/ 17 February 2022

Do we know what we are doing with the jobs problem?

The midterm budget policy statement has revealed that the government is failing at creating jobs
Is joblessness a result of a lack of skills or low growth, or is low growth a result of lack of skills?

Many of us may have spoken too soon when we announced a “post-Covid world” and a “new normal”.  We are back to old truisms, myths and mistakes, and as such, we are not likely to record any improvements. 

In an article I wrote following the 2020 budget, I referenced then-finance minister Tito Mboweni, who at that time had observed during a press briefing that the new economy would involve the protection of local workers from immigrants. I concluded, “If it’s to be sustainable, the new economy will have to be based on serious reflection about the vulnerabilities revealed by the current crisis — including myths about entrepreneurship, our position in global value chains and the protection enjoyed by workers, wherever in the economy they may be.” 

Developments over the past two weeks seem to suggest that the adage “the more things change, the more they stay the same” endures.  We are set on maintaining the vulnerabilities of workers, our thinking about skills, and the role of local and international business and investment in creating work. 

On 11 February 2022, the department of employment and labour announced in a press statement that it had filed court papers against Huawei Technologies South Africa. They said that the company, whose roots are in China, had breached South Africa’s labour and employment laws by filling 90% of its workforce with foreign nationals. The statement noted: “Out of a total of 435 employees, 378 (87%) are foreign nationals and still Huawei [plans] to increase the number to 405 in the next two years without any projections for increase for the designated groups”. 

Further, “at the skilled technical level, 138 (76%) of the 181 employees are foreign nationals, with Huawei projecting an increase to 168 in the next two years; and at the semi-skilled level, there is currently only one employee at this level, who is a foreign national, with Huawei projecting an increase to 11 in the next two years without any designated group being employed”. The department found this unacceptable, as signalled by the court action. 

What is curious is that, a week before, on 2 February 2022, the department of home affairs had gazetted a critical skills list, noting, “The revised critical skills list has been published for the first time since 2014, following detailed technical work and extensive consultations with business and labour. The updated list reflects the skills that are in shortage today, to ensure that our immigration policy matches the demands of our economy.” 

This list, which is 101 occupations long, contains directors, managers, engineers, and technicians. The kind of skills one would assume a company like Huawei would be employing in South Africa. Speaking about the list, Home Affairs Minister Aaron Motsoaledi noted that, “The Immigration Act directs the department of home affairs to contribute to an environment in which economic growth is promoted through the employment of needed foreign labour, facilitating foreign investment, and enabling the entry of exceptionally skilled or qualified people.” 

So how could Huawei South Africa be faulted for hiring foreign skills of which South Africa has a shortage? 

Even more curious were President Cyril Ramaphosa’s utterances. The president repeated a truism we are all too familiar with about the relationship between economic growth and employment. 

“Unemployment has been caused by low growth, which has in turn resulted from a long-term decline in investment,” he declared during his State of the Nation address, contradicting the notion that “economic growth is promoted through the employment of needed foreign labour, facilitating foreign investment”, as outlined in the Immigration Act. 

Is joblessness a result of a lack of skills or low growth, or is low growth a result of lack of skills?

The president further announced that, “A comprehensive review of the work visa system is currently underway, led by a former director general of home affairs, Mr Mavuso Msimang. This review is exploring the possibility of new visa categories that could enable economic growth, such as a start-up visa and a remote working visa.” 

This suggests that the government believes that it is new businesses (start-ups), and remote workers which would help us with growth. Thus, one could start a business from outside South Africa, and work outside of South Africa while employed by a South African company, and thereby help us grow the economy and lower joblessness. 

Many readers will recall the controversy involving the hiring of foreign engineers by the department of water and sanitation. During that episode, Consulting Engineers of South Africa (CESA) argued that “employing highly skilled locally experienced engineers supported by unemployed graduates will provide a more sustainable solution”. The CESA chief executive, Christopher Campbell, further noted, “It also asks the question why so little has been done to leverage our local expertise and grow our own future capacity over the last 20 years.” This question is an important one, and requires us to reflect on whether, indeed, the critical skills list, which was released in 2014, which recognised the shortages, propelled any action. 

Perhaps we can look to another recent news item involving the National Skills Fund (NSF). Online news source MSN reported on “a damning report by auditor general Tsakani Maluleke, in which she found that close to R5-billion couldn’t be accounted for over a two-year period. The NSF reports to Nzimande’s office and was established in 1999. It provides funding for different kinds of skills development initiatives, bursaries, scholarships and workplace-based learning, to name but a few.” 

So we’ve had the money, but have misused it?

There is no doubt that while our thinking and policy action are not changing, the rest of the world is. A technical report on the 2020 critical skills list by the Labour Market Intelligence research programme notes that “as a result of globalisation, climate change mitigation and digital transformation, there is a need for skills to evolve more rapidly than ever before. These rapid economic shifts often create skills shortages and skills mismatches within labour markets.”

The Organisation for Economic Co-operation and Development (OECD) argues elsewhere that this “creates the need for a short-term intervention that can quickly help to plug those skills gaps that are not being filled by the current domestic labour market”. This makes it “necessary in some cases to provide immigration preference to foreign nationals who are sufficiently skilled in areas where the domestic labour supply is not able to match employer needs”.

The questions that arise in our context are: do we really understand the nature and causes of unemployment in South Africa? And if so, is that understanding as dynamic as the changes we are seeing? Most importantly, do we have the appropriate interventions, both for the short term and long term, as the OECD advises? 

The past two weeks would suggest differently.