Bell, Trevor : Unemployment in South Africa

estrictions on the movement of Black labour to the metropolitan
areas and on the freedom of business firms to employ them, may well
for the reasons outlined earlier, make a significant contribution to
relieving the problem of structural unemployment in South Africa.
Among the various fields of macro-economic policy relevant to the
rate of economic grovth in South Africa, it is believed that
international economic relations are crucial. It will not be
possible at the tail-end of this paper to argue the matter in detail.
However, the view taken here is that two spheres of policy, which
have an absolutely fundamental bearinq on the long-term growth of
output and employment, are those relatinq to foreign exchange markets
and foreign trade. Given the constraints outlined above on the use
of some other policies, and the fact that much of the deflationary
pressure on the South African economy, as well as other major
disturbances such as fluctuations in the price of gold, originate
abroad, the way in which we define and regulate our monetary and
trade links with the rest of the world is bound to be crucial.
In the sphere of foreign exchange markets the declared aim of the
Government is the establishment of a system of completely freely
floating exchange rates, and some major steps have already been taken
in that direction. In the sphere of trade policy the Government has
committed itself much less clearly, and the formulation of policy in
this area appears to be in a state of flux, indeed, even a high state
of confusion at present. But judging by two recent government
reports, the tide in this area, too, is running strongly in favour of
a more open, outward-oriented economic system.
These two spheres of economic policy have played a major part in
South African thinking during earlier periods of economic difficvlty.
For instance, as economic conditions steadily worsened after the
First World War, trade policy was clearly perceived by the government
of the day as critical to dealing with the closely connected issues
of poverty and employment. Why is it that the climate of South
African thinking today is totally different from the 'twenties, the