Addressing South Africa’s Unemployment Crisis

The latest official statistics puts the number of economically active persons in South Africa at 16.8 million, reinforcing an oft-repeated claim that the “era of jobless growth” is now over.  Between September 2004 and September 2005, more than 650,000 jobs were created, according to the official statistical agency’s Labor Force Survey (LFS).  Government and business say that this positive jobs report is due to the country’s booming economy — peaking at a growth rate of 4,5% in 2005.  At a deeper level, officials confidently say, this robust economy and jobs growth are in turn outcomes of the efficacy of the country’s sound market-friendly macroeconomic policies.  If this is true, then these “macroeconomic rules” need to be kept in place or selectively reinforced to reach the 6% growth target set to halve unemployment and poverty by 2014.

State officials are upbeat about the survey results that suggest, after a decade, South Africa’s macroeconomic economic strategies are beginning to translate into jobs.  However, they agree that the battle against unemployment is far from over, partly due to the risk of an economic slump.  Current worries arise from the fact that the broad measure of unemployment, which includes so-called discouraged workers, is in the order of 45% of the labor force.  By any standard, this is an enormous figure — an unemployment crisis.  Thus the need for extraordinary measures captured in the Accelerated and Shared Growth Initiative (ASGI) as a new engine to slash unemployment and poverty by 50% within 9 years.  Trade unions and big business support the main thrust of ASGI, with COSATU vowing that it will bring more pressure to bear on government and capital to end unemployment and poverty.  Given this urgency to address SA’s unemployment crisis, it is important to check if the touted “desperate interventions” will create sustainable jobs at living wages.

Flexible Labor Markets

Since 1994, the main electoral slogan of the governing party has been “jobs and a better life for all.”  But the hollowness of this promise became evident when job shedding gathered pace as a result of the state’s neo-liberal economic policies.  Labor market flexibility, a major component of this package, simply meant more insecure and low-paying jobs and jobless economic growth.  Today, these same policies are credited for the turnaround in which the economy is generating 30,000 jobs per month, leading government to assert that it is on track to reach the United Nations’ 2015 Millennium Development Goals.

Critics have pointed out that new jobs are mainly part-time jobs in construction and retail trade.  Besides, estimates of additional jobs include those in barely-surviving small businesses that are difficult to count accurately.  Moreover, risks of recession have increased, and workers in these insecure and low-paying economic activities are usually the first to be sacked.

Employment in the Formal and Informal Sectors,
September 2001 to September 2005

Click on the table for a larger view.
SOURCE: Statistics South Africa,
“Labour Force Survey September 2005,” 24 January 2006 p. ix.

Now, the state started pinning all its confidence on its new job creation plan, ASGI, with its emphasis on public works programs and private-public partnerships.  ASGI basically copies the existing expanded public works programs, offering the jobless six-monthly contracts for a maximum of 2 years at an average wage of R60 per day (US$10) that do not lift a family above the poverty line.  It combines flexible labor markets with state investment for the prosperity of the private sector and markets without sustainable jobs at living wages.

End Job Losses and Poverty

A crisis of joblessness at the South African scale poses a direct threat to trade unions.  Casual workers, the neo-liberal norm, are usually barred from joining trade unions and have virtually zero legal protection.  It is rare for a sacked worker to retain union membership.  Moreover, no independent union of the unemployed has developed in South Africa.  Job losses thus erode the membership and related financial base of trade unions and thus compel them to react.

Energetic interventions on the part of the trade unions have largely been ineffective to make any significant dent in unemployment to date.  While unions have successfully fought for a Jobs Summit in 1998, subsequently renamed the Growth and Development Summit (GDS), this has degenerated into an annual talk shop.  Out of these summits emerged the Job Creation Fund (JCF) — financed from a day’s wage that every union member donated — which has provided work to merely 15,000 unemployed in 7 years.  Compare this figure to at least 30,000 jobs that may be axed, according to the unions, as the state drives ahead the further privatization of transport and electricity utilities.  Using trade union investment companies to promote “social entrepreneurship” or broad-based black economic empowerment (BBBEE) also failed to address job losses.  COSATU’s “end jobs losses and poverty” campaign, which gained momentum as the country swung into the 2006 local government elections mode, has fizzled out after sparking political tensions within the tripartite alliance.

Trade unions can more effectively fight against unemployment if they pay attention to the nature of their demands.  For example, in its “jobs and poverty” campaign, COSATU strikingly exposed the links between unemployment and other social afflictions hitting working people — such as homelessness and exclusion from privatized social services — making it possible to forge a genuine united front with other social movements and political organizations.  A crucial short-term demand absent from current campaigns, however, is a reduction in the working day without a loss in pay to prompt employment of more workers.  Such a demand would strengthen solidarity between the employed and the unemployed.  Furthermore, trade unions can and should demand that public works guarantee the unemployed a living wage and include them fully in their management, as a step toward democratic workers control and self-management in a planned economy.  In short, demands that unite different sectors of working people and connect short-term needs with long-term goals are the demands that can strengthen the labor and other social movements’ fighting capacity.

Peter T. Jacobs is an economist at University of the Western Cape.