Pol­icy to blame for poor jobs growth

Re­port sug­gests that al­though more peo­ple are em­ployed com­pared with 1994, bad labour pol­icy has hurt the poor

CityPress - - Business - XOLANI MBAN­JWA xolani.mban­jwa@city­press.co.za

The num­ber of South Africans who have jobs al­most dou­bled from 7.9 mil­lion in 1994 to 15.6 mil­lion in 2015. This, how­ever, is not nearly enough to make a dent in un­em­ploy­ment fig­ures, as job cre­ation has con­tin­ued to lag be­hind, while the labour mar­ket ab­sorp­tion rate has fallen, ac­cord­ing to the SA In­sti­tute of Race Re­la­tions.

Frans Cronje, the in­sti­tute’s CEO, said the 96.4% growth in the num­ber of peo­ple with jobs in the past 21 years was “a largely un­ac­knowl­edged suc­cess and ex­plains partly why the de­pen­dency on the em­ployed ra­tio has come down”.

The study – ti­tled There’s a Hole in the Job Mar­ket – also found that the num­ber of un­em­ployed South Africans who were de­pen­dent on peo­ple who had jobs had de­creased from 380 for ev­ery 100 em­ployed peo­ple in 1994 to 250 per 100 work­ing peo­ple in 2015, a sig­nif­i­cant de­crease of 34.2%.

The in­sti­tute said the de­pen­dency fig­ures of­fered a more com­pre­hen­sive pic­ture than the of­fi­cial de­pen­dency ra­tio, “which as­sesses the ra­tio of the young and old to the work­ing-age pop­u­la­tion, re­gard­less of whether they are ac­tu­ally work­ing”.

The in­sti­tute said the study was proof that in­vest­ment­driven eco­nomic growth was the most cer­tain way to cre­ate em­ploy­ment, as fig­ures from Stats SA and the Re­serve Bank showed that de­spite higher gross do­mes­tic prod­uct growth be­tween 2004 and 2007 – av­er­ag­ing 5% eco­nomic growth an­nu­ally – un­em­ploy­ment also peaked dur­ing those years.

“This is why the in­sti­tute has long main­tained that in­vest­ment-driven growth, and not gim­micks such as wage sub­si­dies and pub­lic works schemes, is the only sus­tain­able so­lu­tion to South Africa’s un­em­ploy­ment is­sue,” said the in­sti­tute.

Stats SA’s lat­est Labour Force Sur­vey, which tracks the un­em­ploy­ment rate ev­ery three months, in­di­cated that while the pop­u­la­tion stood at 54 956 900 peo­ple in the third quar­ter of 2015, with 35 955 000 peo­ple of work­ing age, the study found only 20 887 000, or 58.1%, of them were eco­nom­i­cally ac­tive.

“Only 15 657 000, or fewer than half of work­ing-age peo­ple, are em­ployed. This is a higher pro­por­tion than of the of­fi­cial un­em­ploy­ment rate of 25% and of the ex­panded rate of 34.9%,” reads the Stats SA re­port.

For a more “ac­cu­rate” view of South Africa’s un­em­ploy­ment cri­sis, the in­sti­tute’s study sug­gests that other mea­sures should be used when analysing the coun­try’s jobs cri­sis. Th­ese are the labour mar­ket par­tic­i­pa­tion rate, of 58.1%, or the labour mar­ket ab­sorp­tion rate, of only 43.5%.

The for­mer mea­sures the pro­por­tion of the workingage pop­u­la­tion that is eco­nom­i­cally ac­tive, while the lat­ter mea­sures the pro­por­tion of the work­ing-age pop­u­la­tion that is em­ployed (in­clud­ing all peo­ple who do any work for pay, profit or fam­ily gain).

The study found that the num­ber of peo­ple em­ployed in the min­ing in­dus­try had con­tracted the most com­pared with six other in­dus­tries. Min­ing em­ployed 692 900 peo­ple in 1990, but only 489 515 in 2015, a 29.4% re­duc­tion in the num­ber of jobs in that sec­tor.

Min­ing’s losses were fol­lowed closely by those in the man­u­fac­tur­ing sec­tor, which shed 26.6% of its jobs be­tween 1990 (1 537 511) and 2015 (1 134 416).

On the other hand, jobs in South Africa’s fi­nan­cial ser­vices sec­tor, which is rated highly in­ter­na­tion­ally, grew by 968% from 186 280 jobs in 1990 to a stag­ger­ing 1 985 465 jobs in the sec­tor in 2015.

The trade sec­tor showed the sec­ond-high­est growth in the 25 years, at 134.1%, with 78 100 jobs in 1990 com­pared with 1 844 849 in 2015. The trans­port sec­tor is in third place, with 361 268 jobs in 1990 and 473 491 jobs now.

The util­i­ties sec­tor grew marginally, at 14.6% in the past 25 years, from 50 920 jobs in 1990 to 58 372 jobs in 2015.

The in­sti­tute sug­gests gov­ern­ment may be forced to slow and even scale down pub­lic ser­vice em­ploy­ment, as the civil ser­vice has ex­pe­ri­enced sig­nif­i­cant job growth, while pri­mary and sec­ondary in­dus­tries have shed jobs.

“Since 1990, broader gov­ern­ment em­ploy­ment has in­creased by 54.8%, from 1 310 484 to 2 028 825. Other than in­cu­bat­ing the black mid­dle class, the ex­panded civil ser­vice has been of lit­tle ben­e­fit to South Africa and is now the pri­mary rea­son for the gov­ern­ment’s fis­cal cri­sis. Es­sen­tially, the pub­lic ser­vice has be­come a wel­fare scheme for the mid­dle class,” reads the re­port.

The ma­jor­ity of those un­em­ployed who are un­skilled youth presents an­other cri­sis in the South African job mar­ket be­cause the num­ber of skilled jobs has in­creased, while un­skilled labour has di­min­ished, with the agri­cul­tural sec­tor – an im­por­tant ex­port player – suf­fer­ing a 54% re­duc­tion in the num­ber of semi­skilled jobs, from 215 000 in 2001 to 99 000 jobs in 2015.

“The data re­veals that the num­ber of skilled employees is in­creas­ing faster than the un­skilled. This is a re­sult of a labour reg­u­la­tory en­vi­ron­ment that has driven poor peo­ple out of jobs and cor­re­lates with broader dein­dus­tri­al­i­sa­tion trends. Again, it is ap­par­ent how mis­guided labour poli­cies have been the ar­chi­tect of high un­em­ploy­ment lev­els among poor peo­ple.

“The labour mar­ket ab­sorp­tion rate for peo­ple with ter­tiary ed­u­ca­tion is twice as high as for peo­ple who have only pri­mary ed­u­ca­tion. In this re­spect, the qual­ity of South Africa’s schools can be iden­ti­fied as a cen­tral ob­sta­cle to the em­ploy­ment of young peo­ple,” reads the study.

The num­ber of peo­ple who were un­em­ployed in­creased from 1 988 000 in 1994 to 5 230 000 in 2015, or 163.1%, with black peo­ple bear­ing the brunt of un­em­ploy­ment.

“The num­ber of un­em­ployed [black] Africans has in­creased by 174.2% since 1994. The of­fi­cial un­em­ploy­ment rate of white peo­ple has in­creased faster, at 245.2%, but still rep­re­sents a mi­nor­ity of the to­tal work­force.” It placed the blame for this squarely on “mis­guided labour poli­cies and a Cab­i­net that re­mains hos­tile to in­vest­ment-driven eco­nomic growth”.

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