and proactive to restore confidence. a now repeated lament from central bankers is that economic policy makers across the world have not used the present global financial crisis to address the structural reforms required to drive higher growth. many economists ask the question ‘ why does the country not introduce seemingly obvious structural reforms to boost growth and employment? ’ the answer to this question is complex and relates to the power dynamic in a country. structural reforms often have winners and losers. the losers are often diffused and dispersed, and therefore not able to mobilise to demand structural change. conversely, the winners are often easily identifiable, powerful and well - organised. the recent debate about tariffs on imported chickens is a good example. this is however not a uniquely south african phenomenon. the common agricultural policy in the eu provides huge benefits to european farmers at the expense of european consumers and producers from developing countries. this problem challenges economists and economic policy - makers to improve the analysis that they use to support their arguments and to think more carefully about how these are communicated to society. many structural reforms are difficult to implement precisely because of the political economy of a society. the last theme that i wish to touch on today is to argue that inequality itself is a structural impediment to faster and more inclusive growth. even after adjusting for differences in income per capita, unequal countries generally have the following features : high levels of crime, poor health outcomes, lower levels of education and low levels of trust between social partners. probably, the single most important problem in unequal societies is that social trust is hard to build and maintain. in countries with low levels of trust, investment decisions tend to focus on short - term returns rather than on long - term rewards. this skews the economy away from fixed investment and from investments in infrastructure or research and development that have long - term payoffs. the simple explanation is that unequal countries are generally more unstable and therefore long - term investment is more risky and hence impact negatively on capital flows. bis central bankers ’ speeches to counter this phenomenon, countries need strong institutions, the consistent application of rules and legal frameworks that protect investors over the long - term. they also need policy certainty and capable public services able to collect taxes and spend it effectively. these capabilities are what rodrik refers to as fundamental capabilities. while these capabilities are difficult to develop in highly unequal countries, they are even more critical in unequal countries to foster sustained growth and development. conclusion south africa ’ s transition from apartheid

francois groepe : south africa ’ s structural unemployment challenge – the most important issues to be addressed to place south africa on a sustainable growth path in an effort to reduce unemployment levels address by mr francois groepe, deputy governor of the south african reserve bank, on the occasion of the release of the 14th uasa south african employment report, johannesburg, 30 april 2015. * * * chairperson, ladies and gentlemen, i am pleased to be part of the proceedings of the day, as we gather here for the release of the 14th uasa employment report. this publication has grown in stature over the years and has earned itself a place amongst various high - level publications informing on the state of the south african labour market. this morning, i shall focus on the most important issues to be addressed to place south africa on a sustainable growth path in an effort to, amongst others reduce the unemployment levels. south africa counts, among its key challenges, its high level of structural unemployment which is exacerbated by the levels of poverty and inequality in the country. these challenges, in turn, give rise to a host of other socio - economic and socio - political challenges. earlier policies, such as the accelerated and shared growth initiative ( asgisa ) ( 2006 ), as well as the more recent long - term vision for south africa, as captured in the national development plan first released in 2012, highlight the requirement for economic growth in excess of 5 per cent on a sustained basis to meaningfully make inroads towards reducing the high levels of unemployment. prior to the global financial crisis in 2008 / 09, some progress had been made in reducing overall levels of unemployment in the country as strong global and local economic growth resulted in higher levels of output leading to increased demand for labour. south africa, in fact, had experienced one of its longest periods of uninterrupted economic growth – 55 quarters of growth averaging between 3 and 5, 6 per cent annually. as the global economic growth recovered after the financial crisis, albeit hesitantly and unevenly, south africa lagged behind, growing at rates well below its potential, which had been negatively been impacted by strained relations and industrial action, but also by structural deficiencies such as the electricity load shedding. while south africa has performed well in managing to largely contain inflation, within the inflation target range, and no doubt assisted in part by the lower international food and oil prices, the country has been less successful in matching levels of growth as experienced in other developing