Labour mar­ket

A dif­fi­cult year ahead for both busi­ness and Govern­ment

Finweek English Edition - - FINWEEKCONTENTS - TROYE LUND troyel@fin­

TWO THINGS STAND OUT about the labour mar­ket cat­a­clysm of 2009 in which al­most 1m peo­ple lost their jobs. First, job losses were more sub­stan­tial and wide­spread than the muted and short-lived re­ces­sion would have im­plied. It now seems as if em­ploy­ers used the global fi­nan­cial cri­sis as a pre­text for trim­ming the re­cruit­ment ex­cesses of the 2004 to 2008 boom.

Sec­ond, nearly 18 months af­ter the bot­tom of the eco­nomic cy­cle, jobs haven’t been cre­ated to any sig­nif­i­cant de­gree in any in­dus­try ex­cept the pub­lic ser­vice. The prospect of job­less growth – or, at the very least, sub­dued job growth – looms large in the cur­rent re­cov­ery. Against that back­drop Govern­ment poli­cies are likely to make things worse. Our key pre­dic­tions for this year are:

will re­main flat at around 12,8m peo­ple, based on a pro­jec­tion SA’s econ­omy will grad­u­ally ex­tend its re­cov­ery and be grow­ing at a 4% clip by year-end 2011. The vir­tu­ous cir­cle for con­sumer spend­ing – from jobs and per­sonal in­comes through to spend­ing and cor­po­rate prof­its – won’t ma­te­ri­alise. Growth will be de­pen­dent on the ex­ter­nal sec­tor and the lo­cal con­sumer’s mood, be­set by job in­se­cu­rity, will re­main sub­dued.

won’t ab­sorb the 750 000 young peo­ple who will leave the ed­u­ca­tion sys­tem in search of work. The un­em­ploy­ment rate will rise to 26,4%, part of a well-es­tab­lished long-term trend. The xeno­pho­bic un­em­ploy­ment rate will in­crease vi­o­lence, ser­vice de­liv­ery protests and the like – all con­nected, in one way or an­other, to un­em­ploy­ment among young peo­ple – will grow in num­ber and sever­ity. Be­tween July and Oc­to­ber 2011,

due to strikes and work stop­pages will reach the high­est level in SA’s his­tory. Trade unions will flex their mus­cles in un­par­al­leled ways, par­tic­u­larly in the Govern­ment sec­tor, where the num­ber of unionised work­ers is just about equal to the unionised work­force in the en­tire pri­vate sec­tor. The in­ter­ests of 6,2m (and grow­ing) dis­grun­tled and un­rep­re­sented un­em­ployed peo­ple will be sac­ri­ficed in the in­ter­ests of 3,1m (and shrink­ing) vo­cal and highly or­gan­ised unionised work­ers. Propped up by heav­ily one-sided labour laws, trade unions will ex­tract 15% to 18% wage in­creases dur­ing 2011.

will be greatly ex­tended, in the form of crim­i­nal penal­ties for com­pany di­rec­tors and rev­enue taxes for share­hold­ers. Jail time and rev­enue taxes will en­sue for even mi­nor vi­o­la­tions of health and safety, em­ploy­ment eq­uity, skills devel­op­ment, labour re­la­tions and other laws. Large, eas­ily au­ditable com­pa­nies will ex­pand their use of cap­i­tal and technology in or­der to re­place work­ers and small and medium com­pa­nies will in­creas­ingly flout the law. Vested in­ter­ests will pre­vail in the

de­bate, at least for this year and pend­ing a pro­tracted con­sti­tu­tional chal­lenge. The use of tem­po­rary em­ploy­ment agen­cies will ef­fec­tively be banned through over-reg­u­la­tion and, in­sid­i­ously, Govern­ment’s as­sault on tem­po­rary work of all forms will com­mence. At risk are the jobs of both 976 000 agency work­ers and 2,8m tem­po­rary work­ers em­ployed by com­pa­nies di­rectly. Changes in the law will en­sure all jobs will au­to­mat­i­cally be as­sumed to be per­ma­nent un­less com­pa­nies can jus­tify that the job is in­her­ently time-limited in na­ture.

– al­ready the most re­stric­tive among larger de­vel­op­ing coun­tries – will be tight­ened fur­ther. Com­bined with ad­min­is­tra­tive chaos in the Depart­ment of Home Af­fairs, the un­in­tended con­se­quence for lo­cal high-skilled pro­fes­sion­als (ac­coun­tants, lawyers, doc­tors, en­gi­neers, etc) is that pay rises will far out­strip in­fla­tion, whereas for lo­cal low-skilled work­ers, for­eign job-seekers will drive wages lower, fu­elling “xeno­pho­bic” vi­o­lence and adding pres­sure to crim­i­nalise min­i­mum wage vi­o­la­tions.

the ANC Youth League will grow in power and in­flu­ence. Last year the league cap­tured six min­is­te­rial po­si­tions in the Cabi­net reshuf­fle.

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