THE DEVELOPMENTAL STATE IN SADC: CLAIMING THE POLICY SPACE FOR DEVELOPMENT - PowerPoint Presentation

Slide1

THE DEVELOPMENTAL STATE IN SADC: CLAIMING THE POLICY SPACE FOR DEVELOPMENT

PRESENTED AT THE 10TH SOUTHERN AFRICA CIVIL SOCIETY FORUM

BY

GODFREY KANYENZE (LEDRIZ)

CRESTA LODGE, HARARE

28

JULY 2014Slide2

STRUCTURE OF PRESENTATION

1.0 DEFINING DEVELOPMENT:

1.1 Measuring

Well-being: The Traditional Approach and

Its Shortcomings

1.2 Measuring Well-being: Alternative Approaches

2.0

Defining Developmental

States:

2.1

Developmental States: The East Asian Experience

2.2

Democratic Developmental States

3.0 The Developmental State: Some Evidence

from

SADC

4.

CLAIMING THE POLICY SPACE FOR

DEVELOPMENTSlide3

The Concept of Development: Beyond GDP

MEASURING WELL-BEING AND SOCIETAL

PROGRESS

In the traditional approach, development is measured

using economic

indicators such as GDP or per capita GDP among others.

For

many years, using a monetary measure like GDP per capita as a proxy for the population’s

wellbeing made

much sense, at least for developed countries. GDP per capita provides

a

measure of

a country’s

capacity to deal with the material needs of its residents.

However, the emphasis on

growth in the conventional approaches is

narrow.

GDP

measures the value of output produced within the domestic boundaries of a country over a year.

A

sustained increase in real GDP means there is a sustained increase in the output of goods and services, and growth in the

country’s economy

.

T

here

are three possible limitations of using GDP as a measure of welfare between countries. Slide4

The three limitations are that it ignores the quality of life, it underestimates informal markets and the household economy, and

ignores

negative externalities, the bad effects that are suffered by a third party when a good or service is produced or consumed.

GDP ignores

the

quality of life which is used to evaluate the general well-being of individuals and societies.

Quality of life should not be confused with standard of living, which is based primarily on income.

Instead

, the quality of life includes wealth, employment, physical and mental health, education, etc.

Since

GDP does not reflect

the

quality of life, it is limited as a measure of welfare.

When

GDP (production) increases, negative externalities (air and water pollution) also increase.

Since

GDP does take this into account, it

underestimates

negative externalities, limiting it as a measure of welfare between countries

.

Furthermore, GDP, as an overall measure of economic welfare, does not reveal

inequality

concerns.

Other ways to measure domestic output and income, as well as health, happiness, and fortunes of a person can be through the gross happiness index, the genuine progress index, and the human development index

.

Measuring well-being is about going beyond the cold numbers of

GDP since multiple

dimensions are needed in order to provide a rounded view of wellbeing

.

Measures that go beyond GDP cover environmental and social aspects of well-being that have not been accounted for by the GDP

measure.Slide5

Since the first global Human Development Report of 1990, UNDP refined the definition of human development to mean ‘a process of expanding people’s choices by enabling them to enjoy long, healthy and creative lives’.

To

this concept was added the aspect of ‘sustainability,’ defined by the

Brundtland

Commission report of 1987 as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.

Sustainable

human development puts people at the centre of the development process, and its central tenet involves the creation of an enabling environment where people can enjoy long, healthy and creative lives.

The

global Human Development Report, 1994 added the gender dimension defining SHD as follows (UNDP, 1995: 4):

Sustainable human development is pro-people, pro-jobs, and

pro-

nature. It gives the highest priority to poverty

reduction

, productive

employment

, social integration, and

environmental

regeneration. It

brings

human numbers into

balance

with the coping capacities of

societies

and the

carrying

capacities of nature … It also recognizes

that not

much

can

be achieved without a dramatic improvement in

the

status

of

women and the opening of all opportunities to women

.Slide6

In the context of human development, growth is seen as a means rather than an end in itself. Such an approach acknowledges that a country may achieve

high levels

of growth, but that does not mean it has a high level of human development.

As

the UNDP (1997) found, the following typologies of growth are

not consistent

with

SHD:

Jobless

growth (growth that does not expand employment opportunities

);

Ruthless

growth (growth associated with increasing inequality and poverty

);

Voiceless

growth (growth in the absence of democracy or empowerment

);

Rootless

growth (growth that withers cultural identity

); and

Futureless

growth (growth that squanders resources needed by

future generations).

Economic

growth is therefore a

necessary,

but an insufficient condition for SHD.

What

is critical for human well-being, therefore, is the quality and distribution

of growth

, not just its quantity.Slide7

The Human Development Report, 1996 elaborated on the concept, adding further concepts as follows (UNDP,

1997):

Empowerment

– the expansion of people’s capabilities.

Co-operation

– the acknowledgement that a sense of belonging

brings personal

fulfilment, a source of well-being, enjoyment, purpose and

meaning. In

that case human development embraces ways in which individuals

cooperate and

interact.

Equity

– capabilities and opportunities, and not only income, all of

which should

be accessible and attained by all.

Sustainability

– meeting the needs of the present generation

without compromising

the ability of future generations to meet their own needs.

Security

(especially of livelihoods) – freedom from threats like

disease, repression

, or dislocations

.

This way of looking at development has implications in terms of the role of

the State

.

Under

the human development strategy, the State ought to play a

leading and

strategic role in expanding capabilities and opportunities, and in

ensuring that

growth is broad-based and inclusive (shared). Slide8

The principles guiding the SHD

therefore include the following:

Ethical development that does not violate human rights;

Equity - less disparities between groups;

Inclusion – broad-based approach to growth and development;

Human security – promotion of stability and minimization of the vulnerability of people;

Sustainability - less environmental destruction;

Human development - no poverty and deprivation

.Slide9

Pulling the various strands together, we can summarize the meaning of human development as ‘a multidimensional process involving changes in structures

, attitudes

and institutions as well as the acceleration of economic growth,

the reduction

of inequality and eradication of absolute poverty’ (

Todaro

, 1977: 96).

