Reform needed for SAfrica economic growth

South AfricaAn international economic body on Monday urged South Africa to use the success of hosting the recent FIFA World Cup to implement labor and market reforms that could deliver higher employment and living standards.

The Organization for Economic Cooperation and Development, releasing its first economic survey of South Africa, also said the country should do away with restrictive economic regulations that retard the country’s growth.

The month-long World Cup tournament helped boost the South Africa’s gross domestic product over the past four years and spawned huge transportation improvements. According to estimates by UBS Investment Research, it also created more than 330,000 jobs but many of those were temporary and low-paid.

OECD Secretary-General Angel Gurria told reporters Monday that the World Cup infrastructure in transportation and other services would continue to provide employment and spur industry. But Gurria said South Africa needed to remove entry barriers inhibiting trade and skilled job seekers.

South Africa is known for imposing strict regulations on businesses and Gurria called for steps to be taken to ensure fair competition and competitive pricing. New suppliers must not be priced out of the market, the OECD chief said.

Unemployment among the nation’s youth was estimated at about 50 percent. Though overall unemployment declined since 2002, it had never fallen below 20 percent and in the first quarter of this year it stood at between 25 and 30 percent.

The body, a world economic and development research organization, commended South Africa for expanding social programs for the poor, but cautioned against spending too much on it. More than 12 million poor South Africans are receiving government-sponsored social grants.

The report said South Africa massively expanded its spending on social programs in recent years to ease poverty but “moving too far in this direction” could jeopardize fiscal stability and hinder market-driven growth.

Source: The Associated Press.