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South Africa: Country Loses Ground in Global Ratings
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Business Day (Johannesburg)
15 May 2008
Posted to the web 15 May 2008
Mariam Isa
Johannesburg
SA HAS drifted closer to the bottom of a global competitiveness index for 55 countries this year, hit by skills shortages, unemployment and weak infrastructure, where it ranked last.
SA's rating slipped to 53 from 50 last year -- beating just Ukraine and Venezuela -- according to the index produced by the Swiss-based International Institute for Management Development (IMD).
"It appears SA is losing ground even with comparable countries," said Sollo Mosai, head of knowledge management at SA's National Productivity Institute, an independent body which carries out the research for the survey.
SA had to improve productivity to make up for the fact that consumption rather than investment and exports have driven economic growth in the past few years, he said.
"For the future, as consumer demand slows, increasing living standards will depend more on improving the competitiveness of SA's export sectors," he said.
Mosai's assessment is in line with recommendations from an international panel of experts advising the government on how to boost economic growth, on a sustainable basis.
The IMD scoreboard, always focusing on the year before, rates economies' ability to create a competitive business environment. It ranks them according to 331 criteria in four categories -- government efficiency, business efficiency, economic showing and infrastructure.
SA jumped seven places in terms of government efficiency, rising to 28 on a lower effective personal income tax, fiscal policy, and management of public finances. All of these reflect policies implemented by the treasury, which have won SA credibility in global markets.
Yet the lack of skilled labour hit the rating for business efficiency, which fell six places to 38, while economic performance dipped one place to 55.
Mosai said unemployment remained the biggest problem for SA's economy. "It's a very big challenge -- the economy is unable to cater for people under the age of 25 years," he said.
"Everyone is crying about the lack of availability of skills and the issue of well-educated people migrating elsewhere."
SA's official jobless rate fell to 23% last September -- the lowest since records began in 2000. However, on an expanded definition -- which includes people who have stopped looking for work -- the jobless rate stands at about 36%.
Infrastructure also put in a dismal showing, even excluding effect s of chronic power outages which began early this year.
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The US, Singapore and Hong Kong topped the IMD index -- the same as last year.
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