It

involves changes through which an entire social system geared to the

diverse basic

needs and desires of individuals and social groups moves away from an

unsatisfactory condition

to a better one materially (economically), socially,

politically and

spiritually.

In

this way, development is the sustained elevation of an

entire society

towards a better, more prosperous and fulfilling outcome

.

In

the apt words of the UNDP,

“The economics of growth and its relationship with development, in particular, require radical rethinking. A vast theoretical and empirical literature almost uniformly equates economic growth with development … The central contention of the human development approach, by contrast, is that well-being is about much more than money: it is about the possibilities that people have to fulfill the life plans they have reason to choose and pursue. Thus, our call for a new economics – an economics of human development – in which the objective is to further human well-being and in which growth and other policies are evaluated and pursued vigorously insofar as they advance human development in the short and long term,” (2010:12).Slide10

Other emerging alternative measures of domestic output and income, as well as health, happiness, and fortunes of a person include the multidimensional gross happiness index, the genuine progress index, or the internationally comparable Multidimensional Poverty Index.

These

can alternatively be presented in a ‘dashboard’ reflecting diverse components and trajectories as in the Millennium Development Goals (MDGs).

Such

growing interest in well-being is evident at both domestic and international policy-making levels with notable efforts such as the

Stiglitz-Sen-Fitoussi

Commission on Economic Performance and Social Progress (CMEPSP,

Stiglitz

et.al.,

2009), which advocates for new measures of performance, and OECD’s

Measuring the Progress of Societies

and

Better Life Initiative

.  

Building on the framework proposed by the CMEPSP report, the

Development Progress,

a flagship ODI project funded by the Bill and Melinda Gates Foundation, adopts the definition of ‘progress’ as an “improvement in the sustainable and equitable wellbeing of a society

”.

It

measures progress in eight dimensions, namely; m

aterial living standards; health (p

hysical, mental and social

wellbeing; e

ducation

; e

nvironment;

p

olitical voice and

governance;

s

ecurity

; e

mployment

;

and s

ocial

cohesion

.

To

assess country performance on single and multiple dimensions of well-being, they study “a large and eclectic dashboard” of

indicators

instead of aggregating data into a single, composite index. Slide11

The Concept of Developmental States

The term ‘developmental states’ was coined to describe the successful experiences of East Asian economies in developing productive capacities towards an export-led industrialisation strategy

- the

Newly Industrialised Countries of South Korea, Taiwan, Thailand, Malaysia, Indonesia and more recently China and Vietnam.

These

East Asian economies were able to achieve high growth rates over sustained periods, resulting in the transformation of their societies from agrarian to export-based by the 1980s via the leadership and coordination of highly effective states.

Critically

, t

his process was driven and sustained by developing

internal cohesion through which broad national consensus among political elites, bureaucrats, and the private sector on development goals was fostered.

The

key tenets of this development strategy included the following:

Industrialisation through export-led manufacturing;

Strong educational focus to build skills and domestic capacity;

High savings and investment rates;

Effective state model where state institutions helped build a national economy against protective barriers and economic incentives; spurred by internal social cohesion between the state and economic elites around economic and social objectives;

Cheap wage policy, limiting union building and political

dissent. Slide12

The NICs employed three key strategies diametrically opposite to the neo-liberal prescription.

First

, the NICs developed domestic industries against state protection of nascent domestic industries via tariffs and these were supported with export subsidies and other support from state institutions

.

Second, institutional development played a crucial role, with such organisations being expert-based,

coherent bureaucratic agencies that collaborated with organised private sectors to drive their economies forward.

These

agencies combined meritocratic promotion with competitive selection, with relatively low levels of corruption

.

Powerful state development agencies were created to lead the process, generating strategic information flows (intelligence) within and between the public and private sectors that enabled bureaucrats to assist firms to compete in the global market place.

Third, the accumulation model of these authoritarian developmental states were such that in the early stages, high savings rates were squeezed the adoption of a low wage policy that was enforced through an authoritarian approach to dissenting voices, and in particular labour (anti-labour approach). Slide13
Slide14
Slide15
Slide16

Democratic Developmental StatesRelevance of authoritarian developmental states increasingly questioned post cold war, hence the emergence of the concept of the democratic developmental state.

The

democratic developmental state retains the autonomous institutional nature of the developmental

state and

places emphasis on an inclusive approach to public policy-making, ‘inclusive

embeddedness

’, where the social basis and accountability goes beyond a narrow group of elites to include broader sections of society

.

On this, the Alternatives to Neo-Liberalism in Southern Africa (ANSA, 2006) argues that the development process should be looked at in a holistic manner, implying the need to consider three basic factors:

The “social factor”, meaning how people’s basic human rights are safeguarded and how vulnerable people are protected against poverty and exploitation;

The “democratic factor”, meaning how the political system functions, how decisions are made and implemented, how resources and opportunities are distributed and how justice and fairness is achieved;

The “global factor”, meaning how the system works at global level, how decisions are taken and implemented, how global resources are controlled and distributed and how this global system affects Africa

.Slide17

ANSA (2006) also contends that development must lead to a better life for working people and eradicate poverty, which can only be achieved if development is based on the promotion and protection of human rights, which include:

Political or civil rights (also known as “blue rights”);

Economic rights (also known as “red rights”); and

Social and cultural rights (also known as “green rights

”).

ANSA (2006) also contends that development must lead to a better life for working people and eradicate poverty, which can only be achieved if development is based on the promotion and protection of human rights, which include:

Political or civil rights (also known as “blue rights”);

Economic rights (also known as “red rights”); and

Social and cultural rights (also known as “green rights

”)

.Slide18

ANSA (2006) identifies the solution to the problem of underdevelopment as lying in bold measures of transformation, as opposed to marginal programmes and projects.

