Going for Growth - South-Africa

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South Africa Growth in incomes and labour productivity has stagnated since the crisis. GDP per capita remains around 75% below the average of the upper half of OECD countries. Weak labour utilisation and total factor productivity have both weighed on growth since the crisis. Inequality and poverty have remained very high and poor environmental quality negatively affects health outcomes. Greenhouse gas emissions per capita are below the OECD average, but population exposure to air pollution is high. Progress on the priority to finalise the reform of the wage bargaining system has been made, as the national minimum wage became effective in January 2019. Although strengthening active labour market policies to tackle unemployment remains important, this priority has been dropped as investment in infrastructure and broadening access to markets are more pressing in order to support job creation and growth. Removing barriers to competition and lifting regulatory restrictions in many sectors would boost growth. In particular, more competition in network industries would bring down prices, increase the accessibility of services, stimulate downstream firms’ competitiveness and raise productivity growth. Improving the management and governance of state owned enterprises and strengthening the regulation of network sectors is crucial to lift supply side bottlenecks. Improving infrastructure and reducing intra-regional trade barriers would facilitate the flow of goods and people, increase market access and support economic growth and well-being. Reducing red tape and barriers to entrepreneurship would bolster employment and productivity growth. Improving equity and quality of education would boost human capital accumulation and reduce the high levels of inequality. Growth performance, inequality and environment indicators: South Africa Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate

A. Growth

Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio

2012-18 -0.2 0.3 0.9 -0.5 0.0 -0.8 0.1 -0.9 0.2

Level

Annual variation (percentage points)

-50

2014 63 (31.7)*

2010-14 -0.1 (0)*

-60

2.4 (7.6)*

0 (0)*

2015 10.2 (12.3)* 0.8 (0.3)* 1.1

Average of levels 2010-2012-2015 10.6 (12.8)* 0.9 (0.4)* 1.2

GHG emissions per capita4 (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)

Gap to the upper half of OECD countries5

Per cent 0 -10 -20 -30 -40

B. Inequality and environment

Gini coefficient3 Share of national disposable income held by the poorest 20%

C. The large gaps in GDP per capita and productivity are not narrowing

2002-08 3.2 0.9 -0.1 1.0 0.0 1.9 -0.1 2.0 0.4

-70 -80 -90

GDP per capita

GDP per hour worked

Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases and World Bank, World Development Indicators (WDI) Database; International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases StatLink 2 https://doi.org/10.1787/888933955351 ECONOMIC POLICY REFORMS 2019: GOING FOR GROWTH Š OECD 2019


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