Charlene Smith
South African unskilled labour is pricing itself out of the market, and while professional and technical staff in Gauteng earn less than the global norm, industries that could create jobs will simply not come to the region because of high wages.
“Labour is simply too expensive,” conceded Jabu Moleketi, Gauteng Minister of Economic Affairs, this week when he released the Gauteng Trade and Industrial Strategy. The strategy, which has taken two years to develop, has been endorsed by President Nelson Mandela and the Inter-Governmental Forum and will form a model for the other provinces. It is the first time such a programme has been mapped for any province and its results are sobering.
The study reveals that although SA needs to create at least 300 000 jobs a year, Gauteng, as an example, will only add 540 000 jobs between now and the year 2002, and 90 000 of those will be in the construction sector, which is expected to be a major employer if low-income housing takes off.
The Gauteng economy will, in that period, grow only 3,2% overall, if it continues on its present path, and investment growth will be a miserable 1,9%.
High wages demanded by unions have shot job creation in the foot. The study shows that unskilled labour in Gauteng is among the most expensive in the world – costing an employer US$560 against $432 for South Africa as a whole, and $163 for Thailand.
However, skilled and professional workers are relatively cheap compared with the rest of the world, which has proved an inducement to high-tech industries to locate here, but many of these workers are being poached by foreign countries.
Moleketi will meet the Congress of South African Trade Unions on August 23 to discuss the findings and the challenges they pose for labour.
But it is not only the workforce that is pricing itself out of the international market. Factory rentals in Gauteng average $3,50 a square metre against $1,64 in the rest of SA and $2,13 in Zimbabwe.
Manufacturing, which according to Sandy Lowitt, Gauteng director of trade and investment, is the fifth least specialised in the world because of apartheid protectionist policies, is declining in importance and as an employer.
In 1994 manufacturing contributed 26,4% to provincial gross domestic product, projected to increase to 27% in 2002. But manufacturing grew only 1,6% in 1985 to 1990, with employment increasing only 0,1%, while the capital to labour ratio fell 1,9%.
From 1988 to 1995, Gauteng’s manufacturing output grew at 2%, which is higher than the 1,5% for developed countries but less than the 3,6% average for developing nations.
The declining importance of steel, iron and mining will impact on downstream industries, says Lowitt.
“Wood industries, as an example, produce R721-million of products each year and sell R347-million to gold mines. If mines close, those wood producers will have lost at least 40% of their market and won’t find an easy substitute.”
Moleketi says the research shows that Gauteng has to become a smart centre and a hive for telecommunications and high-tech industries.
Another area of growth potential is in business tourism, which since 1995 has increased by 70%.
In the future it is forecast that furniture, leather, motor vehicle and transport equipment will be the best performers in the regional economy.
Moleketi says the survey results show that it is critical that a partnership evolve between government and the private sector. “We need to act now to achieve Gear targets, but we are talking a very large turnaround here, and full results will only be seen over the next 30 to 50 years.”