It

implores on the state to transform the legacy of underdevelopment towards inclusive and equitable development; implying the need for developmental states to implement a development agenda.

ANSA

(2006) identifies developmental states as planning organisations that appreciate and encourage active stakeholder participation. Such states are expected to address the following issues:

A developmental vision;

A comprehensive development strategy;

Co-ordination of activities of various economic agents;

Setting a legal and regulatory framework; and

Promoting economic restructuring and upgrading as a public good. Slide19

For ANSA (2006), states can only play their developmental role with the role of supportive institutional arrangements which include:A key planning agency as the custodian of the development strategy. It must steer the economy toward particular outcomes and thus needs a fairly high degree of control over economic developments;

A distributional agenda for the redistribution of assets, economic opportunities and income. This must be central to the development agenda. Currently, black economic empowerment (BEE) programmes are being pursued in the absence of an overall development plan and thus are elitist and cannot be transformative;

An efficient bureaucracy with a high degree of skills, integrity and commitment is essential for the promotion and implementation of a development agenda;

Consultative and participatory structures that facilitate inclusiveness in the development process; and

Structures for obtaining up-to date information on economic, social, cultural and political developments

.Slide20

Africa & SADC’s GDP Performance

Improved performance of Africa since

the “lost”

decade of the 1980s

and early 1990s

-

continent

started

to catch–up.

Between 1996 and

2010,

Africa’s average

annual GDP growth amounted to about

5

% and per capita GDP

increased year

by year by an average of 2.5%.

By 2010,

Africa’s

per capita income exceeded

its 1995 level by 46%.

Catching-up

of African economies

is widespread, save for

a few countries.

Held back by adverse

external shocks,

the

global recession in 2009, and political events such as the “Arab Spring”

in 2011.

Over the period 2002 to 2011 Africa’s annual average real GDP growth amounted to 5.3%, double the 1990s level.

Africa’s economic outlook remains

favourable

in spite of the persisting recession in the developed countries.

Hence, economic

growth

continued

to be solid in Sub-Saharan Africa.

Relatively broad-based growth driven by

oil production, mining, agriculture, services

and domestic demand; mitigated

adverse

effects from

global

recession. Slide21

Annual real GDP growth rates, world and regions (%)Slide22

Global and regional GDP growth estimates and projections, 2010–14 (annual % change) Slide23

Global & Regional GDP growth estimates and projections, 2011-15 (%)Slide24

Economic growth trends (world and SSA)Slide25

While the estimated GDP growth

in Sub-Saharan Africa of 4.8% in 2013, this

is slightly below the growth rates

of

recent years, but it is still the third fastest regional growth rate, after East Asia and South-East Asia and the

Pacific.

Growth

in Sub-Saharan Africa is also high in comparison with the

1990s - from

1991 to 2000, regional economic growth averaged

2.3%

annually, compared with an average of

5.7%

during 2001–12.

In

2013, more than half of the countries in Sub-Saharan Africa are estimated to have realized economic growth rates of at least

5%,

and only in two countries is growth likely to have been negative (Central African Republic and Equatorial Guinea). Slide26
Slide27

West Africa will be the fastest growing region in 2013/14West

Africa

to

continue its rapid growth

at

6.7% in 2013 and

7.4% in 2014 -

has become the fastest growing region of the continent.

Growth

in the region

is driven

by oil and mineral sectors

as well as by

agriculture and services

plus on the demand side, by

consumption and investment.

Nigeria expected

to

grow by 6.7% and 7.3

% in 2013 and 2014 respectively.

Ghana

and Côte

d’Ivoire are projected to grow by over 8% and 9% respectively in 2013/14.

For most

countries of the

region, growth

is expected to

accelerate

in

2013/14 beyond

5

%.

Following resumption

of oil production and exports, Libya’s GDP

recovered by 96% in

2012,

raising

growth in

North Africa

to 9.5%, after

stagnating in 2011.

In

East Africa

, most countries

(e.g. Rwanda

, Tanzania, Ethiopia

and Uganda),

are on a solid growth path of

5-7%.

In

Central Africa

, GDP is

expected o

grow by 5.7% in 2013 and 5.4% in

2014, with above

average growth in Chad and in DRC

.

In

Southern Africa

, GDP

growth is projected at

around 4% in 2013 and to

increase to

4.6% in

2014 – buoyant in

Angola, Mozambique, Zambia and

Botswana.Slide28

Growth by regions and country groupings (real GDP growth in percentage)Slide29

Macroeconomic Convergence in SADC

SADC member states signed a Memorandum on Macroeconomic Convergence, which they ratified on 8 August 2002.

They committed themselves to achieving and maintaining macroeconomic stability and converge on stability-oriented policies including restricting inflation to low and stable levels, maintaining prudent fiscal policies that avoid fiscal deficits and high debt servicing ratios. Surveillance is based n a peer review system set up by Ministers of Finance. The key convergence indicators are:

Primary Convergence:

(i) Inflation Rate (5%); (ii) Budget Deficit to GDP (less than 3%); (iii) Public Debt to GDP (less than 60% of GDP

).

