A difficult year ahead for both business and Government
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.