Independent Online

Tuesday, June 28, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Democracy dividend remains elusive for the jobless

A youth hauls a bag of recyclable waste material to sell to make a living, in Devland near Soweto. StatsSA this week released the fourth quarter unemployment statistics for last year which confirms a jobs crisis in the country. It is critical that the extent of the crisis in South Africa is understood to generate the necessary and sufficient scale of correction, says the writer. Picture: Reuters

A youth hauls a bag of recyclable waste material to sell to make a living, in Devland near Soweto. StatsSA this week released the fourth quarter unemployment statistics for last year which confirms a jobs crisis in the country. It is critical that the extent of the crisis in South Africa is understood to generate the necessary and sufficient scale of correction, says the writer. Picture: Reuters

Published Apr 3, 2022

Share

By Isobel Frye

“Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world... The best lack all conviction, while the worst Are full of passionate intensity.” – WB Yeats

Story continues below Advertisement

In the aftermath of WWII, Irish poet WB Yeats writes of the chaos caused by the annihilation of social, political and economic orders that previously existed in Europe and some parts of Asia.

The inverted notion that the best lacks “all conviction, while the worst are full of passionate intensity” is a sinister image of destructive anarchy. Reading the unemployment statistics gives a similar dread. We live in a broken system.

This week, Statistics South Africa released the Q4 2021 (fourth quarter) unemployment statistics. These showed the continued jobless haemorrhage. There are 9.7 million formally employed people compared to 11.7million unemployed people, while a further 2.6 million people are employed in the informal economy, and 2 million people in domestic and agricultural work. Most of these are precarious jobs.

Labour market inequalities are deep and are perpetuated. Employment is racially unequal. The figures show that 51% of black Africans are unemployed, while 11% of whites are employed. Just over 50% of women are unemployed, compared to 42% of men.

Spatially, provincial trends continue to show a rural disengagement from the labour market. Unemployment in the Eastern Cape, Limpopo and Mpumalanga is above 50%, the Free State and Gauteng have rates of 44%, while unemployment in the Western ape is 30%.

No incentive exists for working-aged people to stay in rural provinces. The employed labour force is ageing. Unemployment among people aged 55 to 64% is the lowest, at 22%. But this rate rises to 54% for 25- to 34-year-olds and is an unbelievable 77% for 15- to 24-year-olds. There is no transfer of skills as people retire.

Story continues below Advertisement

Unemployment is also permanent: 80% of the unemployed are in longterm unemployment, unable to re-enter the job market. Lastly, the Quarterly Labour Force Survey raised two small shifts that are worth noting. The first was a slight churn of people from “discouraged work seeker” to “unemployed”.

Why this is important is that it shows that although people have not found jobs, they are starting to look for work. The only potential causal change that I can think of is that a few adult unemployed people are now receiving the R350 Social Relief of Distress grant, which might enable some to now better look for work.

This would support previous related research that identified such a positive dynamic. The second is a slight but definite decline in informal employment. The informal economy is always looked at to absorb formal economy unemployment, but we are seeing globally that the informal economy was so badly hit by the Covid-19 disruption that it is struggling to recover everywhere.

Story continues below Advertisement
Graph: Supplied

There are some pretty basic steps that need to be taken to prevent the unemployment trajectory continuing. But it is critical that the extent of the crisis in South Africa is understood to generate the necessary and sufficient scale of correction.

It was distressing to note the speed with which the unemployment news faded this week, suggesting that the severity of the crisis is not understood. The accompanying graph, using International Labour Organization (ILO) Weso 2022 data, shows unemployment trends in South Africa and three other countries against a global trend. The trends are clear, and South Africa’s outlier status is stark.

Story continues below Advertisement

What can global lessons teach? Getting people into jobs can be done through supply or demand-side initiatives. Supply-side initiatives include paying workers subsidies to keep them in unpopular, such as rural, jobs or paying on-the-job training incentives to improve skills and productivity.

Public Works jobs are also temporary, supply-side options. Demand-side options include paying employers to hire new staff or not fire their existing staff. Another demand-side approach is to encourage SMME start-ups through training, credit and market access.

South Africa has millions of struggling micro-entrepreneurs who could benefit from support, but they also need their customers to have more money. Universal decent social security systems help to support workers and grow demand.

Countries that recovered pre-Covid level jobs best have comprehensive social security systems that were able to move people from unemployment schemes back into jobs. People received money from the state until they could get back into jobs, acting as accelerants to economic recovery.

Crudely put, the state paid benefits to the unemployed until people consumed the economy into better health. South Africa’s unemployment situation is in crisis now, and it requires clear interventions, now.

Leaders speak of how jobs will follow GDP growth. However, a recent ILO report debunks a positive correlation between GDP growth and job creation in sub-Saharan Africa. This is due to much of the growth being generated from resource exports rather than in labour-intensive sectors.

Waiting for jobs to miraculously follow GDP growth has been our job policy in past years, and see where we are headed. Two policies will turn around this slaughter.

First, introduce a decent universal basic income grant. This has been well researched. It can turn everybody into active economic citizens overnight, able to buy local and look for jobs.

Second, provide credit, start-up and mentoring support for micro and small businesses. Provide basic business training, enable access to markets and credit. With these two interventions, we will cover both supply- and demand-side solutions. We must craft order from chaos. There is no alternative.

*Frye is Director of the Studies in Poverty and Inequality Institute

Share