Macroeconomy

This policy brief by the Institute for Economic Justice (IEJ) argues that South Africa's unemployment crisis is a macroeconomic phenomenon that cannot be solved through microeconomic interventions alone. The document criticizes the 'orthodox' macroeconomic framework adopted since 1996, characterizing both fiscal and monetary policies as contractionary and detrimental to job creation. It proposes a shift toward a developmental macroeconomic approach, featuring a significant fiscal stimulus and a restructured monetary policy mandate to prioritize employment and productive investment over strict inflation targeting.

• The document asserts that South Africa's approach to unemployment has failed because it relies on microeconomic doctrines—such as addressing skills, labour laws, and wages—while ignoring the critical role of macroeconomic variables like deficits, debt, and inflation.
• South African macroeconomic policy is described as contractionary, with fiscal austerity and high interest rates contributing to economic stagnation. Between 2016/17 and 2018/2019, average annual growth in real government expenditure (excluding interest) was 0.3%, while population growth was 1.6%, indicating a decline in per capita expenditure.
• The 'orthodox' framework adopted since 1996—characterized by inflation targeting, an independent central bank, and financial liberalization—is blamed for failing to generate large-scale job-creating investment, instead leading to de-industrialization and the dominance of speculative finance.
• The IEJ proposes a R500 billion fiscal stimulus over three years (approximately 3% of GDP), suggesting that a large portion be directed toward economic infrastructure due to its high fiscal multiplier of 1.9.
• To fund the stimulus, the document suggests six avenues: increasing taxes on wealth and income, allowing government debt to rise to 60% of GDP by 2019/2020, utilizing over-capitalized funds from the Public Investment Fund (PIC), requiring private sector contributions, monetizing debt via the SARB, or using overt monetary financing.
• The brief recommends a fundamental change to the South African Reserve Bank's (SARB) mandate to prioritize sustainable growth and employment creation, including an emergency interest rate cut of at least 2 percentage points.
• The document advocates for 'Quantitative Monetary Easing' (QME) where the SARB provides direct credit to productive economic agents and SMMEs, and the implementation of capital controls (such as a Tobin tax) to curb short-term speculative capital flows.
• The IEJ argues for the end of the separation between fiscal and monetary authorities, proposing a coordinated approach similar to the relationship between the Bank of England and HM Treasury to enable the monetisation of fiscal operations.

APA

Isaacs, G., Gqubule, D., & Nkosi, R. (2018). Macroeconomy. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf

Chicago

Isaacs, Gilad, Duma Gqubule, and Redge Nkosi. Macroeconomy. Institute for Economic Justice, 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf.

Wikipedia

{{cite report |last1=Isaacs |first1=Gilad |last2=Gqubule |first2=Duma |last3=Nkosi |first3=Redge |title=Macroeconomy |publisher=Institute for Economic Justice |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{isaacs2018macroeconomy, author = {Isaacs, Gilad and Gqubule, Duma and Nkosi, Redge}, title = {{Macroeconomy}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-4-Macroeconomy-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }