Latest Unemployment Figures Shock COSATU

unemployment economy job creation industrialisation
Wednesday, 8 May, 2013 - 13:22

The finding by Statistics South Africa that unemployment has increased paints a picture of a country in which people continue to live under abject conditions of poverty
 

The Statistics South Africa Quarterly Labour Force Survey has revealed that the number of unemployed persons increased by 100 000 people to 4.6 million between the fourth quarter of 2012 and the first quarter of 2013. This took the country's official unemployment rate to 25.2 percent from 24.9 percent in the fourth quarter of 2012.
 
The more realistic expanded definition of unemployment, which includes people who have stopped looking for work, increased to 36.7 percent in the first quarter of 2013 - the highest since 2008. This is a massive waste of human resources, which could be mobilised for development.
 
The report further says that the number of discouraged work seekers increased by 73 000 to 2.3 million between the fourth quarter of 2012 and the first quarter of 2013 and young people (between 15-34 years old) accounted for 70.7 percent of the unemployed persons. This is preposterous!
 
It is absolutely demoralising to see that if this trend persists we shall not only fail to meet the government's target of creating five million new jobs between 2010 and 2020, but end up with a net loss of jobs over those 10 years.
 
COSATU is vindicated by reports that, in the first quarter of this year, employment in private households, i.e. domestic work, recorded a growth of 29 000. The agricultural sector also grew by 54 000 jobs – despite the increase in sectoral determinations which so many analysts were arguing was going to lead to a rapid decline in jobs.
 
Surely this will change the common perception about minimum wages. The increase in jobs in the agricultural sector has shown that where there is an increase in wages or when minimum wages are set at a reasonable level, they have no significant employment effect one way or the other.
 
The Freedom Charter says that there shall be a national minimum wage. Yet one of the areas that bourgeois apologists always raise regarding the discussion on labour market performance is the issue of minimum wages leading to job losses.
 
International experience - as outlined to our Collective Bargaining, Organising and Campaigns conference by the International Labour Organisation’s chief economist, Patrick Belser, as well as a detailed input on the experiences in Brazil - discredit these claims for what they are: propaganda and a denial of realities here and elsewhere.
 
Having said this, COSATU reaffirms its call for a legislated national wage and an incomes policy to be combined with an appropriate macro-economic and industrial policy - not the policy in the National Development Plan, which would entrench deregulation of the labour market, and deindustrialisation.
 
This legislated national minimum wage must cover all workers, and ensure the abolition of the existing ineffective and fragmented system of sectoral determinations and the introduction of comprehensive, legislated, wall-to-wall centralised bargaining in all sectors of the economy, through appropriate amendments to the Labour Relations Act.
 
We also welcome positive employment figures in the mining and construction sector, but it is concerning that the manufacturing industry has seen eight percent shrinkage in the last quarter and 10 percent shrinkage over the year. Construction has seen an overall significant increase over the year of around 70 percent - although a decline in this last quarter - that could be taken as an indicator that the expansion of infrastructure is working to create jobs. The continued shrinkage in manufacturing jobs is clearly a cause for worry.
 
The continuing job losses underline the correctness of our central demands there is an urgent need to overhaul macro-economic policies to be in line with a radical economic shift necessary to deal with unemployment, poverty and inequality. These demands include:

  • The call for decisive state intervention in strategic sectors of the economy, including through strategic nationalisation and state ownership, and the use of a variety of macro-economic and other levers at the states disposal, which can be deployed to regulate and channel investment, production, consumption and trade to deliberately drive industrialisation, sustainable development, decent employment creation, and regional development, and to break historical patterns of colonial exploitation and dependence. 
  • The radical economic shift requires that institutionally, the Treasury, which constitutes the biggest obstacle to the government’s economic programme, needs to be urgently realigned; a new mandate needs to be given to the Reserve Bank, which must be nationalised; and the National Planning Commission must be given a renewed mandate, to realign the national plan, in line with the proposed radical economic shift. Aspects of the New Growth Path also need to be realigned in line with the proposed new macro-economic framework. All state owned enterprises and state development finance institutions need to be given a new mandate.

COSATU believes that in order to create a sufficient number of sustainable new jobs, the government will need to show that it is forging ahead with practical implementation and adequate resourcing of the Industrial Policy Action Plan (IPAP) and the Infrastructure Development Plan announced in last year’s State of the Nation Address, and ensure that all levers and institutions of state, including local procurement, and investment by state entities, are used to maximise employment and diversify the economy. However, this must be linked with skills development and training as part of addressing structural unemployment and also to meet employment equity targets; skills development and training should lead to upward mobility of the workforce employment.
 
The only way to address the structural problems in the economy is through industrialisation, in particular promoting the manufacturing sector and the creation of decent jobs. COSATU fully supports the efforts by the Department of Trade and Industry to reverse the deindustrialisation of the economy as a result of neoliberal policies implemented before and after 1994.
 
We continue to support IPAP’s continuing emphasis on policy instruments like the designation of sectors for local procurement. These interventions have resulted in a turn-around in the clothing, textiles and leather sector that was almost annihilated by earlier neoliberal trade policies. This is a clear indication that conscious interventions by the state can save and create more jobs in the economy.
 
COSATU rejects interventions in the economy that focus on low value added service such as travel and tourism, and call centre operations. This is an incorrect route to follow in order to address poverty and inequality.
 
Lastly, COSATU will consistently campaign for policies that encourage manufacturing, including a significant cut in interest rates and the depreciation of the rand to promote new investment in job-creating industries, add value to our raw minerals and to make South African exports competitive on a global scale.
 
- Patrick Craven (patrick@cosatu.org.za) is national spokesperson at the Congress of South African Trade Unions.

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