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In today's blog we provide feedback on World Trade Organization (WTO) public forum discussions in which various economist, financial gurus and think tankers presented their views and opinions on the current state of world trade, globalization and where future growth will come from. And if these presentations and their predictions were to turn into reality. South Africa will be left behind in the next growth phase, as we continue to be stuck with slow policy implementation, strict and restrictive labour laws and lack of students being produced in areas such as computer programming, artificial intelligence and mechanical engineering.
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So what type of topics were covered?
The public forum presentations covered a very wide variety of topics, from growth in AI, big data and increasing trade in services (and companies being more focussed on trade in services). Below an abstract of the opening plenary debate:
"In recent months trade has moved from the business pages to the front pages. It has rarely had a higher profile. This session brings together a range of experts who will seek to look behind the headlines and assess the reality of trade in today's fast-moving global economy. Our eminent panel will consider how trade is interacting with other major forces of economic change, how trade can help to respond to the major challenges facing our economies, and how the trading system can be improved to deliver greater benefits to people around the world."
And in South Africa these are hardly topics on the lips of those in charge of South Africa's economy.
"In recent months trade has moved from the business pages to the front pages. It has rarely had a higher profile. This session brings together a range of experts who will seek to look behind the headlines and assess the reality of trade in today's fast-moving global economy. Our eminent panel will consider how trade is interacting with other major forces of economic change, how trade can help to respond to the major challenges facing our economies, and how the trading system can be improved to deliver greater benefits to people around the world."
And in South Africa these are hardly topics on the lips of those in charge of South Africa's economy.
Banner outside the WTO showing dates of the Public Forum discussions in Geneva
Sadly South Africa's economy is far to dependent on primary industries (such as agriculture or mining) over the years, both in terms of employment and driving growth of the SA economy, while the more developed countries such as the G7 is focussing on the tertiary sector (the sales and services sectors). As the belief is that this is where the most "value added" can be gained. Growth in "value added" is essentially economic growth.
The image below shows SA's last quarter's economic growth being largely driven by agriculture which grew by over 30% quarter on quarter annualised. But the growth is coming off a low base due to the drought experienced across South Africa in the last 18months. Sadly the tertiary sectors (mostly services), showed relatively low and in some cases negative growth in the 2nd quarter of 2017.
The image below shows SA's last quarter's economic growth being largely driven by agriculture which grew by over 30% quarter on quarter annualised. But the growth is coming off a low base due to the drought experienced across South Africa in the last 18months. Sadly the tertiary sectors (mostly services), showed relatively low and in some cases negative growth in the 2nd quarter of 2017.
So why is the South African government still stuck with an economy largely dependent on mining for employment? Well the ruling party has large scale support from labour unions such as COSATU. And labour unions represents a massive amount of people in the mining industry. And the ruling ANC cant exactly upset the apple cart by shifting policies away from labour intensive industries such as mining as this upset their voter base and cost them at the poles.
As we listened to the opening plenary debate, which included high level panelist such as the MD of the IMF, Christene Lagarde, we were particularly impressed by the contributions made by Susana Malcorra, Minister Advisor, Government of the Argentine Republic. And we wondered whether the South African government possesses someone of that caliber and quality that had an audience of well over 1000 people hanging on her every word. South Africa sure has some talented economists and advisors, but sadly they not working for the government. They working for the private sector, as the government has decided that rather than have competent skilled staff in such positions, they would rather deploy cadres in such positions. Or more recently deploy a "Gupta" connection in such posts to ensure state funds are funneled to Gupta linked companies.
As we listened to the opening plenary debate, which included high level panelist such as the MD of the IMF, Christene Lagarde, we were particularly impressed by the contributions made by Susana Malcorra, Minister Advisor, Government of the Argentine Republic. And we wondered whether the South African government possesses someone of that caliber and quality that had an audience of well over 1000 people hanging on her every word. South Africa sure has some talented economists and advisors, but sadly they not working for the government. They working for the private sector, as the government has decided that rather than have competent skilled staff in such positions, they would rather deploy cadres in such positions. Or more recently deploy a "Gupta" connection in such posts to ensure state funds are funneled to Gupta linked companies.
World Trade Organization, opening plenary debate, 2017
South Africa's policies and those setting it needs a serious rethink. Future jobs and skills required is a total mismatch with what is currently being focussed on. We heard presenters saying that in various cities in China and other asian countries, computer programming is a compulsory subject for students in school, so that everyone has the coding background to ensure they would be employable in the ever evolving tech economy where the demand for computer programmers are ever increasing.
And the new gig economy where people are employed across the world for short periods of time to work on the same project (often in an online or virtual space) gaining traction, one wonders if South Africans are ready for what this might do to their job security, as companies can now hire someone halfway across the world, with same knowledge or skill levels, at half your salary and without having to deal with South Africa's restrictive labour laws. The one presenter called it the greatest threat to job security across the world. And said it would hit the countries with high wage levels the hardest. Likening it to a Tsunami.
Its time that we as South Africans prepare for this, be it by government plans and policies being set up to prepare future job market participants for the tech economy, or those in the job market already opening themselves up for the gig economy to ensure they do not get hit by the Tsunami set to hit employees the world over.
Its time that we as South Africans prepare for this, be it by government plans and policies being set up to prepare future job market participants for the tech economy, or those in the job market already opening themselves up for the gig economy to ensure they do not get hit by the Tsunami set to hit employees the world over.