It was a real treat to attend the recent Sake Economist of the Year awards, where our chum Ulrich Joubert was once again anointed as Economist of the Year. Not only is he a great economist; he is also a very likeable person. ZA Confidential caught up with Ulrich to get his views on a few issues which worry us…..
ZAC: We are now in July. The data for Q2 is not in yet, but do you believe it was a second quarter of GDP contraction, which would technically place us in a recession?
UJ: Some of the first indicators for the second quarter – namely April mining and industrial production – were better than expected. Those indicated that we could see positive second quarter growth. My view is that the quarter could show some positive growth, but just above the zero level.
ZAC: Jacob Zuma has shuffled his cabinet following the latest election. Do you believe we have a better team steering the economy?
A: No. Most of the ministers have no experience in their new portfolios. Therefore it will take time before they can take meaningful decisions and improve the environment in which we have to do business. Given the severe problems that the country faces due to the policies being followed over the past twenty years, government has to take decisive decisions changing the environment in which the economy has to perform. First of all we have to change the emphasis of the fiscal policy to support the production sectors rather than the consumption sector of the economy. Will the new Minister of Finance be able to convince his 70 other cabinet colleagues to change course? We have to have less intervention in the economy – unfortunately we do have the same Minister of Trade and Industry as previously. Will he be able to change his mind? We have to change the labour dispensation in the country and improve the quality of our training and education system. Unfortunately we have the same ministers in these portfolios and will they be able to handle the trade unions? I do have respect for the Minister of Basic Education, but can she really get SADOU out of the classrooms? I hope that Pravin Gordan will be able to bring some improvement into the performance of local authorities.
ZAC: Unemployment remains stubbornly high. What would you do that isn’t currently being done to improve employment?
UJ: I would break the (ANC’s) alliance with Cosatu! We need a new labour dispensation, because the current environment ensures that the economy will become more and more capital intensive and less labour intensive. We also need a better quality out of the education and training institutions – rather have a 50% quality passing rate of grade 12s than an 80% passing rate that delivers people that cannot be utilised in the economy.
ZAC: You again have the title Economist of the Year. Do you think economists in SA have the respect they deserve? Are they listened to enough?
UJ: Given the uncertain environment in which we have to operate, it is necessary to listen to different views of the economy, because we as economists interpret the information at our disposal in different ways. That is why I always try to listen to other economists’ views; because I could have missed something or interpreted something in a different way than the next guy/lady. I normally find that if the economy is not performing, then we are listened to, but when the going is good, people make enough money and think they do not need us! We of course know that it is the company/institution that controls its business effectively in the good times that will survive the bad times as well. I am of the opinion that the managers/engineers/accountants, and so on do not have the time to look at the environment while running their businesses and therefore need the interpretation of these economic, financial or commodity market trends by someone who keeps track of these trends on an ongoing basis.
ZAC: Is there one indicator which more than any other gives you a feel of how the economy is doing?
UJ: No! One has to be aware of the changes in the total environment – even the political environment – internationally and domestically.
ZAC: Which sectors do you believe have the best potential for job creation in SA, and which the worst?
UJ: The best potential lies perhaps in the tourism industry. The worst sector at the moment is most likely the mining industry – and specifically the platinum mines. Unfortunately the government sector has created most jobs since the 2009 recession, and the country cannot afford this type of job creation.
ZAC: How would you characterise labour relations in SA?
UJ: I think they are very tense and take too much time and effort to manage.
ZAC: And how would you characterise the relationship between business and government?
UJ: I think there is too much government intervention in the economy. It hampers the growth potential of the economy and forces the business sector to defend itself and try and limit the interventions of government. This results most likely in a more tense relationship between government and the business sector than what is advantageous for growth.
Not much in all this with which we can disagree. Does this mean ZA Confidential is in the running for next year’s award?
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Funny Tweets (@Funny_TweetsQ): My favourite outdoor activity is going back inside