Dilemma in job creation

FOCUS: MORE POSITIONS, OR DECENT WAGES?

SA suffers from mismatch between skills and demands. Moneyweb

In South Africa, the unemployment level is high and there are few jobs to compete for, according to the Statistics SA report, the Quarterly Labour Force Survey, for the second quarter of this year. “About 71.5% of those unemployed have been looking for work for a period of a year or longer.”

The economy is well into the fourth quarter of the year and little has changed in the labour market since July, when this was stated.

What SA needs more than anything else is uninterrupted job creation for the next three or five years.

However, with the slowing of the global economy, is uninterrupted job creation possible, even in a growing economy?

Growth does not always translate into job creation, as the two terms of former president Thabo Mbeki’s administration illustrated.

But could a tighter labour market achieve an effective redistribution between employers and workers in such a way that the latter benefit through a wage boom?

The International Labour Organisation’s Global Wage Report for 2018/2019 shows that global wage growth has waned to its lowest level since 2007, and SA is among the 64 countries with the highest wage inequality in the world.

For many South Africans, the stagnation in wages could not have happened at worse time.

The weakening economy has sent the cost of necessities skyrocketing, creating insecurity and making saving all but impossible.

Obstructionist politics

A number of issues are playing out at the same time, including the persistent obstructionist politics of the governing, party when it comes to addressing the enduring challenges of the economy.

For one thing, politicians consistently talk about tackling the rising unemployment crisis – yet government is never clear on how it is going to approach this task.

There is no getting away from the fact that the country is in serious economic difficulty. In the face of this, what will inform government policies on the labour market – job creation or decent wages?

The former means creating an enabling environment that allows business to simply create jobs – with the emphasis on the quantity of jobs created instead of the quality. The risk is that this will bind low-earning workers to the stagnant wage growth they have faced for more than a decade.

The latter, however, may see employers creating jobs that pay better – but with fewer jobs available.

The big question

Importantly, whatever policy government comes up with to tackle the imbalances in the labour market, policymakers and government leaders must be able to give a convincing answer when asked this question: what obstructions to job creation or decent wages are their policy proposals trying to remove?

In resolving SA’s unemployment problem, have they considered structural or deficient-demand unemployment? SA symbolises structural unemployment, with a mismatch between skills and demands in the labour market.

Furthermore, workers displaced in a sector struggle to find employment beyond that sector. The effects of globalisation and technological advancements are other contributing factors. Employment has changed from being secure to precarious and technology has made some jobs redundant, replacing them with new jobs requiring new skills.

Can our leaders answer these questions?