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Archive for January 2016

Foreign skills needed to improve our economy

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Sergey Brin co-founded Google. He is also an immigrant.

Sergey Brin co-founded Google. He is also an immigrant.

Last July my university advertised a tenure-track position in the Humanities. We recruited widely and, in line with our goal of positioning Stellenbosch as an internationally-reputable university, appointed a US citizen with a PhD from Oxford. Our chosen candidate held a teaching job at another South African university before, but was eager for better job security and the prospect of educating the next generation of South African political leaders.

And then the process of applying for a visa started. It has been more than six months since her appointment. Although she was due to start in September, she has had to return to the US, where as I write in late-January, she is still waiting for feedback from the Department of Home Affairs.

She is not alone. Across South Africa, universities and corporations are lamenting the slow speed at which visa applications are processed. Since the amended Immigration Act was passed on May 22 2014, it has become increasingly difficult to obtain a work visa, even for foreign spouses of South African citizens. Part of the reason is that the new process requires communication between the Department of Home Affairs and the Department of Labour, with the latter needed to verify whether the skills are indeed ‘scarce’.

This is all the more saddening in a country so desperately in need of all kinds of skills. Those in favour of tougher laws against skilled immigration fail to recognise the immense shortfall in skilled workers across all sectors of the South African economy. The rapid growth of the South African economy since 1994 has created a huge demand for skilled workers, with institutions of higher learning unable to keep up with demand.

This is clear from a look at unemployment rates. Stellenbosch economist Hendrik van Broekhuizen calculates that the unemployment rate for South Africans with at least a bachelor’s degree is a low 5.9%. Black graduate unemployment is slightly higher at 8.6% because black students are more likely to enrol for courses in the arts, humanities and social sciences, and attend formerly disadvantaged universities, where the quality of degrees are perceived to be lower. But even an 8.6% unemployment rate is vastly superior to the aggregate broad unemployment rate of 41% for black South Africans (and lower, incidentally, than the graduate unemployment rate in the European Union too). This clearly suggests that there is a much greater demand for skilled jobs in South Africa – and why the #FeesMusFall-movement was so passionate in their pleas for greater access to higher education.

Yet despite employers’ need for skilled workers, the South African government seems eager to do everything in its power to isolate South Africa from the international labour market. According to Gary Eisenberg of law firm Eisenberg de Saude, more than half of all immigration applications have been refused since the new law was enacted. He estimates that foreigners can wait anything between five and 12 months for a decision, and then a similar period for appeals. Those awaiting applications or appeals after their visas have expired can be declared ‘undesireable’, and prohibited from returning for five years.

If there is a country that should understand how isolation from the global talent pool is bad for growth, it is South Africa. Apartheid and its discriminatory education policies meant that only a sliver of the population was acquiring the skills necessary to expand the manufacturing and services sector, and grow the economy. After democracy, the need for skills became acute as firms (and universities) had to compete not only for export markets in a rapidly-globalised world, but for a skilled elite that was increasingly mobile. Despite the fact that universities have trained large numbers of black graduates (there are now more black graduates in the labour market than white), the inequalities in the demand for skilled and unskilled workers have largely remained, as the unemployment figures suggest.

That is why the government’s attitude to immigrants is so baffling. Allowing skilled immigrants to work in South Africa – and making their application process as easy as possible – is what economists like to call low-hanging fruit: one of the easiest ways to significantly improve the prospects of the South African economy. Of course immigrants should not simply substitute for training South Africans too. But denying skilled immigrants the opportunity to work is actually hurting the ability of the next generation of South Africans to acquire the skills necessary to compete in the global economy.

That is exactly the reason why we appointed an Oxford-educated lecturer. The best university departments are those with a diverse faculty who are able to offer their students access to minds trained in the best universities in the world. Such professionals often bring an international network through which different avenues for scholarships and new outside sources of funding can be made available to South African students. They are the ones to push their South African colleagues to the boundaries of science, and help them develop new theories, invent and innovate. And they are the ones who will train a new generation of South Africans who can not only participate but prosper in the economy of the future.

*An edited version of this article originally appeared in the 21 January 2016 edition of Finweek. Buy and download the magazine here.

Written by Johan Fourie

January 30, 2016 at 13:51

Again: What to study in South Africa

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Big shots: Joseph Stiglitz, Jeffrey Sachs and Edward Glaeser, amongst others, were at the ASSA meetings in San Francisco

Big shots: Joseph Stiglitz, Jeffrey Sachs and Edward Glaeser, amongst others, were at the ASSA meetings in San Francisco

My most popular post on this blog – by far! – remains the Why and what to study in South Africa entry I wrote in May 2013. My advice was pretty simple: if you can do math, study a degree where you will develop your math skills further. Math and statistics, combined with economics, computer science and/or engineering sciences, will make you an incredibly desirable employee: both in South Africa and abroad.