Secondary

Targets:

(i) International Reserves (at least 6 months of import cover) (ii) Real GDP Growth (not less than 7 %); (iii)Current Account to GDP (less than 9

%).Slide30
Slide31

SADC average growth rates (%)Slide32

Real SADC GDP growth (target of at least 7%)Slide33

SADC per capita income (USD)Slide34

GDP growth rates in BRICS countries (%)Slide35

Despite some easing, commodity prices remain favourable for resource-rich countries

Commodity

prices (indices, base January 2000 = 100

)Slide36

Global inflation developments (%)Slide37

Inflation in AfricaSlide38

Inflation in SADC countries and commodity price developmentsSlide39
Slide40

SADC Average annual inflation rates (%) (target of 5%)Slide41

SADC Real GDP and Inflation (%)Slide42

Budget balance as a % of GDP (target of less than 3%)Slide43

Public debt as a % of GDP (target of less than 60%)Slide44

Intra SADC import and export (US$m)Slide45

Total Intra SADC Trade (combined Imports & Exports), 2000-2012Slide46

Share of World Exports From Selected Regional Trading Groups (%): 1970-’00Slide47

Intra SADC trade balance (US$m)Slide48

Current account balance (% of GDP) (target of less than 9%)Slide49

Reserves in months of import cover (target of at least 6 months of import cover)Slide50

International reserves in months of import coverSlide51

Total external financial flows to Africa(billion USD, current)Slide52

In a nutshell, the emerging trends with respect to FDI flows in Africa are:

FDI

inflows have surged in the last decade;

Only

a few African countries have been the main recipients, chiefly, South Africa, Nigeria, Egypt, Morocco, and Tunisia, with the top 10 countries receiving 90% of the region’s inflows in 2006;

The

region’s share in global FDI flows has declined from about 9.5% in 1970, stagnating at about 3% between 2000 and 2006 (2.7% in 2006);

M

uch

of the inward FDIs are going into the primary sector,

implying the primary motive is natural resource seeking

;

The region’s largest natural resource producers – Angola, Algeria, Libya, Mozambique, Nigeria and South Africa - which accounted for about three-quarters of the region’s commodity exports also are responsible for more than three-quarters of the FDI inflows to the region

.

The

SADC Protocol on Finance and Investment raises concern about “…the low level of investment into the SADC, even though a number of measures have been taken to improve the investment environment,” (page 26

).

As UNCTAD found, “Thus, at the end of 2006, countries that received the bulk of Africa’s FDI were not countries with the most liberal policies but rather those with large natural resources, notably oil,” (2008: 29).Slide53

FDI inflows into the SADC region increased from US$ 54 billion in 2010 to US$ 63 billion in 2011, representing an increase of about 15

%.

In Namibia, this increase was attributed to profit reinvestment from mining and capital inflows to other secondary activities. This capital flows

originated in holding companies loans to domestic affiliates to finance capital formation

.Slide54
Slide55
Slide56
Slide57

Potential benefits of FDIs

FDIs are expected to provide the following benefits to the host economy:

Transfer of technologies;

Transfer of skill;

Knowledge of global markets;

Increase in domestic capital stock.Slide58
Slide59

On the supply side, the main engines of growth were often agriculture and services, in several resource-rich countries rising production of oil and mining activity.

Manufacturing played a role in only a few countries.

The manufacturing sector in Africa

is relatively small with an average contribution of only about 10% to GDP.

In SSA,

the share

manufacturing in GDP decreased

significantly

between 1991 and 2011,

from 16.7 to

11.1%.

In

terms of employment, the share of workers in industry in Sub-Saharan Africa, which is estimated at less than

10%,

is extremely low.

In

all other regions this share is at least

20%,

and in the case of East Asia it exceeds

30%.

The proportion of the working-age population in paid employment is also low in Sub- Saharan Africa (

13.7%).

Yet the potential to

develop labour-intensive manufacturing

especially in

sub-sectors with linkages to agriculture and extractive

industries remains largely unused

.

Countries with low per capita income levels and those with high resource wealth tend to have very small manufacturing sectors, often around 5% of GDP or less.

While many African countries have taken measures to diversify their economies, progress has been low.Slide60

Agriculture remains Africa’s main source of employment, employing around 60% of its labour force.

However, its share in GDP is much smaller, accounting for an average of 25%, reflecting its relatively low level of productivity and earnings.

Oil and mining sectors

are the main engines of growth in resource-rich countries such as in Angola, Gabon and Libya.

Excluding the distortions by volatile gross domestic product (GDP) in Libya, Africa’s economic growth was 4.2% in 2012 and is projected to accelerate to 4.5% in 2013 and further to 5.2% in 2014

.Slide61

While some progress has been made in improving living conditions,

there is much need and scope for making growth more inclusive

.

When

terms of trade effects are included, Africa’s oil-exporting countries

achieved an average growth above

7%

over

the past ten years, which – in theory – should

be sufficient

to significantly reduce

poverty.

However

, despite some improvements

in living

conditions in some of these countries, poverty has often remained

high suggesting that the

benefits

of high

growth have not trickled down to the whole

population; i.e.

growth has

not been

inclusive.

The

2012

African Economic

Outlook with a theme on promoting

youth employment, showed that in spite of steady

growth,

Africa’s ability to offer economic and social opportunities to its younger generation has not matched its demographic dynamism.

Africa is

facing

a

formidable challenge of creating more and better jobs,

by

sustaining the pace of

growth and

by making it more inclusive

.

High

inequality is undermining the positive impact of Africa’s economic growth.

Hence Africa’s

major challenge is not only to raise

t

rend

growth, but

also making growth more inclusive

.Slide62

Assessing the Labour market situation

In

a nutshell, three indicators are critical for the assessment of the employment situation in developing countries, namely:

The share of the formal segment in total employment

;

Output per worker in the non-formal segment; and

The

unemployment rate.

Other

things being equal:

The larger the share of the formal segment in total employment, the better the employment situation;

The

higher the output per worker in the non-formal segment, the better the employment situation;

The

higher the employment ratio (the lower the unemployment rate), the better the employment

situation.Slide63

The theme of the 2013 Africa Economic Outlook of the AfDB is on Structural Transformation and Natural Resources.

It observes that structural

transformation towards more productive activities and better jobs is closely linked with a strong natural-resource sector.

Emerging

economies, such as Brazil,

China and

India

were

more successful than most African

countries, recording

impressive reductions in poverty for more than two

decades largely because they

have undergone a more rapid

structural

transformation -

a

higher proportion of labour

moved

from low-productivity to high-productivity sectors.

It further observes that in

Africa,

structural

transformation is in its formative stage

in most countries hence

the

slow pace

of poverty

reduction

.

