Part of the reason for South Africa’s worsening unemployment is that attempts to address it have been based on “programmes and projects” without looking at policies and the framework they create.
At the same time, the worst might be over in the haemorrhaging of jobs, say a range of economists commenting this week on unemployment figures. These showed mixed signals, but the outlook was overwhelmingly gloomy.
According to Statistics South Africa’s (StatsSA) Survey on Employment and Earnings, the number of jobs in the formal, non-agricultural sector grew by 1,2% annualised in the quarter to December last year. This means that the government, manufacturing and trade sectors employed 4,7-million people, an increase of 54285 posts. This is the second straight quarter that the formal sector has shown positive growth after a decade of shedding jobs.
At the same time the StatsSA Labour Force Survey showed that the official unemployment rate for the quarter to September last year stood at 30,5%, up from 29,5% a year earlier and 25,8% in September 2000. StatsSA attributed the increase to a sampling error.
The survey shows that the number of people employed in the non-agricultural formal sector had increased from 6,8-million to seven million in the period. Employment in commercial agriculture increased from 666000 to 811 000. It is employment in the informal sector that has seen a drop from 1,8-million to 1,7-million. The number of domestic workers shrank from 916 000 to 875 000.
Asghar Azeldazeh, an economist at the United Nations Development Programme, says the roots of unemployment are policies designed to restructure into an export-promoting, competitive, open economy in a rapidly liberalising environment without “placing emphasis on job creation”.
“We need to interrogate our fiscal, monetary, trade and industrial policies,” he said.
He notes, for instance, the government’s inflation-targeting policy.
“The policy has as its focus the goal of keeping inflation down without focusing on job creation or stimulating growth.”
Azeldazeh says the policy should strive towards openness and competitiveness while striking a balance with job creation. He notes that at the 1998 Job Summit policies were left out of the discussion which ultimately focused on programmes and projects.
“Programmes and projects are important,” he said, “but they work if you want to tinker with unemployment from say 8% to 5%. But not if you want to move from 30%.”
He notes also that the jobs created are hardly enough to keep up with the growth of the labour force.
Azeldazeh suggests putting in place complementary policies that would absorb those jobs shed as a result of restructuring towards a more capital-intensive means of production. He cites two possible sources as the small, micro and medium enterprise sector and labour-intensive public works programmes.
But private-sector economists read the figures in a more positive light.
“I suspect that we are either at or close to a turning point,” Tony Twine of Econometrix said. He noted that the cleaning-out process from the early 1990s economic structural distortion is “almost complete”.
Twine expects the economy to embark on a long-term job creation path, which “will be slow at first but then gather speed”. Twine notes the importance of economic growth to job creation.
From an annual average of 1,3% a year in the 1980s to 3,1% in the past three years, Twine expects growth to eventually start creating jobs. The sectors most likely to lead in growth are manufacturing, which Twine describes as “job hungry”, and tourism, which last year experienced a foreign arrivals growth of 18%. He warns though that the most robust growth sector, financial services, does not absorb the semi-skilled and unskilled workers, “which is where the unemployment problem is at the moment”.