by Stef Terblanche

Employment decline

It’s open season on jobs in SA

It’s open season on jobs in SA
Mine workers.jpg

Instead of moving closer to achieving the government’s ambitious job creation targets, labour statistics show exactly the opposite trend with thousands more jobs currently under threat. The recent rounds of labour unrest and wildcat strikes on the mines and Western Cape fruit farms may have secured higher wages for workers, but many of those 'victorious' workers may soon be unemployed.

While the biggest immediate threats to jobs are in the mining and agriculture sectors, which employ the most people in South Africa, more sectors are showing vulnerability. 

Too rigid labour laws, disastrous one-size-fits-all approaches by unions and government, pie-in-the-sky policies, a variety of vested interests and flawed understanding of the relevant economics are being blamed by business, academics, and others.

Hamstrung by its close but increasingly troubled relationship with the Congress of South African Trade Unions (Cosatu), government finds itself in a dilemma. 

Mindful of investor sentiments and economic realities, it has, at times, tried to be an honest broker between labour and employers. At other times narrow political interests made it more abrasive, even threatening towards mining companies battling to survive. 

President Jacob Zuma declared 2011 the “year of job creation”, announcing that the New Growth Path (NGP) would aim to create five-million new jobs by 2020 and reduce unemployment by 10% from around 25% to 15%. 

In June last year ANC secretary-general, Gwede Mantashe, claimed satisfactory progress saying that since 2010 employment growth had been on track to meet the NGP target.

However, by January this year the picture had changed dramatically following widespread labour unrest and strained relations between government and the private sector. According to Business Day deputy minister of economic development Hlengiwe Mkhize was now saying South Africa would miss the 2020 five million jobs target “if we don’t systematically look at priority sectors”. 

Last week Statistics South Africa’s latest Quarterly Labour Force Survey (QLFS) revealed that for the first time since its introduction 2008, there had been a fourth quarter decline in employment. 

Despite the unemployment rate declining marginally to 24.9% in the fourth quarter, year-on-year some 68 000 jobs had been lost. The lower rate was due to the total labour force shrinking by
235 000 persons dropping out of the economy between the third and fourth quarters.

The latest statistics have also not yet reflected job losses in the mining and agricultural sectors. Other sectors, like domestic workers however, showed sharp employment declines.

At the time of writing, the ANC’s national executive committee (NEC) had gathered for a lekgotla to discuss the contents of President Zuma’s state of the nation address this week. Top of the agenda was the issue of job creation. Earlier it was announced that the controversial youth wage subsidy was back on the agenda, eliciting fierce opposition from Cosatu and youth organisations closely aligned to the ANC.

Since the NGP was unveiled, economic growth had remained far below the required rate for the targeted employment growth, exacerbated by last year’s massive labour turmoil in the mining and agricultural sectors. 

Since then two major mining companies announced possible survival steps that would severely slash jobs. Harmony Gold, South Africa’s third largest gold producer, announced it would mothball a mine, which could cost up to 6 000 lost jobs. And, the largest platinum producer, Anglo American Platinum (Amplats) was also considering mothballing some operations at a cost of 14 000 jobs.

Despite Amplats’ explanation that it had to reduce jobs now to save other jobs in the long run, that about 9 000 of the affected workers would be redeployed by the group, and that other measures would in the longer term lead to higher wages and better jobs, the government reacted aggressively, threatening Amplats with a review of its licences among other things.

Employment in the mining sector has however, been in decline for more than two decades, according to Chamber of Mines figures declining from 780 000 jobs in 1990 to 513 000 in 2011. Only the platinum sector had contributed new jobs, but last year’s adverse market conditions and labour unrest have now put paid to that.

At last week’s Mining Indaba in Cape Town Chamber of Mines president and newly appointed chief executive of Anglo American, Mark Cutifani, warned that greater mechanisation and new mining techniques could see the sector suffering sustained job losses over the next 10 to 20 years.

And, as mineral resources minister Susan Shabangu reminded the Indaba, most of the affected workers will most likely remain unemployed since the sector still draws most of its labour from illiterate people in rural communities. 

The social and economic consequences will be immense, severely affecting whole communities. The socio-economic impact of the country’s high unemployment rate is already being felt.

For instance, Credit Ombud Manie van Schalkwyk was reported as saying the high unemployment rate is exacerbating already high levels of over-indebtedness. The ratio of household debt to disposable income amounted to 76.3% in the second quarter of 2012 and in September 2012 more than 9.25 million (47%) of credit-active consumers had impaired records.

These developments also increase pressures on social services, crime rates and service delivery, among others. Similar trends are now afflicting the agricultural sector as we report in a related article Distributors of agricultural machinery are already reporting dramatic increases in sales. Like mining, employment in agriculture has long been on the decline. Statistics show that the sector shed a massive 700 000 workers between 2000 and 2007 alone. 

A just released study by Professors Nicoli Nattrass and Jeremy Seekings of the University of Cape Town also shows how the National Bargaining Council for the Clothing Manufacturing Industry (NBC) has for the past 10 years been used to impose higher labour costs on Chinese employers in Newcastle, KwaZulu-Natal, via an enforced minimum wage. This has led to factory closures and job losses, with a further 16 700 jobs being under threat. 

There is clearly a dire need to depoliticise the issue of job creation and for government to treat all stakeholders, Cosatu and industries as equal partners in the quest for more jobs and not some as allies and others as enemies.

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