SOUTH Africa has continued its downward trend in world competitiveness rankings as factors such as poor labour-employer relations and weak economic growth weigh on competitiveness.
The country’s ranking fell to 56th out of 144 countries in the World Economic Forum’s (WEF) Global Competitiveness index for 2014 released on Wednesday. The country ranked 53rd out of 148 countries in the 2013 competitiveness index.
South Africa ranked poorly on higher education and training, which the WEF said remained insufficient, and labour market efficiency. It ranked 144th in labour-employer relations.
"Raising education standards and making its labour market more efficient will thus be critical in view of the country’s high unemployment rate of over 20%, with its youth unemployment rate estimated at over 50%," the WEF said.
The country did well on measures of the quality of its institutions (36th), including intellectual property protection (22nd), property rights (20th), the efficiency of its legal framework in challenging and settling disputes (ninth and 15th, respectively), and its top-notch accountability of private institutions (second).
The WEF said South Africa’s financial market development remained impressive at seventh place, although their data pointed to "more difficulties" in all channels of obtaining finance.
The country’s efficient market for goods and services, business sophistication and innovation, benefiting from good scientific research institutions, and strong collaboration between universities and the business sector in innovation were also identified as points supporting competitiveness.
The WEF did, however, note that the country’s strong links to advanced economies where economic growth was anaemic, would not bode well for its own growth prospects.
"South Africa’s strong ties to advanced economies, notably the euro area, has made it more vulnerable to the economic slowdown of those economies," the WEF said.
These ties were identified as likely contributors to the deterioration of fiscal indicators in South Africa, including macroeconomic environment performance which dropped sharply in this year’s index.
"Low scores for the diversion of public funds, the perceived wastefulness of government spending, and a more general lack of public trust in politicians remain worrisome," the WEF said in the Global Competitiveness report.
South Africa ranked poorly in the health of the workforce — at 132nd out of 144 economies as a result of high rates of communicable diseases and poor health indicators more generally, the WEF said.