It cites the

high proportion of jobs in the primary sector

as reflecting

a lack of structural change and of productive jobs, but also Africa’s comparative advantage and hence the basis from which structural transformation must take off.

Resource-based

raw and semi-processed goods accounted for about 80% of

Africa’s exports

in 2011, compared with 60% in Brazil, 40% in India and 14% in China

.Slide64

Global & Regional Employment Trends

The global labour market situation remains uneven and

fragile

d

ue

to the uneven and low economic recovery

.

Encouraging

signs of economic recovery in

the

advanced economies most affected by the global financial crisis

that started

in

2008.

A

number of emerging and developing countries − including recently in Sub-Saharan Africa − are enjoying relatively robust economic growth.

However, the

economic improvements will not be sufficient to

deal with the labour

market imbalances that built up in recent

years.

More

fundamentally, the root causes of the global crisis have not

yet been tackled properly, with the

financial system

remaining

the Achilles heel of the world economy.

Many

banks

are in such a state such

that many sustainable enterprises,

especially the

small ones, have limited access to credit,

affecting

productive investment and job creation.

Moreover, significant

financial bubbles have reappeared in a number of advanced and emerging economies, adding new uncertainties and affecting hiring

decisions.

Thus, global

labour incomes continue to increase at a slower pace than justified by observed productivity gains,

affecting

aggregate demand. Slide65

The Global wage employment gap (millions)Slide66

Employment-to-population ratio, world and regions (%)Slide67
Slide68
Slide69

Annual employment growth, world and regions (%)Slide70

Labour force participation rate by sex, world and regions (%)Slide71
Slide72
Slide73

The crisis-related global jobs gapSlide74

The bulk of the increase in global unemployment is in the East Asia and South Asia regions, which together represent more than 45% of additional jobseekers, followed by Sub-Saharan Africa and Europe. By contrast, Latin America added fewer than 50,000 add­itional unemployed to the global number – or around 1% of the total increase in un­employment in 2013.

Young people continue to be

disproportionately affected

by the weak and uneven

recovery.

An estimated 74.5

million young people

aged

15–24

were

unemployed in 2013;

almost

1 million more than in

2012.

The

global youth unemployment rate

reached 13.1% in 2013, almost

three times as high as the adult unemployment rate

., with the

youth-to-adult unemployment ratio

reaching

a historical peak.

It

is particularly high in the Middle East and North Africa,

parts

of Latin America and the Caribbean and Southern Europe.

In countries

for which information exists, the proportion of young people neither in employment, nor in education or training (NEET)

continued

the steep upward trend recorded since the start of the crisis.

In

certain countries, almost one-quarter of young people aged 15 to 29 are now NEET. Slide75

A key feature is the intensifying long-term unemployment in advanced economies.

With weak recovery,

the average length of unemployment

spells increased

considerably,

reflecting weak

job creation.

In

many advanced economies, the duration of unemployment has doubled

compared to the

pre-crisis situation.

In

the

Euro zone crisis

countries

for example,

the average duration of unemployment

reached

up to 9 months in Greece and 8 months in Spain.

Even

in countries

with signs

of

economic

recovery

such

as the United States, long-term unemployment affects more than

40

of all jobseekers.

First, this interrupted

earlier progress in

labour force

participation

rates.

Labour force participation rates are not improving and remain more than 1 percentage point below their pre-crisis level.

The

drop in participation rates

was pronounced

in East and South Asia, where many women

left

the labour market.

In

Developed Economies, participation

rates

dropped

as young workers in particular

have less

opportunities in the labour market. Slide76

Average unemployment duration in selected countries (months)Slide77

Other regions, such as Central and Eastern Europe, experienced an increase in participation rates because of the less well-developed social security systems and the large losses in (formal) employment, resulting in many previously economically inactive people returning to the labour market, often to take up informal employment to make up for the loss of household income.

Second, vulnerable employment

(i.e. self-employment or work by contributing family workers

)

, is expected

to reach

48%

of total

employment.

Such persons

in vulnerable employment are more likely than wage and salaried workers to have limited or no access to social security or secure income.

The

number of people in vulnerable employment expanded by around

1%

in 2013, which is five times higher than during the years prior to the crisis. Slide78

Third, working poverty at 839 million workers living on less than US$2 a day, continues to decline globally, at a slower rate than during previous decades.

In 2013, 375 million workers (or 11.9% of total employment) are estimated to live on less than US$1.25 per day and 839 million workers (or 26.7% of total employment) live on US$2 a day or less, a substantial reduction compared to the early 2000s when the corresponding numbers of working poor below US$1.25 and US$2 were more than 600 million and more than 1.1 billion, respectively.

However, progress in reducing working poverty has stalled such that in 2013, the number of workers in extreme poverty declined by only 2.7% globally, one of the lowest rates of reduction over the past decade, with the exception of the immediate crisis year.

F

inally

,

informal employment

remains

widespread in most developing countries,

with

regional

variations.

In

Eastern Europe, CIS countries and a few advanced economies, informal employment

accounts

for over

20%

of total employment.

In

Latin America, some countries have

maintained

informality rates below

50%,

but low-income Andean and Central American countries

experience

rates of

at least 70%.

Significantly

higher informality rates

are

found in

South

and South-East

Asia where in some

countries

of these

regions, informality rates reach up to

90%

of total employment. Slide79

Estimated informal employment shares, 2011, (%)Slide80

In view of the post-2015 development debate, little progress has been made in reducing working poverty and vulnerable forms of employment (e.g. informal jobs and undeclared work), delaying the achievement of development goals.

For lasting job recovery, a strategy that combines short-term measures (job-friendly macroeconomic and labour market policies) with action to tackle long-standing imbalances is

required.

Tackling the employment and social gaps requires job-friendly macroeconomic

policies.

Such a strategy strengthens job-rich economic

recovery.

A

faster recovery in global labour markets is held back by a deficit of aggregate demand.

Hence, fiscal

consolidation

under

way in many advanced economies

is

a drag on faster

output growth.

