OECD calls for less business regulation and higher public spending in South Africa
South Africa needs to do more to create jobs and reduce inequality, according to a report from the OECD.
The latest OECD Economic Survey on South Africa reports that economic growth since the end of apartheid has not been inclusive, with high levels of income inequality and unemployment particularly affecting black South Africans.
The report recommends the country does more to remove obstacles to job creation, including investing in public transport and other infrastructure, and eliminating regulations that hamper competitiveness.
The OECD also calls for the South African government to “broaden personal and corporate income tax rates”, including increased taxes on higher incomes, to pay for public services.
OECD Secretary-General Angel Gurría commented that: “Millions of young South Africans are eager to work, and their potential must not be wasted. Their future is precious enough to justify tough reforms and hard spending choices.”
The report notes that cutting red tape is essential to encouraging entrepreneurship and small businesses, which “offer the greatest potential for creating jobs and future growth”. This message is echoed by an article by Gary Fields for IZA World of Labor about self-employment in developing countries, in which he argues that: “Too often, public policies hinder the self-employed. With the right policies in place, the self-employed can boost their earnings above the poverty level.”
Recently, Yoonyoung Cho has written for us about the role of entrepreneurship programs in developing countries. She writes that: “Entrepreneurship programs provide business training and access to finance, advisory, and networking services with the aim of boosting workers’ earnings and reducing poverty… Recent studies have identified some promising approaches that are yielding positive results, such as combining training and financial support.”
Read more on this story at Bloomberg. The OECD Economic Survey on South Africa 2015 can be accessed here.
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Entrepreneurship for the poor in developing countries by Yoonyoung Cho
Self-employment and poverty in developing countries by Gary S. Fields
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