By Dr. Ivor Blumenthal

Is South Africa headed down a road of jobless growth where a capital-intensive economy is incompatible with a labor-intensive need?

According to an International Labour Organisation (ILO) report reviewed in Forbes Magazine, 11 August 2017, there are about 71 million unemployed 15 to 24-year-olds around the globe, many of them facing long-term unemployment. This is close to a historic peak of 13%.

It is a problem which primarily hits low-income countries especially hard. Even where there is work, much of it is low-paying. The ILO estimates that about 156 million (or 38%) employed youth in emerging and developing countries were living in extreme or moderate poverty in 2016 – equivalent to less than $3.10 per day.

Coupled with that, is what I can only describe as a self-serving and the cynical call, by those who have deployed technology to their own benefit, the Jeff Bezos, Mark Zuckerberg and Elon Musk’s of this world, who are calling for a ‘Global Wage’ which should be paid by Governments to their unemployed but employable citizenry, to stay at home as compensation for losing their jobs due to technology.

This, in the face of an ever-increasing problem, where internet-based technology is used as labour replacement by faceless, companies intent on skirting and avoiding residency in tax-paying countries.

So the questions which are begging for these Techno-Emperors to answer, are:
Who will fund these global wages you so eagerly call for?
Where will Governments find the money necessary to support the unemployed when you so obviously don’t intend on being the source of those benefits or paying your taxes compliantly?
Are you not the ones causing the problems but failing to compensate for the damage and havoc you wreak – the unemployment crises you create?

Capital vs. Labour Incompatibilities of the Fourth Industrial Revolution

“Today, a fourth industrial revolution is transforming economies, jobs, and even society itself.

Under the broad title Industry 4.0, many physical and digital technologies are combining through analytics, artificial intelligence, cognitive technologies, and the Internet of Things (IoT) to create digital enterprises that are both interconnected and capable of more informed decision-making.

Digital enterprises can communicate, analyse, and use data to drive intelligent action in the physical world.

In short, this revolution is embedding smart, connected technology not only within organizations, but also our daily lives.”
Punit Renjen, Deloitte

It could be argued that ever since the second Industrial Revolution, owners of Industry have been implementing capital-intensive processes working to replace what is basically an inefficient non-productive, costly and troublesome system founded on human labour, with that of an automated, continuous, self-reliant and importantly self-iterating and improving system, based on capital investment and a focused strategy of labour replacement.

Truth-be-told, a world based on technology and efficiencies is highly incompatible with one based on labour-intensive inefficiencies. These are the lessons learned in Europe, the USA and Asia, and China of recent times.


The doyens of technology will blithely throw ideas such as ‘re-training’ into their justification as if that is the panacea that will result in a job-for-job replacement strategy. However, experience around the globe tells a different story. It talks about a marginal capacity for industries to absorb irrelevant dead-weight, where only a fraction of those laid-off are ever able to be re-absorbed as a result of having been re-trained and capacitated.

Ground Zero – where Civil War is spawned

Job creation from technology deployment in capital-intensive economies is perhaps one of the greatest lies ever told, and willingly bought into by Governments. There is little compatibility between a capital-intensive economy and a labour-intensive necessity.

There is no middle ground or meeting point. It is obviously one or the other.

This is where WAR is inevitable.

Where will the final battle take place? That frontier that defines mankind and survival?

If the choice is for a capital-intensive where a technologically-based economy persists, where the wealth and income is concentrated in the hands of those few, who own the intellectual property (IP) then everyone else, will be slaves to the IP owners. The moderating solution is somehow a liberalisation and nationalisation of that Intellectual Property in the public interest. Out of the hands of the originators and into the hands of the citizenry. A “Nationalisation” of Technology for the common good. The ability to democratise ownership of the ‘Internet of Things’, to the extent that ALL citizens benefit.

Capital versus labour in South Africa.

This will truly become the definitive challenge in South Africa.

We live in a country, where currently of our 56 million citizens, less than 5 million are gainfully employed and by definition where for every employed person there are up to 10 dependants.

Ours is already a capital-intensive economy. One where the machine, IP and technology are more pervasive than labour intensive mines or farms or manufacturing plants. How much more capitalisation can our economy endure? That has to be the question which drives national policy and supply-side incentive programming. Surely?

We hear talk of the Black Industrialists Programme (BIP). Our President has identified the mining industry for significant investment and sectoral growth. Can we honestly believe that when our President singles out mining as a growth prospect, he is at the same time considering mining to be a labour-growth sector? Does it truly have the ability to absorb more labour than is currently employed in Mining? How can this be true when every other country which mines have re-designed their policy framework for a capital-intensive drive?

They use machines to mine in Russia, in Asia, in Australia. Why would we continue to use the most unproductive and costly solution to mine in South Africa? The same goes for farming and virtually every other labour-intensive sector identifiable.

In this day and age of machines and technology, it is simply not a safe or economical bet to invest in people as your pivotal resource when people come with flaws, with trade unions, with sickness, incapacity, and with unimaginable social baggage.

Our bumbling ill-informed Policy Framework

It has to be asked. In the light of this inevitable trend, why is South Africa intent on driving the business towards a YES (Youth Employment Service) economy?

How is Government going to be able to convince companies to employ young unskilled and unemployed people beyond the incentivised 12 months, contained in the latest amendments to the Broad-Based Black Economic Empowerment Codes (BBBEE)?

The argument is that with one year of experience, those exiting the YES phase will stand a far better chance of finding employment.

Ours is an economy speedily chasing down the highway of capital intensity. Because of that our companies simply become disinterested in creating long-term employment prospects for the young, inexperienced and unemployed. Ours is an economy characterised by stronger trade unions than ever before, a minimum wage threshold and a CCMA and Labour Court making the prospect of becoming a labour-intensive employer, unpalatable.

The global experience as far as Graduate Employment is concerned has, for the most part, resulted in graduate unemployment. Italy is perhaps being the greatest indicator of such a failed policy framework, driving school leavers to university and eventual perpetual unemployment.

Why in the latest BBBEE Amendments is the South African Government intent on re-engineering skills development spend to force companies to have to spend 2.5% of payroll on higher education and training qualifications when there is no evidence that the qualifications offered, primarily by Public Universities in South Africa make no contribution whatsoever to efficiencies or productivity in the workplace?

We now know that a university education is no guarantee of employment. That employers choose to be closer to the teaching, training and mentoring, to the coaching and development of new entrants into the workplace than universities and the DHET (Department of Higher Education and Training) will allow.

So why be so counter-intuitive? It takes us back to the days of Mbeki and beetroot for HIV/AIDS. It simply doesn’t make sense?

Perhaps the Global Wage is not such a bad thing after all?

Elon Musk believes artificial intelligence that is much smarter than the smartest human on Earth could result in dangerous situations. Musk argues that the government must introduce a universal basic income program in order to compensate for automation.

Truth-be-told there really seems to be no alternative but to pay people, to stay at home, remain unemployed, and enjoy their leisure-time by receiving a state pension forever and ever and ever. Funded by a tax base receiving income from technology owners with a social conscience making their money from internet trading, internet retail and from the provision of internet-based services.

Or, is there an alternative?