Overview of industrial policy

Abstract

This chapter analyses the impact of industrial policy on the demand for labour. Its shows that South Africa¿s industrial development has historically been driven by minerals extraction and import-substitution industrialisation, overlaid by apartheid policies aimed at excluding the majority of the population from the economy. This entrenched a growth path characterised by capital-intensive production processes, a paucity of skilled labour, and exceptionally high levels of unemployment. The post 1994 period has seen a radical shift from the protectionist policies of the past. Trade liberalisation and supply-side policies have succeeded in improving the international competitiveness of manufactured exports. However, high levels of unemployment persist among unskilled and semi-skilled workers, as do high levels of inequality. The chapter concludes that human resource development (HRD) policies should adopt a two-pronged approach: a short- to medium-term emphasis on developing unskilled labour for jobless in the non-tradable sector and a long-term objective of enlarging the pool of skilled labour in line with the pattern of demand emerging in the manufacturing sector.