Johannesburg - As trade union Solidarity this week warned of 60 000 retrenchments across various sectors of the economy, particularly in mining this year, Economists.co.za economist Mike Schussler said the future was bleak if new sectors were not found to solve the country’s unemployment crisis.
South Africa’s unemployment has been hovering around 25 percent and the sluggish economic growth has put pressure on the country’s credit rating with rating agency Standard & Poor’s earlier this month slashing growth prospects this year to 0.8 percent from 1.6 percent.
Solidarity said that the jobs of 60 000 employees’ in various industries were hanging in the balance this year owing to large-scale retrenchment.
Unemployment
Solidarity general secretary Gideon du Plessis said mining industry employees were the hardest hit, with retrenchments across 36 companies this year and 29 261 employees facing retrenchment.
Mining had performed poorly, having been hit by the triple whammy of weak global commodity prices, unstable labour relations, rising input costs and policy uncertainty.
Kumba Iron Ore, Exxaro Resources, De Beers, South32 and Lonmin, Evraz Highveld Steel and Vanadium are just some of the companies that have cut back on employees.
Du Plessis said this week that the number of workers eventually retrenched was a drop in the ocean compared with the number of job opportunities lost in the wake of a formal retrenchment process.
Read also: Economy is haemorrhaging jobs
“For example, in mining 1.7 job opportunities are created for every permanent appointment made. In other words, the moment such a person is retrenched, 1.7 jobs are lost,” he said.
Du Plessis said the second worst off was the information and communication technology industry with 8 141 employees at six companies being affected by retrenchments.
In addition, 24 companies in the metal and engineering industry have announced retrenchment processes since April last year, involving about 7 918 employees, while six companies and 835 employees in the chemical industry have been affected by retrenchments.
“The situation in the manufacturing sector is much worse as four external jobs… are lost for every permanent job abolished,” Du Plessis said.
Read also: SA jobs at risk, warns Solidarity
Job creation
Speaking during a Uasa Employment Report this week, Schussler said until commodity prices recovered, there was little hope for older economic sectors – manufacturing, electricity, mining, construction and transport – to create jobs.
“The spotlight should, therefore, be on industries such as tourism, education, and food production for future job creation opportunities. A general awareness about how technological development will require different skills should be built while self-employment and entrepreneurship should be promoted,” he said.
Read also: Labour minister warns on jobs
The falling global commodity price environment has taken away economic growth prospects with manufacturing at its lowest employment levels since 1971, while mining will cut back on their wage bills.
The bad news was that unemployment would probably remain and become an even bigger problem just when the government could no longer spend more on civil servants wage hikes as it had done in 2008.
BUSINESS REPORT