With 23 million people estimated to have dropped out of the labour market due to discouragement and rising long-term unemployment, active labour market policies (ALMP)

should be

implemented more

vigorously

to

deal with

inactivity and skills mismatch.

As more potential

workers

become

discouraged and

remain out

of the labour force, the risk of skills degradation and obsolescence is

rising.

Currently

only small amounts of public spending go into active labour market

measures with OECD countries spending

an average of less than

0.6%

of GDP

in

2011.

It is estimated that

by

raising spending to 1.2%

of GDP,

the same level as countries

that spend the most on ALMP, an additional 3.9 million jobs could be created in the Developed Economies and European Union

region

(see ILO 2014 Global Employment Trends Report)

. Slide81

Output per worker, level and annual growth Slide82

Output per worker growth, world and regions, selected periods (%)Slide83

Annual output growth per worker, world and regions, selected periods (%) Slide84

Labour productivity in Sub-Saharan Africa and East Asia, 1991–2012 (’000)Slide85

Labour market situation and outlook in Sub-Saharan Africa (%)Slide86

Employment distribution by status in Sub-Saharan Africa, 1991, 2000 and 2012 Slide87

Economic shares by economic class in developing world and regions, both sexesSlide88
Slide89
Slide90

Vulnerable employment by sex, world and regions (millions) Slide91

Vulnerable employment shares by sex, world and regions (%) Slide92
Slide93
Slide94
Slide95

Working poor indicators, world and regions (US$ 1.25 a day) Slide96

Working poor indicators, world and regions, (US$2 a day)Slide97

The impact varies across countries, depending on the economic structure, the level of integration in global markets, and labour market and social protection institutions, among other factors. In

developed economies with strong social protection measures, workers who lose their jobs can move into unemployment, generally resulting in an overall decline in total employment.

In many developing economies, workers who lose their jobs do not have access to social protection.

Instead of becoming unemployed, these workers often take up various forms of employment, working on their own accounts, or contributing to family businesses, resulting in an increase in the number of workers in vulnerable employment.

Slowing labour productivity growth limits potential for investment and real wage growth, harming aggregate demand

.

The main factor underpinning

the

decline in productivity growth is weak investment.

The

vicious circle of uncertainty, weak investment and diminished productivity growth is

contributing

to slower wage growth,

undermining

consumption and further

eroding aggregate

demand.

A slowdown in productive structural change means less progress in reducing vulnerable

employment.Slide98

Unemployment 2007–18 (rates) Slide99

Global unemployment trends and projections, 2003-2018Slide100

Youth unemployment 2007–18 (rates) Slide101

SADC official unemployment rate (%)Slide102

Based on the information, average unemployment rate in the region was 24.9% in 2011.

The

highest unemployment rate

in

DRC (51%),

and

the lowest rate

in

Seychelles (1.7%).

In

between these two cases, some countries still present relatively high unemployment

rates; Swaziland

, Lesotho and South Africa, with 28.5%, 25.3% and 24.9%, respectively

.Slide103

Rates of Unemployment (%)Slide104

Employment by sector and sex, world and regions (millions) Slide105

Employment shares by sector and sex, world and regions (%) Slide106
Slide107
Slide108

Employment shares by sector and sex, world and regions (%)Slide109

Employment by sector and sex, world and regions (millions) Slide110
Slide111
Slide112

The reallocation of jobs across sectors is central to the process of structural change and productivity upgrading and yet it often entails considerable social adjustment costs that fall onto specific groups in the labour market.

Lay-offs

in low-productivity sectors, increased training needs of workers, or congestion in urban areas due to workers’ movements from the countryside into crowded cities are only a few examples of problems that can arise from structural shifts in employment.

Growth

in labour productivity arises either from changes in labour productivity within sectors – for instance through the implementation of new machines and innovative technologies that allow more output with the same amount of labour input – or from the reallocation of jobs across sectors (“structural change”) when workers move from low- to high-productivity sectors (e.g. from agriculture to industry or services);

At the same time, structural change is central and necessary to increase living standards durably and equitably by allowing ever more people to benefit from higher productivity levels in more advanced parts of the economy.

Structural change has slowed down as global investment

plummeted.Slide113

Paid employment and employment in industry across regions, 2012 (%)Slide114

Labour markets benefit from structural change .Structural change has potential to produce a faster reduction of vulnerable employment.

Structural change is the most effective driver of growth to bring down rates of vulnerable employment in developing economies, both in the short and in the long

run.

It

is the across-sector labour productivity component of growth that is associated strongest with the speed at which vulnerable employment decreases, compared with other growth components.

A growth model that is based on structural change lowers the share of workers in vulnerable employment faster than other growth models, if structural change is associated with a reallocation of labour away from agriculture into industry and service sectors.

Vulnerable

employment is often particularly present in the agricultural

sector.

As

a consequence, productive structural change is effective in lowering the prevalence of vulnerable employment on average.

Hence, structural change for decent work

.Slide115

The challenge in Sub-Saharan Africa is therefore not so much to get more people integrated in the labour market, but far more to improve labour productivity, conditions of work and the returns and benefits people derive from their work.

Employment

only plays its intermediary role between growth and poverty reduction if it is productive.

Therefore

, sustained reduction of poverty requires increasing the labour productivity of women and men in wage and

self-employment.

However

, labour productivity in Sub-Saharan Africa is still very low, particularly in the informal economy where many workers eke out a living, and the region continues to be at the bottom of the global chart in terms of labour productivity.

Part

of the growth in labour productivity is due to the shift of labour from less productive to more productive sectors, in particular service

sectors

but

quite

limited towards industry.

With

the share of workers in agriculture at 62.0 per cent in 2012, Sub-Saharan Africa is the only region in which the large majority of workers are still employed in this sector (South Asia is second with 50.8 per cent).

