SA’s workers face retirement wave

2014-08-19 00:00

THERE are not enough new jobs to support the massive increase in savings required for the number of people who will retire in the future.

This was according to Econometrix chief economist and director Dr Azzar Jamine, who spoke at the opening of the Institute of Retirement Funds’ annual conference that opened in the International Conference Centre in Durban yesterday morning.

Jamine said only five percent of South Africa’ population are in retirement age, compared with 30% under the age of 14, while in high income countries, the population is more evenly developed, with 16% in retirement age and 17% under the age of 14.

“We have the biggest workforce in the world, and we are facing the biggest retirement challenges,” he said.

The challenge would be to find retirement funding mainly for the black population — the white population had remained static at over 4,5 million people over the past 12 years, while the black population had grown by eight million people between 2002-2014.

The average length of life of South African’s had also grown “extraordinarily” to 61 from 52 in 2005, due mainly to the roll-out of free antiretroviral drugs for people infected with HIV/Aids. With employment growth tracking below the growth of the economy, “who will fund the retirement” of the growing number of older people, said Jamine.

One view was to increase taxation. But only a small percentage of the population was already paying most of the personal tax collected.

“Clearly the way forward is for the economy to grow faster for more people to be employed, and for government to be able to collect more taxes,” he said.

And while those who did enjoy retirement savings had done well out of rising stock prices, the fact was that economic growth was lagging the rest of the world, and the sustainability of high share price valuations was being questioned.

Jamine said there were three main reasons, in his view, why the economy was not generating sufficient growth:

• inadequate education and skills outcomes,

• adversorial labour environment, and

• weak entrepreneurship and SME development.

Jamine also listed four reasons why he believed the labour market had become militant.

Workers were in a “desperate financial state” due to being enticed by microlenders, there was competition among unions for members, there was rising inequality between workers and corporate executives in particular, and there were attempts to overthrow the capitalist structure of the South African business sector.

Government had an answer to the economic growth problem in the National Development Plan, but not much had been seen in terms of its implementation yet, said Jamine.

Department of Social Security deputy director general Selwyn Jehoma said South Africa’ problems of poverty are being made worse by “fewer and fewer people finding formal employment” and “more and more people having to find informal employment.”

As to the perception among many that the social grant system to 16 million adults was unsustainable, he said planning indicates the percentage of GDP being spent on grants will decline over 20-30 years.

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