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Speech from Mr. Angel Gurría, OECD Secretary-General: Unlocking South Africa's great economic potential
Despite considerable success on many economic and social policy fronts over the past 19 years, South Africa faces a number of long-standing economic problems that still reflect at least in part the long‑lasting and harmful legacy of apartheid. Unemployment remains excessively high, educational outcomes are poor on average and extremely uneven, which aggravates the excess supply of unskilled labour as well as worsening income inequality. In addition, the prospects for sustained improvements in well-being are compromised by environmental challenges, notably climate change and water stress. South Africa needs to achieve rapid, inclusive economic growth while at the same time making the transition to a low-carbon economy and managing effectively the country’s scarce water resources. Tackling the key problems effectively will require continued skilful management of macroeconomic policies, but above all improved implementation of structural policies, with education being a particularly critical area.
In particular, the government should undertake the following structural reforms in view of achieving faster, more inclusive and more sustainable economic growth.:
- Education should do a better job in providing equal chances for all South Africans. The government should expand its programme to address infrastructure backlogs, improve the delivery of learning materials with priority to the most deprived schools, and increase the number of teachers. More school leadership training and support staff could be provided to school principals in exchange for stricter accountability. The South African government could further improve the governance of the education system by joining the Programme for International Student Assessment (PISA) and the Teaching and Learning International Survey (TALIS) and by undertaking an OECD Review of Evaluation and Assessment Frameworks for Improving School Outcomes.
- Youth employment could be improved by reforms of the vocational education and training as well as apprenticeship systems, for instance by providing tax credits to firms hiring trainees, by simplifying hiring administrative procedures and by building more public‑private partnerships.
- Product market regulation should be less restrictive, particularly as regards barriers to entrepreneurship. The within‑sector legal extension of collective bargaining agreements could be curtailed, while the level of centralisation and co‑ordination in collective bargaining could be increased to allow for greater influence of outsiders on wages and conditions.
- The South African policy framework for addressing environmental issues, including climate change and water scarcity, is sound, but implementation has so far been slow, in part due to limited administrative capacity. In designing climate change mitigation policies, broad and easy-to-implement instruments, such as a simple carbon tax, should therefore be favoured. Implicit and explicit subsidies for energy and coal consumption should be reduced, while other instruments, such as cash transfers or supply vouchers, should be used for protecting the poor. To deal with water scarcity, water-use licenses should be allocated and charges for water should reflect supply costs.
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- Per capita income growth has been slower than in most other major emerging economies
- Selected economic indicators
- The negative output gap is still widening
- Several economic indicators are still below pre-crisis peaks
- Households have struggled to reduce debt loads and rebuild net wealth
- Export commodity prices have turned down recently
- The cyclically adjusted deficit widened in the crisis and remains sizable
- Inflation has fluctuated with food and fuel prices, but core inflation has been stable
How to obtain this publication
The complete edition of the Economic Survey of South Africa is available from:
For further information please contact the South Africa Desk at the OECD Economics Department at email@example.com.
The Secretariat’s draft report was prepared by Geoff Barnard and Fabrica Murtin, under the supervision of Andreas Wörgötter. The draft has benefited from valuable background research by Yaseen Jhaveri, seconded from the South African National Treasury. Research assistance was provided by Corinne Chanteloup. The Survey also benefited from valuable background research by Nicola Branson and Murray Leibbrandt from SALDRU at the University of Cape Town, and by George Frempong, Dean Janse van Rensburg, Vijay Reddy and Lolita Winnaar from the Human Sciences Research Council.