SA is shifting towards a knowledge economy

South Africans are spending millions of rands on things they barely knew they needed 15 years ago.

They are paying for their purchases with mechanisms they had never heard of at the time. And an increasing number are earning their living in occupations that didn’t exist when they left school.

Innovation is moving back the boundaries of possibility and, in the process, it is transforming the world we live in.

These shifting patterns of behaviour – partly driven by lifestyle changes and partly by rapid advances in a wide range of technologies – have been accompanied by the opening of South Africa’s economy to global competition. Goods made locally have to compete with those made in all parts of the world, and many manufacturers have been unable to rise to the challenge.

This combination of forces is restructuring the economy. A breakdown of gross domestic product figures from Statistics SA into sectors shows that the share of agriculture in the economy has fallen from 3.5 percent in 1993 to 2.6 percent in the last quarter of 2005; the share of manufacturing from 21.1 percent to 16.4 percent; and the share of the mining sector has remained static at roughly 7 percent.

While these pillars of the economy are flat or shrinking, new growth areas are emerging. The contribution of the sector described as "transport, storage and communication" rose from 8.7 percent to 9.8 percent; and of "finance, real estate and business services" from 16.1 percent to 21 percent.

A further breakdown into subsectors makes the picture clearer. Subsectoral breakdowns lag, so 2004 is the latest figure.

The share of communication, that captures the activity of cellphone companies, doubled from 2 percent in 1993 to 4 percent in 2004. Finance and insurance grew from 7.1 percent to 9.1 percent; real estate from 5.2 percent to 6.7 percent; and business services from 3.7 percent to 5.2 percent.

To put these figures into context, we need to go back about 25 years, to a time when the economy was based on mining – which contributed 20.6 percent to the economy in 1980.

Middle-class (and mainly white) South Africans were buying food, fridges, furniture, clothing, motor cars and, if they were wealthy enough, houses that stood on a piece of land in the suburbs. They are still buying all those things, but now (along with a growing black middle class) they are buying cellphones, computers, DVDs, iPods and residential units in densely packed cluster homes. They are subscribing to electronic newsletters, downloading music from the internet and checking the latest news on the CNN site.

Twenty-five years ago, rich people paid by cheque or with a relatively new instrument: a credit card. And poor people paid with cash. Today many more people pay with a plastic card and the range is constantly expanding. They can also pay electronically at ATMs or over the internet.

Even low-income people have access to debit cards and can use them not only at ATMs but at a point of sale in many of the national retailers. Everyone, including the poor, is starting to add smart cards to their battery of payment instruments.

Along with these changes in consumer behaviour has come a transformation of the workplace. In earlier decades, people worked on farms, mines, building sites and factory assembly lines. Those who were allowed to (whites), drove trains and buses, served in restaurants and behind shop counters, or worked in offices.

Today people still do those jobs, though relatively fewer because technology has replaced workers in many industries. But there is also a whole new area of activity. Computers, the internet and cellphones are not only creating new industries but interfacing with the old so that the traditional sectors do their jobs in very different ways.

It is here that the major growth opportunities are. And only people equipped with the right skills can take advantage of them. That explains the country’s large and stubborn unemployment problem. According to Stats SA’s labour force survey, the official rate of unemployment was just below 26.7 percent in September last year, slightly higher than the previous year. When people who have given up looking for a job are included, the figure is nearly 40 percent.

South Africa is not the only country where people have been marginalised by changes in the workplace. Because of the legacy of apartheid, our economy is even less able to adjust to the change.

Many, among them the trade unions, would like to turn back the clock to a time when the economy needed large numbers of unskilled people. But that isn’t going to happen.

There is no way to go but forward. South Africa is moving towards a knowledge economy – and everyone must be given the chance to acquire knowledge

The solution is one mooted in the accelerated and shared growth initiative for SA, or Asgisa. People have to be trained to do the jobs the economy needs. And, if the country doesn’t have the people to train them, then trainers must be found abroad.

The future of millions of South Africans coming into the job market over the next few decades depends on whether politicians have the will to implement Asgisa’s proposals on skills and immigration policy. If they give in to vested and short-term interests, then the majority of South Africans will remain trapped outside the economy’s growth areas.

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SA is shifting towards a knowledge economy