How to get our idling factories humming and creating jobs again

A series of recent government policy announcements contain a welcome sense of urgency to turn around the economy and create much-needed jobs. However, there is an unwelcome overlooking of existing capacity of the South African economy, the part that needs a minor policy adjustment. A brief review of the announcements nonetheless points to an improvement in investment-friendly policies. President Cyril Ramaphosa announced the third iteration of government-business collaboration, with a commitment to achieve over 3% economic growth and a million additional jobs by 2030. Sceptics might point to previously unmet targets that were also branded 'urgent'. The difference this time, however, is that the commitments have been made with the endorsement of business leaders who presumably know better what it would take to reach the targets. The president's fresh growth commitment was preceded by his participation in the Southern African Development Community summit where regional leaders agreed to enable the development of regional value chains to promote growth and jobs. Recently, Electricity and Energy Minister Kgosientsho Ramokgopa published an electricity market position paper. It proposes electricity market reforms that would allow more private generation and trade. The paper promises that this will safeguard employment and strengthen the economy. We should hold the minister to the promise. If it results in unintended consequences, government must review it. It was encouraging that before publishing the paper, Ramokgopa correctly launched an appeal against the 2024 High Court judgment that sought to block new 1 500 MW coal-fired power generation that is permitted by the Intergraded Resource Plan. The plan promotes the use of all energy sources including coal and renewables. And a few months ago, Parks Tau, the minister of trade, industry and competition published the Industrial Development Strategy for South Africa. The strategy promotes increased productive capacity, competitiveness and transformation of the economy. It envisages a shift towards higher-value production, reduction of reliance of export of primary minerals and the need to create jobs through beneficiation. All these policy positions paint a picture of policy makers continuously trying to solve the crises of low growth and unemployment. Many of the initiatives are work in progress. Yet unemployment persists. Stats SA reminds us about the horrible reality that just over 40% of people, including those who are demoralized to look for jobs, are unemployed. While Quarterly Labour Force Surveys occasionally show minor changes, the trend line of high unemployment continues. There's a major shortcoming in the way policy responses are crafted. We have so far failed to build on the existing base of the economy that can yield high-value industrial output. For example, we have over-capacity to produce ferroalloys and steel. This is supported by the abundance of iron, manganese and chrome. We also have abundant engineering skills and capital to mine and process these minerals. But the kind of overcapacity to manufacture is not the same as China's. China's overcapacity has been created as part of building more to enhance global competitiveness. Ours has been driven by underutilization of the capacity and declining competitiveness of what we have. The main causes of the decline are loadshedding and high electricity prices which exceed R2/kWh. Interestingly, power price hikes are not caused by lack of capacity for power generation in relation to demand. In fact, the problem is our failure to tap into the existing capacity, to modernise it and produce power that is reliable and cheap. We are effectively constraining our own competitiveness and our ability to create jobs. Eskom has licensed and unused generation units that are deemed enviable due to aging and unreliability. A policy that allows private investors or Eskom itself to fully reignite the power generation capacity and tie it to competitive manufacturing would have a positive multiplier effect in the whole economy. By using unused power generation and unused industrial capacity, we can reduce the rate of unused labour: unemployment. We know this because millions of jobs were lost when mineral processing and steel making plants along with associated supply chains retrenched millions of workers in the last decade and a half. The unproductive manufacturing capabilities haven't been dismantled. They need cheap and reliable power, followed by technological modernisation. The last time South Africa's industrial capacity utilisation was above 85% was in 2007. Since then, it has fallen to below 80%. The latest data from Stats SA shows that large manufacturers used 76% of their production capacity in May, down from 77.8% in the same period last year. Under-utilisation has increased to 23.4%. Manufacturers most affected by under-utilisation are basic iron and steel, non-ferrous metal products, metal products and machinery. This category has recorded 71% utilisation for May 2026. It was 72.9% in August 2025 having decline from 74. 2% in May that year. Eskom's 2026 annual report bears testimony to the declining utilization of industrial capacity. The power utility reported that decline in demand for its power was recorded mostly in the industrial sector, which reduced by 9.7TWh or 22.5% year-on-year. Now Eskom sits with not only under-utilised capacity, but under-utilised power. While this may be partly explained by manufacturers opting for self-generation, there is a huge portion that can be attributed to idling industrial capacity. Heavy electricity users like smelters cannot operate on solar power. The increase in industrial underutilisation has an impact on labour underutilisation. The latest Stats SA Labour Force Survey shows that the combined rate of unemployment and time-related underemployment increased by 0,7 of a percentage point to 36,6%. Over the years, the worsening unemployment rate was driven by de-industrialisation. There hasn't been a turnaround. The combined rate of unemployment and potential labour force increased by 0,1 of a percentage point to 43,8%. And the composite measure of labour underutilisation, which includes time-related underemployment, unemployment and potential labour force as a proportion of extended labour force, remained at 46,3% in the second quarter of 2026. Youth unemployment alone stands at 47. 4 % . A competitive electricity price of not more than 62c/kWh could turn idling capacity into production in ferromanganese, steel, ferrosilicon, ferro vanadium and calcium carbide industries. South Africa doesn't have to build new plants to produce these products. We need a clear energy policy tweak to get the idling plants humming again. Bayoglu is the MD of Menar, a private investment company with interests in ferromanganese and coal mining