South Africa’s Greatest Shame

What The Figures Reveal

According to the recently released Quarterly Labour Force Survey by Statistics South Africa, in the first quarter of 2019, unemployment hit an all-time high of 27.6 per cent. Employment has decreased in all four sectors — formal, informal, agriculture and private households.

The number of employed people has decreased to 16.3 million, a reduction of 237 000 workers when compared to the same quarter last year. Of those that still have a job, 11.2 million people are employed in the formal sector, 2.9 million in the informal sector, 1.3 million in private households, and 837 000 work in the agricultural sector.

The formal sector recorded the largest job losses at 126 000, followed by the informal sector, which shed 68 000 jobs. Around 31 000 jobs were lost in private households, while agriculture lost 12 000 jobs.

Of the ten major industries tracked by Statistics South Africa, six of them shed jobs in the period under microscope. The construction industry recorded the largest decrease of workers at 142 000, followed by finance and other business services, which shed 94 000 jobs. Around 50 000 jobs were lost in community and social services, while private households employed 31 000 fewer people. But it was not all bad news. Employment gains were recorded in the transport sector, which hired 59 000 more people, trade added 25 000 more workers, utilities and manufacturing sectors followed with 16 000 and 14 000 new jobs respectively.

The unemployment rate was also higher among those without educational qualifications, when discouraged job seekers are excluded. The unemployment rate among those without matric is 55 per cent, reducing to 34.5 per cent among those with only a matric certificate. For those with some form of tertiary qualification, the unemployment rate was at 6.1 per cent while among graduates it is at 2.1 per cent. The Western Cape has the lowest number of unemployed persons at 19.5 per cent, and the Eastern Cape has the highest number of unemployed people at 37.4 per cent.

The most worrying figure, however, is the number of young persons aged 15–24 years who are not in employment, education and training. This category has increased from 32.4 per cent to 33.2 per cent, raising fears of increased social unrest.

The National Development Plan (NDP) specifically warns of this. “Rising levels of frustration and impatience suggest that time is of the essence: failure to act will threaten democratic gains. In particular, South Africa must find ways to urgently reduce alarming levels of youth unemployment and to provide young people with broader opportunities,” it reads.

Innovative Ideas Needed

Given this gloomy picture, what can be done to bring down the high unemployment rate? What innovative ideas are there to boost job creation?

The NDP suggests that for the economy to grow sufficiently to create much-needed jobs, the GDP has to increase by five per cent every year until 2030 and SA’s per capita income must be at double the current rate. Key proposals to curb high unemployment include raising exports, breaking the disincentive to hire young people and unskilled workers by incentivising employers to take them on board, and lowering the costs of energy, transport and logistics.

Professor Hugo Pienaar, an expert in employment law and director in the employment practice division at Cliffe Dekker Hofmeyr law firm, believes in only one formula — making it attractive for employers to bring in new workers. He cites the example of the Netherlands where benefits for new workers are introduced incrementally as one creative way to boost job creation.

He says: “They say at year one of your employment you don’t get any benefits, you just get a basic pay.

“Year two you derive some benefit and only in year four do you derive the full complement of benefits. We need to become more flexible in that regard, we must make it more attractive for people to be employed.”

Pienaar suggests a social accord between government, business and labour, modelled on a similar accord entered into in Ireland in the 1990s, which helped to drastically curb that country’s unemployment rate. Government, he says, needs to come to the party with more employer-friendly legislation. “The growth in the creation of work globally lies in flexi-labour, not in formal employment. Can we have six months no-fault dismissals? Is that a possibility?”

He says business needed to give an undertaking that it would end its investment strike and relook retrenchments, or even fund the re-skilling of workers earmarked for retrenchment, so they can be employed in other business units or other sectors. Unions must consider wage freezes in return for job retention, as happened in Ireland.

“We have seen instances there where certain unions came to the table and said that to retain jobs, they would not take increases that year. Unless there are concessions by all parties, we will not have an answer to unemployment,” he says.

But, Thembinkosi Mkalipi of the Department of Labour says experts and other observers that were criticising the Labour Relations Act (LRA) have to point out what it is in the legislation that inhibits job creation. He says the legislation was meant to safeguard worker rights by introducing recourse mechanisms such as the Commission for Conciliation, Mediation and Arbitration (CCMA) to mediate in labour disputes.

“Is it the dismissal provisions in the LRA? Do they want workers to be dismissed without a hearing? Which part of the LRA affects employment negatively? What do we mean when we say employer-friendly legislation?

“Are you saying that when workers are dismissed, they must not go to the CCMA, they must not challenge the dismissal? Are you saying when workers are dismissed, there must be no hearings?” He also dismisses suggestions that small to medium enterprises be excluded from certain sections of the LRA to make it easier for them to hire new workers.

“Are you saying small-sized business should be able to dismiss me in the morning without a hearing? Without me having to defend myself? From which provision should they be excluded?” he asks.