All this bad news makes for lively elections in 2016
THE negative news flow around the economy is turning into a deluge, and it’s harder than ever to see what is going to be the catalyst for a turnaround.
South Africa increasingly feels wedded to low growth, with the chief culprit being persistent electricity shortages, mounting labour market disruptions and the ever-present curse of policy uncertainty. All that contributes to a slump in investment spending, rising unemployment and a crisis of consumer and business confidence.
With first-quarter growth a paltry 1.3%, the country feels trapped in a downward spiral.
It’s made worse by the fact that unemployment is at its highest levels in 12 years. Stats SA figures this week showed a spike in unemployment to 26.4% of working-age people unable to find a job versus the long-term average of around 24%. What the data does not show is the devastating social consequence as millions give up hope of joining the cosy club of the employed.
As the economic news cycle turns from bad to worse, companies are continually finding ways to do more with less. They’re tightening up on everything from hiring to procurement as they seek to limit costs.
It means more and more people are excluded from the mainstream economy, making it more difficult for the unemployed to get a foot on the jobs ladder. The brutal reality is that more than five million workingage South Africans are unlikely to hold down anything resembling a job in their lifetimes.
The most recent data shows agriculture and industry have been worst affected, but mining, too, is undergoing serious cutbacks that will continue unless there is a jump in global demand for our key commodity exports.
Figures from the Chamber of Mines show jobs have been cut in gold, platinum and iron ore mining over the past three years. In 2012, gold employed 142 000 people. That has been reduced to fewer than 120 000, while platinum, which employed nearly 200 000 people, has fewer than 190 000 in work currently. Iron ore has seen similar reductions.
No one has a clue how to fix it, and the government, as the key regulator across most industries, appears bewildered by the consequences of low growth.
Minister of Mineral Resources Ngoako Ramatlhodi said he was “alarmed” by the collapse in jobs, despite the evidence of diminishing reserves, a crippling five-month platinum strike and soft commodity prices being there for all to see.
Companies are striving to adapt to their new reality and have shed 35 000 jobs in the past two years, but the government and its alliance partners are stuck in an interventionist time warp.
Wages have grown well above inflation as unions, struggling for political dominance, have become more demanding in the face of a slowing industry.
Although the Association of Mineworkers and Construction Union may have succeeded in getting higher wage settlements for some, cutbacks have become inevitable. Worst affected has been the gold sector, which has seen its workforce fall by 16% in two years, while platinum employs 5% fewer people than it did at the time of the Marikana shootings, which left 34 dead.
Despite its appeals for jobs to be created, the government’s policies, rather than liberating the labour market, seem intent on limiting the number of options available to people, but any suggestion that it is policy and the actions of unions that are instrumental to the destruction of jobs is met with derision.
It’s clear, though, that mounting wage demands in a slowing economy and with no commitment on issues such as productivity and labour efficiency are leading to a haemorrhaging of jobs.
This week, the South African Municipal Workers Union rejected a new performance-based system by which local government employees could be measured based on their work efficacy. The union claimed there was a last-minute attempt to shift the goalposts after apparently successful negotiations.
In reality, there is very little willingness to improve service levels in return for above-inflation increases.
This is where politics and economic realities collide. A growing number of South Africans are disillusioned about their future. Slow growth and mounting unemployment, coupled with the failure of politicians to fulfil basic service requirements, mean that the 2016 local government elections are going to be the most interesting yet in our young democracy.
Particularly vulnerable from an ANC perspective is Nelson Mandela Bay. No sooner had the party announced that it had anointed Danny Jordaan, the superhero of the 2010 World Cup, as mayor, than a global scandal erupted around bribery associated with the event.
In a country punch-drunk over allegations of corruption around Nkandla, this might just be the catalyst voters need for change. That’s the trouble with depending on PR rather than policy and delivery.
Whitfield is an award-winning financial broadcaster and writer