Claims that South Africa’s economy could be creating 1 000 jobs a day should be met with scepticism, Congress of South African Trade Unions economist Neva Makgetla said on Thursday.
Makgetla was reacting to findings by independent economist Mike Schussler in the second South African Employment Report, commissioned by the Union Association of South Africa.
Schussler found that between January last year and August this year, the number of people registered with the Unemployment Insurance Fund (UIF) as commercial employees rose by just more than 870 000, or 46 000 a month, over 20 months.
Allowing for the fact that some people might merely be “catching up” and registering long after becoming employed, Schussler reckons that 30 000 of these registrations a month were new employment registrations.
Schussler notes that this rate, while enough to absorb new entrants into the job market, is insufficient to meet the stated goal of halving unemployment by 2014. This would require a job creation rate of about 60 000 a month.
Schussler extends the analysis to suggest that formal employment may be larger than the figures presented by Statistics South Africa in both the Labour Force Survey (LFS) and Quarterly Employment Survey (QES). The LFS puts formal employment at 8,3-million people at the end of March this year, while the QES gives the figure of seven million.
But he argues that since the UIF does not cover public servants, people who earn only commission and the self-employed, the formal employment figure is nine million.
However, Makgetla noted that increased UIF registrations could be attributed to efficiency improvements since the South African Revenue Services took over contribution collection a few years ago.
“The [LFS] shows that one in four people go hungry at some point in the month, and that situation has not changed in the past five years,” she said.
Makgetla also expressed misgivings about Schussler’s use of anecdotal evidence such as car sales, house prices and tax collections to argue that the economy might be creating more jobs and, in fact, growing at the government’s desired 6% rate.
She acknowledged robust growth, but argued it could be driven by low nominal interest rates and tax breaks with a bias to the employed, rather than necessarily spreading to new entrants to the job market.
“If growth was indeed being shared by the poor, all we would need to do is accelerate growth,” Makgetla said.
However, the government had been forced to adopt the Shared Growth Initiative — a growth plan led by infrastructure spending — after the failure of the growth employment and redistribution policy.