The trouble with job creation
South Africa has a New Growth Path document. It was released by economic development minister, Ebrahim Patel, on 23 November 2010. Although the document is chockfull of strange ideas (executive salary capping comes to mind) we cannot recall any economic c
In tackling this question it helps to think of an economy as a giant passenger liner, the Titanic, for example. Once a vessel of this size builds up a head of steam it becomes near impossible to change direction or stop. Current government policy – set by the likes of the department of labour, mineral resources and land affairs – have set HMS South Africa on a collision course with an employment decimation iceberg. If South Africa hopes to create sustainable jobs government will have to divert from its current policy path. But instead of shouting up to the wheelhouse to change course the latest statements from these departments suggest that government has simply shouted down to the engine room for more power. Government will not budge on restrictive labour policies, wants to introduce additional “conditions” for new mining ventures and has plans to limit foreign ownership of land, for example. To make matters worse, government believes it should be competing with the private sector (state-owned firms) if not become the private sector (murmurings about nationalisation) going forward.
Does this cosy union relationship make sense?
The Q2 2011 Labour Force Survey confirms that there were further job losses in the economy in the first half of 2011. An alarming 25.7% of job seekers (as defined by Statistics SA) are now unemployed. To continue our “passenger liner” analogy, a year after the New Growth Plan was announced the economy is still bleeding jobs. Employment specialist Adcorp Holdings reckons another 460, 000 jobs will be shed between now and 2012. In other words, two years after announcing a jobs target we will be further from that target than when we started. And that means whatever policy “tweaks” government might have made since the document was published have had no impact whatsoever.
There is little doubt recession has played a hand in recent job losses, but there are other “accelerators” at play in our economy. One of the challenges faced by local employers is the power of South Africa’s trade union movements. South Africa “lost” 14.6 million workdays to strike action last year, with another 17.8 million days “at risk” through 2011. Just how strong are the unions? Adcorp is up in arms over the lack of detailed statistics on union membership and questioned the ability of the department of labour and the national statistics body to provide this much-needed data. By their calculation the number of union members has declined from 4.3m in 2000 to around 3.2m in 2010. Whatever the case the relationship between the ruling African National Congress and the Congress of South African Trade Unions (Cosatu) is making it increasingly difficult for private sector employers in the mining and manufacturing industries to make headway. Tough labour legislation, often sympathetic to unions, means that capital expenditure wins out over job creation every time!
Taxpayers cannot fund this ambitious job creation plan
Perhaps the most alarming trend exhibiting in our employment statistics is the reliance by government on the public sector as a job creator. There are already an estimated 1.3 million people in public service employment, one of only a handful of sectors to show an improvement in the latest survey. The fact is not lost on finance minister, Pravin Gordhan, who commented during his 2011 Budget Speech: “Our public service salary bill has doubled over the past five years, from R156 billion to R314 billion, now accounting for just under 40% of [the country’s] consolidated non-interest expenditure!” The National Treasury budget (which excludes local and regional municipalities) confirms that government salaries and wages are chewing threw billions of rand of taxpayer funding each year… The actual expenditure in this category grew by 15.2% in 2007/8, by 16.5% in 2008/9 and by a staggering 18.8% in 2010/11. Growing at rates two to three times the official inflation level, government employee salaries are slowly strangling the economy.
Even so, the only job creation projects trumpeted by government of late involve jobs “bought” with taxpayers’ money. Last week the social development minister, Bathabile Dlamini, said 310, 000 “work opportunities” have been generated since 1 April 2011 in terms of government’s expanded public works programme. More horrifying perhaps is that the minister said the recent cabinet meeting had identified community works programmes as one of its key job creation and service delivery improvement programmes! A Fin24 reader sets the record straight: “Pure window dressing! Such projects have zero sustainability, and will last only as long as there is budget. In the face of rising unemployment, the only purpose of such schemes is to artificially boost the numbers in order to reduce criticisms of government’s failed job creation schemes. We need job opportunities that are self-funding and add value to the economy – not more hand-outs!”
Up your game Mr Government, before it is too late
A while back we stumbled upon a press release which gets to the heart of the problem. We quote: “Black Sash [a not-for-profit human rights organisation] calls on our government to move beyond the politics, promises and policy paralysis that has so far characterised this term of office, and set a budgetary framework that delivers a convincing anti-poverty plan for South Africa!” Is the New Growth Path the anti-poverty plan they were calling for? We don’t think so. The document is fundamentally flawed because government’s objective is to control and partake in business rather than act as an enabler for business. Every measure proposed in the document will require state intervention by way of legislation and enforcement, introducing layers of additional red tape to the private sector, and forcing employers to go defensive – draw into their laagers – and employ only enough people to get by.
Editor’s thoughts: A while back we heard a caller to a radio talk show lambaste the media for always painting government in a negative light. But what is the media to do? The problem – and this is opinion – is that government policy conflicts with what government pretends to be. They claim to be democratic and pro-business, yet on a daily basis we are confronted with anti-democratic secrecy and protection of information bills and anti-business labour, mining and land reform proposals to name a few. Is government conflicted by the different philosophies among the ruling party alliance? Add your comment below, or send it to gareth@fanews.co.za
