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How do policy networks function in labour market policy processes? An assessment of the labour policy subsystem and its effect on youth employment policy outcomes

This study aimed to assess the role of policy networks on labour market policies and their effects on youth employment. The research has examined how key players such as the government, the private sector, and organised labour can influence the success or failure of youth employment policies. Policy network theory was used to examine the institutional arrangements of decision-making. As part of the mixed-methods research approach, seven key respondents were interviewed qualitatively, and 61 unemployed youths were surveyed quantitatively to determine how policy decisions affect employment outcomes. The findings indicated the existence of two alliances – (1) that of the Tripartite Alliance, comprising the African National Congress (ANC), Congress of South African Trade Unions, and South African Communist Party and (2) its alliance with private interests – that underlie a political economy characterised by concessions, trade-offs, and exchange of resources, since 1994. They are institutionalised in the ANC and National Economic Development and Labour Council, where the policy decision-making process regarding the labour market is consolidated. Following the global financial crisis of 2008, neoliberalism was shaken, revealing the power dynamic between the ANC government, organised labour, and big business. This watershed moment led to the adoption of landmark labour market policies such as the National Minimum Wage and the Employment Tax Incentive (ETI) Act. Since the beginning of democracy, the ETI is the only policy to have tackled youth unemployment from the demand side by granting big businesses unearned tax credits for hiring youth while ignoring the informal economy and small businesses. Moreover, it has provided big businesses with the opportunity to hire younger workers while earning tax credits, which has threatened the employment of older workers, some of whom are unionised. After six years of adoption, the ETI has had no significant impact on youth employment; at the end of the second quarter of 2021, youth unemployment stood at a record 64.4%. The decision to implement the ETI was based on preconceived views, political pressures, and vested interests, which is consistent with the thesis of this study that public policy fails at conception, design, and formulation – not at implementation. Implementation failures can be associated with policy instruments adopted at earlier stages of policy development; therefore, implementation failures are in essence manifestations of flaws present in the process of policy development. The key recommendation of this study, is that the government ought to reform Nedlac to include a wide variety of stakeholders with an equal voice, thus eliminating the dominant influence of a few elites on labour market policy decisions.

Full Name
Dr Siphamandla Warren Khumalo