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Economic reform programmes, labour market institutions, employment and the role of the social partners in Namibia

Listed author(s):
  • Bruno Venditto


  • Dirk Hanshom


  • John Ashipala


Namibia does not represent a case of structural adjustment, that is, a kind of economic reform in a situation of crisis with a high leverage of external actors (IMF, World Bank). Rather, the agenda for economic reform is set by the government, and addresses the problems of the high poverty and extreme inequality of a dualistic economy which emanate from a mineral-based enclave economy and from a past policy of racial segregation (apartheid), which restricted the benefits of education and other social services to the privileged. Government policy is aimed at promoting growth and employment and reducing poverty and inequality. Key instruments for achieving these aims are high expenditures on education, health, a universal pension system, and other social services. Further to this, measures have been taken to create employment and to redress inequities on the labour market. At the same time, the Namibian Government follows a market-oriented and open economic policy, based on acknowledgement of the fact that the problems of poverty and inequality can only be overcome in the context of economic growth. The aims of the government include a balanced budget, a conservative approach to foreign debt, and public sector reform. However, progress in the achievement of these remains limited. Namibia’s economic record since independence in 1990 compares favourably to both the pre-independence decade and the sub-Saharan African (SSA) average, but remains inadequate to the task of significantly raising per capita incomes - in fact, since 1994 per capita incomes have been stagnating. Independent Namibia inherited a highly segmented labour market, where every defined ‘ethnic group’ had differentiated access to employment and to wages, with a major underlying factor being unequal access to education. Figures do not exist for tracing the record in social development precisely, but it is clear that poverty and inequality remain a major problem. Unemployment has increased, as the declining importance of agricultural employment has not been compensated by commensurate increases in employment in the industrial and services sectors. Namibia’s formal sector is characterised by its large size and high incomes. Sheltered by the high tariffs of the Southern African Customs Union (SACU), these are increasing and outstripping productivity increases. They also reflect the high degree of unionisation and the scarcity of skills. Then there are the small non-agricultural informal sector and agriculture, with low, market-determined incomes. Poverty is concentrated among the rural population (subsistence farmers, agricultural and other workers). Significant progress has been made when one compares the present to the inequitable situation of the past. However, despite high expenditures in the social sectors, the outcome remains limited, due to inefficiencies. Confrontational labour relations were inherited and have not yet been overcome, despite a policy of reconciliation and collective bargaining, and are identified as a key problem by investors. A related problem is that the trade unions represent mainly the predominantly non-poor urban workers and employees. The involvement of labour market institutions in the process of economic reform is limited, due to two principal factors. Firstly, the institutions do not yet represent the social partners in their totality, and secondly, this capacity of economic policy analysis is itself limited. Measures to augment the role of social partners in the formulation of economic policy reform include the following: • strengthening the voice of presently underrepresented groups (low-paid workers, especially in the informal sector; informal sector operators) • strengthening the capacity of the social partners in economic policy analysis • strengthening institutionalised tripartite mechanisms • providing better information to the general public (e.g. capacity- building of economic policy journalists) • providing timely and comprehensive economic information (statistics) to facilitate an informed debate).

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Paper provided by EconWPA in its series Development and Comp Systems with number 0408006.

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Length: 42 pages
Date of creation: 09 Aug 2004
Handle: RePEc:wpa:wuwpdc:0408006
Note: Type of Document - doc; pages: 42
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