As

a consequence, there is still ample scope for the region to benefit from

Baumol’s

“structural bonus” through continuous structural change, although this would require more explicit efforts towards

industrialization.

Baumol

, W.J.; Blackman, S.A.B.; Wolff, E. 1985. “Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence”, in

American Economic Review

, Vol. 75, No. 4, pp. 806–817. Slide116

In summary, the basic growth story in Sub-Saharan Africa is one of low but rising labour productivity and a slow but steady structural shift of labour from agriculture to services, but without an expansion of the industrial sector.

The

basic jobs story is one of persistently high levels of vulnerable employment that declined only modestly over the past two decades, despite high growth.

In

2012, there were 247 million workers in vulnerable employment in Sub-Saharan Africa, 62 million more than in 2000 and at least 100 million more than in 1991.

The

proportion of workers in vulnerable employment (defined as own-account and contributing family workers) in the region decreased from 83 per cent in 1991 to 82 per cent in 2000 and 77 per cent in

2012.

This

proportion remains unacceptably high, and is comparable only to South Asia.

Even

during the much touted decade of sustained growth in the region, vulnerable employment remained high, only dropping by 5 percentage points over the past 12 years, and declined too slowly to lift the majority of workers into productive employment in the foreseeable future.

A large gender gap remains in vulnerable employment as women are more likely to be in vulnerable employment than men, and this gap has widened during the past two decades.

In

1991, 89.4 per cent of women and 78.5 per cent of men were in vulnerable employment, but the gender gap increased from 11 percentage points to 14 percentage points by 2012 (84.9 per cent and 70.6 per cent, respectively). Slide117

Economic growth and vulnerable employment by region, 2001-12Slide118

Sub-Saharan Africa was in a crisis before the global crisis started, and progress in the reduction of widespread poverty has been limited.In Sub-Saharan Africa and South Asia, the overall vulnerable employment rate rose to almost four-fifths of the employed.

The largest potential negative impact is in South Asia, South-East Asia and Sub-Saharan Africa, where extreme working poverty increased by 9 percentage points or more in the worst case scenario.

In the case of Sub-Saharan Africa more than two-thirds of workers were at risk of falling below the extreme poverty line in the worst scenario.

Three of the ten economies that were hit hardest by the economic crisis worldwide are in Sub-Saharan African (Angola, Botswana and Equatorial Guinea), which each saw GDP growth drop by at least 12 percentage points due to dwindling export demand.

GDP growth in Africa’s largest economy, South Africa, dropped 5.3 percentage points to minus 2.2 per cent in 2009.Slide119
Slide120
Slide121
Slide122
Slide123
Slide124
Slide125

The HDI – a composite of indicators on life expectancy, education and command over the resources needed for a decent living – is the main assessment of Africa’s

human development.

The 187 countries around the world are classified in four

groups: ‘very high’, ‘high’, ‘medium’,

or

‘low’ development.

T

he

Seychelles

has been placed as

a “very high human development” ranking in 46th

place.

Libya

, Mauritius, Algeria and Tunisia

are

in the “high” group and ten African countries in the “medium” sector.

The remaining 37

African countries are in the “low” human development

category.

Recent United Nations’ human development reports have launched an

Inequality Adjusted

Human Development Index (IHDI) and Gender Inequality Index (GII)

alongside the

HDI

.

In 2012, the inequality adjusted index revealed losses

of

approximately 35% in the HDI value for most African countries due to inequality in

life expectancy

, education and income across the population.

Compares

to a loss of 29%

for South

Asian countries, 26% for Latin America and the Caribbean, 25% for Arab states, 21%

for East

Asian countries and 13% for Europe and Central Asia.

The

country with the highest

loss in

HDI due to inequality was Angola (44%), followed by Namibia (43%).Slide126
Slide127
Slide128
Slide129

Loss in human development due to inequalitySlide130
Slide131

Number of new HIV Cases in SADC, 1990-2010Slide132
Slide133

Measures to deal with Poverty in SADC

About 45% of the 277-million people in the 15 SADC countries live on less than $1 a day, yet poverty eradication is not prioritised at heads of state meetings, such as their annual summit.

There is a “worrying disconnect” between the growth in gross domestic product (GDP) and rising poverty levels, as is the case in other parts of Africa.

SADC has a regional poverty reduction framework adopted in 2008, but the organisation has been too focused on big development schemes. 

Focus is on the “mega-projects” such as trans-frontier parks, hydro-electric schemes or big infrastructure networks, but as a recent Mail and

Guardian

report observes: “What use is a highway if it runs past a village with no clinic or no school?” 

Following the adoption of the regional framework, SADC states agreed to set up a Regional Poverty Observatory (SADC RPO) that brings together government officials and representatives of business, labour, civil society, and gender- and faith-based organisations to discuss policies and share expertise about alleviating poverty. International partners and independent experts are also invited to the RPO meetings.

The framework requires a more robust intervention on alleviating poverty and for the active participation of civil society for SADC to develop ‘pro-poor’ and ‘pro-people’ strategies. Slide134

The RPO secretariat, based at the SADC headquarters in Botswana, has organised a series of meetings and workshops to facilitate the discussion between state and non-state members of the RPO. Most countries have set up national RPO focal points that facilitate the regional process.

One

of the first priorities of the organisation is to draw up clear guidelines to measure poverty and to compile credible indexes of indicators across SADC. 

The multi-stakeholder Poverty Observatory in Mozambique, which has been functioning successfully for some time, inspired the idea of a RPO.  

Other countries have similar initiatives, such as Zambia’s Poverty Indaba, which regularly brings together faith-based organisations, civil society and government. 

Though the Regional Poverty Reduction Framework exists on paper, it has not yet been implemented and “may not see the light of day” if it is not seen as a priority.  

The real difference between the RPO and previous initiatives to look at poverty on a regional level is that for the first time state and non-state actors are involved. 

One of the major problems is the lack of funding to move beyond just a talk shop.

While states have committed themselves to a regional development fund, the focus is on big projects. 

However, the RPO could be used to name and shame governments that are not keeping to their commitments in uplifting poverty — similar to the African Peer Review Mechanism (APRM). Slide135

SWOT analysis of SADC (RISDP 2015-20)

The SADC Secretariat’s “Desk Assessment of the RISDP 2005-2010” and the “Independent Mid

Term Review

of the RISDP 2005-2012” provide the basis for a situational analysis for the revision of

the RISDP

.

Strengths

Relative peace, security, democracy, and

good political governance;

Legacy and history of

cooperation;

Strong social, cultural and political

affiliations among citizens;

Positive economic

fundamentals;

Abundant exploitable natural

resources;

Positive international perceptions of the

SADC region;

Basic integrated regional

infrastructure networks

in place and

operational;

Educated

workforce;

Youthfulness of the region’s

population.Slide136

WeaknessesPrevalence of under-development and poverty;

Limited options for resource mobilization

for regional

cooperation and

integration;

Regional vision, common agenda

and community

decisions inadequately

implemented at

national

level;

Limited alignment of the regional

programmes with

national development

plans;

Slow pace of macro-economic

convergence;

Inadequate economic infrastructure to

meet demand;

Inadequate investments in

infrastructure capacity;

Limited institutional

capacities;

Inadequate capacity to coordinate, monitor,

and evaluate

the implementation of

regional initiatives;

Inadequate

engagement

of key stakeholders

at all levels.Slide137

OpportunitiesSupportive continental and global

initiatives, e.g

. AU Agenda 2063, NEPAD,

post-2015 development

agenda,

WTO;

Support from bilateral and

multilateral development partners;

Prospects for expanded regional markets, e.g

. through

the Tripartite

COMESA/EAC/SADC free

trade

area;

Availability of examples of

beneficial functional

cooperation projects, e.g.

one-stop border

post, trans frontier national parks,

and trans

boundary development

corridors;

Resurgence of private sector investment

in infrastructure;

Global demand for mineral

resources available

in the

region;

Growth in demand for infrastructure

and services

(power, ICT, transport and water

);

Increased private sector role in

economy.Slide138

ThreatsWeak global positioning;

Continued unbalanced and

disadvantageous economic structures;

Low capacity of some of the member States

in embracing

the regional

agenda;

Nationalistic tendencies that

undermine commitment

to the regional vision

and development initiatives;

Environmental

degradation;

Perceptions of threats to Member

State sovereignty;

Weak common regional

institutions;

HIV and

AIDS;

and

Reduced FDI flowsSlide139

Following the realisation that the RISDP priorities were in excess of Member States capacity to fund regional cooperation and integration programmes, a re-prioritisation of SADC programmes and a framework for re-allocation of resources was undertaken in

2007 as follows:

Trade/Economic

liberalization and development (together with item ii) below) – 50

%;

Infrastructure

in support of regional integration (allocation together with item i) above);

Peace

and security cooperation (as a pre-requisite for achieving the Regional Integration Agenda) – 15%;

Special

programmes of regional dimension under Education and Human Resource Development, Health, HIV and AIDS and other Communicable Diseases, Food Security and Trans-boundary Natural Resources, Statistics, Gender Equality, and Science, Technology and Innovation and Research and Development. – 35%.Slide140

African policy-makers recognize the need to create

gainful

employment

and the related need for economic and labour market transformation.

Based on regional

consultations on the post-2015 development

agenda,

four desirable development outcomes in

Africa Have been formulated.

To

harness Africa’s natural resources for structural transformation, a four-layer policy approach is suggested:

Establish

general framework conditions for structural transformation such as education, infrastructure and access to sufficiently large, regional markets;

Establish

specific conditions required for natural resource sectors to thrive;

Optimise

the revenues from natural resources and invest them strategically to promote structural transformation;

Address

structural transformation directly by increasing agricultural productivity and enabling economic linkages between the natural-resource sector and the economy as a

whole (

AfDB

et.al,

2013).Slide141

Claiming the Policy Space for Development

There are various forces that shape our societies and can bring about the fundamental changes that are needed to improve the lives of working people.

The

major players are firstly the people themselves and their organisations at grassroots level.

They

are the key agents of change and must drive the

process.

Secondly

, there is the state, which is a very important site of struggle.

States

rule in the interest of those who

control

them

and thus working people have to regain control over the state, not only at national level but also within the SADC region and Africa as a whole.

Thirdly

, there are the global actors including the World Bank, IMF, the World Trade Organisation (WTO), G8 and Transnational Corporations (TNCs) who have a strong influence over African states and whose interests are opposed to those of working people. These global actors can be described as “the Empire

”.Slide142

How then, can we build a better society?The most fundamental step is to build a movement from below.

This

means political “

conscientisation

” and mobilisation among working people at grassroots level.

Such

mobilisation must be based on a good understanding of the current crisis.

The

task is to develop concrete strategies to create alternatives to the neo-liberal development

strategy.

Grassroots

mobilisation will include a constant engagement with the state to transform it into an ethical, responsible and developmental state that acts in the interest of working people instead of those of the Empire.

People are the agents for change

The state is a creation of history and a product of struggles.

Its

role and orientation depends on the balance of forces in society and thus the task is for people at grassroots level to transform existing states into independent, truly developmental, accountable and ethical states.

This

can only happen through daily struggles, as people are the defenders of their own rights.

Only

they are the agents who can bring about fundamental change

.Slide143

The Three Legs of ANSA

“Ideas

are a powerful force once they are seized by a large number of people! Transforming a region of over 200 million people is a daunting task that cannot be achieved in a short period by a few activists and intellectuals. It requires a mass movement that is dedicated to a sustained struggle, including education, consultations, debate, action and reflection

.”

Research and Analysis.

Education, Training &

Mobilization.

Advocacy and

Engagement.Slide144

NOTHING ABOUT US WITHOUT US!

NONE BUT OURSELVES!

Amandla

!!!

Thank you