Creating employment and reducing emissions: Options for South Africa

Abstract

South Africa faces huge challenges of poverty and unemployment, yet at the same time, needs to make a contribution to climate action. Historically, our pattern of development gave rise to the ‘minerals-energy complex’, locking us into low employment and high emissions development. It has proved difficult to change this structure, with political economy interests opposing shifts and high adjustment costs. We analyse policy instruments that can reshape the development path: reducing incentives to capital-intensive and high emissions heavy industry, ending direct and indirect support for cheap electricity, and removing fossil fuel subsidies. Industrial policy should pay attention to creating comparative advantage in more labour-demanding sectors. Agriculture can create employment, while enhancing carbon sinks. Based on our exploration of such policy instruments, we suggest that future development can align employment and mitigation objectives, seeking synergies across industrial, energy, and climate policy, while at the same time managing trade-offs.