The unemployed are the real poor

Distorted vision: Neva Makgetla is an ideologue who distorts figures to suit her arguments, says Mike Schussler. (Oupa Nkosi, M&G)

Distorted vision: Neva Makgetla is an ideologue who distorts figures to suit her arguments, says Mike Schussler. (Oupa Nkosi, M&G)

For someone who is better known for media coverage than academic rigour it is pleasing to point out some major mistakes by Neva Makgetla about my United Association of South Africa 11th Employment Report being “pay in the sky”.

The report clearly states that salaries were average salaries and based on purchase-power parity exchange rates. Instead of the R7 a dollar she seems to use to ridicule my report, the actual exchange from the Organisation for Economic Co-operation and Development (OECD) was R4.99 a dollar for 2010.

Perhaps the deputy director general for economic policy at the economic development department has heard of purchase-power parity exchange rates as a fairer way to compare prices and earning across countries?

By the way, the United Nations is currently working on the second comprehensive methodology survey following its first global one in 2005.

Makgetla asks how I came up with inflated salary figures and accuses me of using private web-based surveys.
That is not true, as for the average salary comparisons I used Statistics South Africa average salaries from its employer-based Quarterly Employment Survey. This, as she rightly observes, should include things such as pension and healthcare costs and is the methodology that the OECD uses.

No ounce of understanding
Obviously, when one gets paid in health insurance or deferred payment in the form of pension it is part of one’s salary. But Makgetla prefers to rant on about what I should be doing without an ounce of understanding.

Furthermore, if she read the report she would see that I agree with her that public servants with degrees and higher skills levels do not get paid enough.

“Higher level employees are not paid over the top by government. Government senior staff are actually paid below both local and international standards generally, but starting salaries are out of sync even for university graduates.” This is a direct quote from my report.

Why then does she feel she needs to lecture me on salary differences among public servants? I also agree that unskilled and semi-skilled workers in the government are paid more than in the private sector.

If the government thought unemployment and high wages for unskilled and semi-skilled workers was not a problem, why is a youth wage subsidy proposed?

Wage subsidy
Makgetla clearly has no idea that it is government policy to implement some sort of youth wage subsidy as this would lower the wage or salary costs of employers hiring young people. This means my “inflated” wage figures – aside from coming from official data sources – must also be known to the government, at least to the Cabinet, which has apparently approved some sort of subsidy.

I also know that the government she works for must find some of her thinking strange, as my report said both a training wage and a wage subsidy could be helpful.

I did not make any median salary figure available in the report and think she should have said I should have used a median salary, or similar, rather than put down figures I did not use. (Why is it that when ideologues argue, they like using figures they then claim you used?)

Makgetla states the report found employment peaked in 1988 and that this data is suspect because official data during apartheid “excluded blacks almost entirely” and, more­over, it is not easy to figure out long-term employment trends. She then quotes a study that found employment declined in the late 1970s and only recovered from 1994 onwards.

If her research sources could get this data, it is obvious that it would be readily available through other common sources, such as the South African Reserve Bank and by keeping older Statistics South Africa data in original form. It is also available through the International Monetary Fund, the OECD and older International Labour Organisation data sets. One would hope she might have investigated these sources, instead of accusing me of using web-based surveys that are not representative.

Whites only
Moreover, if the older apartheid statistics only included whites and today’s statistics include everyone, we would have an even bigger problem because formal sector employment numbers are now lower, with blacks included, than the “whites only” data she claims I used. The apartheid statistics machine collected quite a bit of data and we still use much of it, as does Makgetla.

Back when Makgetla was a Cosatu economist she gladly told a group of economists at the Michelangelo Hotel in Sandton how South Africa did not create jobs after apartheid as growth, employment and redistribution was not suited to this country. We had to change our capitalist ways or the country would revolt.

A little media research shows that, as a Cosatu economist, she was quoted not once but numerous times complaining about the jobless growth during the first few years of the past decade. Now that she is in government, she finds research of job growth over the same period strange?

Also, when I pointed out in a previous report that there was job growth in South Africa in November 2005, she lampooned my research. It did not suit her and she wrote an editorial stating that the job growth I found at the time relied too much on administrative data such as Unemployment Insurance Fund statistics.

She was doubtful about job growth yet, last week, a miracle took place and she has now found research that shows job growth from 1994 to 2004. Statistics South Africa also fought with me on the topic, but they later included the Unemployment Insurance Fund data I had found from mid-2006. Since then, with the recession, South Africa has lost too many jobs.

Tinted glasses
Sorry Neva, your glasses are tinted to suit your arguments. When you were at Cosatu, you told all and sundry about jobless growth; when criticising me, however, you quote research that says the growth was not that jobless after all. The only consistency is that when people say anything you do not agree with, you lampoon them in the media.

The truth about all this playing with numbers and trends – from the same Quarterly Labour Force Surveys Makgetla likes quoting – is it is easy to find that broader unemployment numbers went up from 5.2-million people in 2001 to 7.75-million people in the first quarter of this year. Formal employment outside of government and state-owned enterprises is less than 7.3-million in the first quarter of this year. Yes, in a way the jobless are the biggest voting block on employment issues, and that is why Magketla feels so touchy about it.

Makgetla was central to our labour market policy from 1993 from within Thabo Mbeki’s presidential office, even as chief state negotiator on wages for public servants, and now the department of economic policy. If South Africa is not creating wealth, nor work, we need people in positions of power who can take responsibility and not blame others for the data they use.

Mike Schussler is the founder and director of Economists.co.za

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