This IEJ paper proposes a transformative macroeconomic framework that aligns macroeconomic policy with industrial policy and employment creation. It argues that South Africa’s economic strategy should move beyond a narrow focus on stability and instead promote inclusive development, decent work, and long-term structural transformation.
Integrating macroeconomic and industrial policy
The document critiques conventional macroeconomic policy for prioritising inflation control, debt reduction, and market liberalisation without sufficient attention to employment or industrial development. It proposes a coordinated approach that links fiscal, monetary, industrial, and labour-market policies to achieve both full employment and sustainable external balances while strengthening domestic production.
Policy tools for inclusive growth
The framework recommends combining demand-raising measures, such as public investment and government spending, with demand-switching policies that encourage domestic production through exchange-rate management, tariffs, and capital management. It also advocates a more flexible approach to inflation management, recognising that macroeconomic policy should support employment and productive investment alongside price stability.
Strengthening sectors and labour markets
Sectoral policies are designed to expand higher-productivity industries, deepen domestic value chains, and promote environmental sustainability. Recommended measures include domestic sourcing requirements, licensing, subsidies, training obligations, export controls, and investment in research and development. Labour-market policies complement these efforts through skills development, formalisation of informal work, strengthened collective bargaining, minimum wages, and expanded social protection to ensure broader access to decent work.
Conclusion
The paper concludes that sustainable employment creation requires macroeconomic, industrial, and labour-market policies to operate as a coordinated system. Through strategic public investment, institutional reform, development finance, and targeted industrial policy, South Africa can build a more resilient, inclusive economy that creates decent work while reducing vulnerability to external shocks.