"Andrew" offers the following:Some of the skepticism comes from the projects not being "shovel ready" and taking too long to have a real stimulative impact. South Africa didn't have a banking crisis but we had a dramatic housing bubble ... and we did enter recession after the crisis hit. We also have massive investment in infrastructure because of the World Cup and those projects were only really getting going when the crisis hit. I'm sure there are technical reasons why this isn't relevant to the stimulus debate, but I've barely even seen it mentioned anywhere. Is it really that irrelevant?Unemployment in South Africa had been 23.5 percent. Yet, after the collapse and response, the unemployment rate is still rising and see also here for further information. It's like trying to catch a falling knife, there is more information here.
1. A large proportion (perhaps 50-80% depending on the type of project)of the billions spent is is 'heavy metal', that is technology such as turbines, boiler, cranes, train-sets etc, imported from abroad and therefore this spending has a much more limited impact on local demand and employment;
2. Most construction jobs are relatively low-skilled jobs and there is already evidence that people employed on flagship 2010 projects are again unemployed. Part of the problem is the insistence on using local labor on projects which limits the extent to which people trained on one project can be used elsewhere. The focus on local labor also raises the training and recruitment costs;
3. the main reason why there is such high unemployment is the relatively inflexible labor markets which overcompensate a relatively small labor aristocracy and mitigate against the employment of more people at lower costs. Even those taken on in 'unemployment relief' type projects get paid a significant premium over local wages which limits the scope of such projects;
4. the ruling alliance is dominated by the trade unions which are solidly entrenched in the public sector and major utilities which raises the costs of government and services. Basic services in health, policing and education also suffer because the unionized staff have no incentive to deliver because of their protection. Similarly the costs of electricity and other public services are inflated whilst the actual services are constrained by under-investment and poor maintenance;
5. the majority of the population are excluded from these benefits, suffer poor service delivery and unemployment, and like the disenchanted masses elsewhere in history seek scapegoats such as 'foreigners'. ....