Case | HBS Case Collection | April 2011 (Revised May 2013)

South Africa (A): Stuck in the Middle?

by Richard H. K. Vietor and Diego Comin

Abstract

Fifteen years after ending apartheid, formal unemployment in South Africa was still at 24%. While the country had grown at 4 to 5% annually during the 2000s, the financial crisis set it back by 1 million more unemployed. Moreover, it seemed as if the nation were stuck between low wage and fully developed competitors. The government of Jacob Zuma has just adopted a "New Growth Path," hoping to create several million jobs over the next few years. Both the Finance Minister and the head of the Central Bank support the initiative, but worry how they can sustain fiscal discipline and control inflation, in light of these stimulative policies. Organized labor, meanwhile, has little sympathy for any sort of sacrifice.

Keywords: Financial Crisis; Inflation and Deflation; Policy; Employment; Wages; Competition; South Africa;

Citation:

Vietor, Richard H. K., and Diego Comin. "South Africa (A): Stuck in the Middle?" Harvard Business School Case 711-084, April 2011. (Revised May 2013.)