mimicked the thoughts of Mbeki, citing the increasing cases of corruption, how the system has been used to elevate a select minority of black elites, and the hurdles the system has added to enterprising companies. Most of the black students while agreeing with B-BBEE’s pitfalls, also spoke with a sense of hope. B-BBEE has been going through a lot of changes this past year in the hopes of avoiding what Mbeki calls “stagnancy “ and “decline”.  The most recent amendment was finalized this month and in essence has made the BBBEE scorecard much stricter and therefore difficult to achieve. The goal of this amendment is to combat the constant corruption concerning the BBBEE scorecard. According to Sipho Ncgobo, financial manager at Anglo American, “generally fronting is when companies pretend to be compliant with the BEE Act by placing black people in positions that would make them seem they either own the company or were at a level to make decisions in that company”. By doing so, they receive benefits reserved for those in proper compliance with BBBEE.

Sipho Ncgobo

While this seems to be a step in the right direction, this amendment also adds many complications for businesses attempting to adhere to the BBBEE scorecard. Honest, small businesses working to receive BBBEE benefits must now stretch themselves even farther or face a loss in revenue. This doesn’t help the reality that small businesses are most responsible for curing youth unemployment, yet have been hurting the most. As stated before, there is also the negative stigma associated with current BBBEE practices. Mbeki has called it legalized corruption and while speaking to Ngcobo, he called this amendment a “last ditch” attempt to salvage the program. It seems however that these efforts have instead reinforced the idea that any respectable black entrepreneur should avoid BBBEE benefits to save his dignity and reinforce himself as a hard working businessman.

What I’ve seen is that these amendments and attempts to fix the BBBEE system have not only discredited the government but done little to nothing for the unemployment problem of South Africa. It’s portrayed as a corrupt system that benefits a few wealthy black businessmen and furthermore exasperates the stigma of the lazy, entitled black businessman. 

July 16, 2012

I've only been in Cape Town a week and I've already felt myself becoming slightly numb to the immense amount of beggars encountered on the street. The homeless seem to the dwarf the number of New York City, or they are simply more open and less abashed by their economic status. When so many people confront you for change or food on a five minute walk to the grocery store, it’s hard not to become indifferent, especially when every single person simply can’t be helped. It also begins to raise personal questions as to whether they should be helped, why they are homeless or unemployed and if giving money is simply enabling them to continue to live a life of begging.

 While the large number of beggars seems to makes sense in accordance with the staggeringly high unemployment rate, near 23%, it is also important to note that a lot of people are engaged in black market activity and jobs that do not show up in the country’s polls or taxes. This includes sellers of vegetables, braii cooks, homemade jewelry and gifts, maids, and other self employed, undocumented work. While this may lower the unemployment rate somewhat, the money received performing these types of jobs are hardly significant, especially in the hopes of supporting a family. There are also exists a large amount of people working as “car parkers” and “garbage men”. These” jobs” are occupied by people that sit on the side of the road near empty parking spaces and attempt to direct and assist cars into parking spots and then offer them a garbage bag to unload any waste from their car. Afterwards, the workers ask for change in reward of their assistance.

I recently read that the fundamental goal of the International Labor Organization is the achievement of decent and productive work for both women and men in conditions of freedom, equity, security and human dignity. Decent work is then defined as the “promotion of standards and rights at work, to ensure that worker's constitutionally protected rights to dignity, equality and fair labor practices, among others, are safeguarded by appropriate legal frameworks; the promotion of employment creation and income opportunities, with the goal being not just the creation of jobs but the creation of jobs of acceptable quality; the provision and improvement of social protection and social security, which are regarded as fundamental to the alleviation of poverty, inequality and the burden of care responsibilities; and the promotion of social dialogue and tripartism”.

It is interesting then that walking down the road from my house are three guys employed to put on a giant foam finger and point to the mall being refurnished all day. Gas stations employ a much larger amount of people than here in the States; one person to wave you to the pump, one to wipe the windows, one to dry the windows, one to pump the gas and one to handle the money. It just seems as though labor is so abundant and so cheap that “the goal of [not] just the creation of jobs but the creation of jobs of acceptable quality” is not being fulfilled and will be difficult to do so. A paper written by Tamara Cohen and Luendree Moodley at KwaZulu-Natal University entitled Achieving Decent Work in South Africa? cites these very types of jobs and poor economic performance in South Africa as reasons why the informal sector has been steadily increasing. With the rise of the informal sector, “decent work” will become increasingly hard to achieve and poor working conditions as well as exploitation will continue to rise.

This is just my first glance at the unemployment in the small suburb of Rondebosch and surrounding suburbs of Cape Town that I live in. The suburb is bolstered by the presence of students and University of Cape Town and therefore boasts the second richest city in South Africa and an annual growth rate of 4.06%. However, unemployment in Cape Town is still a staggering 18% and so I’m interested to see what the rest of Cape Town and South Africa have in store.