I was reminded of this advice when I attended the world’s largest gathering of economists last week in San Francisco. The ASSA meetings spanned three days, had more than 500 sessions with more than 12 000 participants. I presented a paper with Dieter von Fintel (on persistence and reversal of fortune) in a session on apartheid – with excellent papers by Johannes Norling (on fertility), Dan de Kadt and Melissa Sands (on voting), and Martine Mariotti and Taryn Dinkelman (on remittances and migration). And there were many other excellent sessions: notable ones I attended was a session on long-run inequality (with a very entertaining Philippe Aghion), a session on writing books (see photo), and a session on early childhood development (where Melissa Kearney presented a paper I reported on here).

But what reminded me about my math advice was a discussion during one session about the need to diversify academia. One commentator mentioned that the reason for the slow diversification of economics faculty is the high level of mathematics required to do a PhD in Economics in the US. (The slow transformation was quite apparent at the conference: the vast majority of attendees were white males.) Much like in South Africa, black students in the US would often opt out of math courses because of poor grades or a bad experience at school. They are thus more likely to end up in the humanities and less likely to study more ‘mathy’ degrees, like economics.

Yet, there is an increasing realisation that the current state of affairs – the white, male bias – is neither fair nor sustainable. Harvard’s chair of the Economics department, David Laibson, confirmed this: he was quite explicit that Harvard will focus on hiring more diverse staff during his tenure. This is likely to increase the demand for female and black economists (and engineers, scientists, actuaries, statisticians) significantly in the foreseeable future. But to suspect that the market will automatically adjust – that the higher demand will induce more black students to study economics – is unlikely. That is why there are several programmes in the US to inform high school students of the possibilities that economics can offer, showing them the wide applicability of economics in their daily lives. (Economists, for example, study how Discovery Vitality can get their members to live healthier lives, they study how to make things like Uber and Airbnb more efficient, they study what’s wrong with the school system and how to improve it, they study how firms compete and grow, they study the minimum wage and its impact and, yes, they also study financial markets and the banking system. Just watch this video).

Economics departments in South Africa are certainly not doing enough to promote the field to young scholars. Prospective students have a very narrow view of what an economist does, if they have a view at all. I know I never thought much about Economics before I arrived in my Economics 1 class. But the truth is that there is a massive demand for good economists, both in South Africa and, as I witnessed for myself in San Francisco, abroad. South Africa’s services industry needs far more graduates with strong mathematical or statistical backgrounds; the industries of the future will require the analyses and interpretation of (big) data, skills for which economists are well-equipped.

So, what should you study? This is an incredibly tough decision to make at a young age, and it almost certainly will have a big impact on the quality of your life. But here goes: if you have the ability, you can narrow the risk that your choice will turn out to be a bad one by developing your math and stats capabilities. And if you really want to enjoy what you’re doing (yes, I’m biased), combine it with Economics.

Written by Johan Fourie

January 13, 2016 at 19:00

A time to reflect

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The center of it all: Johan was part of the Leuven/Stellenbosch ThinkTank 2015

The center of it all: Johan was part of the Leuven/Stellenbosch ThinkTank 2015

My last post of 2015 began with a reference to a train trip in Holland. With me on that trip was a young student from Stellenbosch, Johan van Huyssteen, who travelled with me to Belgium for a two-week exchange between Stellenbosch and Leuven students. I wrote about those two weeks here.

This morning I received the tragic news that Johan had died after slipping and falling 60m down a waterfall on his family’s farm in the Eastern Cape.

I have no words to express my utter disbelief that someone with so much vitality and enthusiasm for life is gone. There are many joys of our job as teachers and mentors, and during those two weeks in Leuven I experienced many of them. But that makes the loss of a young student like Johan even more heartbreaking. It is not only the loss of life, but the loss of potential unfulfilled that I find truly devastating.

I knew Johan only for a short few months, but there are many others that had the pleasure to know him much longer. My thoughts are with his parents and family, classmates (Johan studied agriculture), and fraternity friends (he was a Pieke onderprim) and my colleagues who worked with him in the various leadership structures.

It is moments like this when the busy world that surrounds us comes to an abrupt halt. Let us pause at the start of 2016 to not only celebrate Johan’s life, but to reflect on what it is we value and dedicate our most valuable commodity – time – to this year.

Written by Johan Fourie

January 5, 2016 at 16:22