Discouraged job seekers ring alarm bells
NEWS that South Africa’s official unemployment rate barely moved in the third quarter, when it stood at 25.4%, masks alarming and persistent trends in the labour market.
The cold fact is that 3 000 fewer people were actively seeking work, taking the number who are officially unemployed to 5.15 million. But the number of people who have given up looking for jobs continued to swell, rising by 95 000 during the quarter and taking the increase over the year to 217 000.
This pushed the expanded rate of unemployment, seen by analysts as a more accurate measure of the problem, up to 35.8% from 35.6% in the second quarter.
The figures released by Statistics SA on Thursday also showed that the number of people who have been officially unemployed for five years — and therefore stand little chance of finding work again — shot up to 1.5 million this year from 974 000 in 2008.
“It is very grim. The unemployment problem is highly acute, and appears to be growing,” said labour consultant Andrew Levy.
“Economic growth is too low and employers favour capital intensity because of perceived rigid labour legislation. South African business is losing appetite for being here; a large number of com- panies are looking for ways to spread their wings outside the country.”
Private households shed 110 000 jobs from July to September, showing people are feeling the pain of high inflation and are cutting costs. This is significant as 1.18 million of the 15.117 million people with jobs are domestic workers.
About 4 000 jobs were shed in the embattled manufacturing sector, which is still reeling from prolonged strikes in the platinum industry and by metalworkers earlier this year.
Worryingly, 17 000 jobs were shed in the community and social services sector, which mainly represents state employment and has been the engine of job creation in recent years. The government’s new resolve to keep the public sector wage bill in check to curb the budget deficit suggests this impetus will be lost.
At the same time, slowing growth in some of South Africa’s main trade partners – particularly Europe and China – would keep the private sector reluctant to expand capacity, Ned- bank said in a research note. “Conditions in the labour market will therefore remain tight until the economy accelerates more convincingly.”
This is not an immediate prospect. Finance Minister Nhlanhla Nene predicted in the mid-term budget policy statement last month that the economy would grow 1.4% this year, 2.5% next year and 2.8% in 2016 – sharply down from February’s projections of 2.7%, 3.2% and 3.5% respectively.
Kefiloe Masiteng, Stats SA’s deputy director for population and social statistics, said of the sharp rise in long-term unemployment: “It means you have a bigger number of people getting marginalised. They lose skills, they lose hope and the probability of getting back into employment slims by the day.”
Neren Rau, the chief executive of the SA Chamber of Commerce and Industry, said: “I am alarmed by this. We won’t be able to fix it easily. Even if the economy suddenly turns and creates jobs, [employers] won’t find people rushing into them because they have despaired and are no longer employable because they have lost touch.”
However, he said the creation of 135 000 construction jobs over the past year was significant. “It’s a positive sign – something must be brewing there,” he said.
Prospects of a public sector strike next year could prompt further credit rating downgrades, analysts warn. Unions have demanded a 15% oneyear pay increase while the Treasury has budgeted for increases of 6.6% in each of the next three years.
“This will be subject to the scrutiny of credit-rating agencies and would be seen as a sign of the inability of government to deal with the challenge of keeping the public sector wage bill in check,” Rau said. Wages account for 40% of the government’s noninterest expenditure.
Rau was hoping for progress at a labour indaba on Tuesday when the government, labour and business will discuss three big issues: a national minimum wage, possible changes to the collective bargaining system, and how to deal with strikes.