“Don’t tell us we can’t produce welders,” said Reserve Bank Governor Gill Marcus in a lecture to students and high school pupils at Rhodes University on Wednesday. Commenting on what she described as a major structural problem in the South African economy, Marcus said that in spite of widespread unemployment, we have more than 60 000 unfilled vacancies for skilled artisans such as welders.
“Don’t tell us we can’t produce welders,” said Reserve Bank Governor Gill Marcus in a lecture to students and high school pupils at Rhodes University on Wednesday. Commenting on what she described as a major structural problem in the South African economy, Marcus said that in spite of widespread unemployment, we have more than 60 000 unfilled vacancies for skilled artisans such as welders.
She pointed out that although South Africa has weathered the brunt of the crisis rather well, recent political developments have left this country more vulnerable than it was six months ago. She cited the recent fall in the rand’s value and the large amounts of investor funds that have left our shores as evidence of this growing vulnerability.
The widely publicised strikes and particularly the violent confrontations at Marikana have severely undermined confidence in the future of this country, making it a less attractive investment destination. The erosion of confidence was a key factor in the withdrawal of investments, but it was not the only one.
The reflex response to the international financial crisis was for banks to bring their funds back to their country of origin. The consequence of this reaction was that countries all over the world suddenly found foreign investments being withdrawn from their markets, leaving them with localised liquidity crunches.
The only way of coping with these domestic cash shortages was to call in their own funds from overseas markets and so exacerbated the spiralling international crisis. Marcus spoke at length about the deficit of trust as being the salient characteristic of the current crisis.
She said that internationally trust has been undermined at various levels beginning with a lack of trust in leadership. This is followed by a lack of trust among European states as the wealthier, northern European countries do not trust those in the south to use bail-out money prudently.Thirdly there is a lack of trust between social groups called on to make sacrifices.
Marcus added that while the above three trust deficits are critical, she chose to focus on the lack of trust in the global financial system in general and in banks in many of the advanced economies in particular.
She said, “The importance of trust in the financial system cannot be over-emphasised, because without it the financial system breaks down and without an efficiently working financial system, the economy will not operate effectively”.
Marcus added to the gloom by explaining that a recovery from a financial crisis takes much longer than that of other crises.
“Unlike normal economic cycles or recessions, financial crises are protracted,” she said, because they result in loss of output, employment and tax revenues.
