Mpumelelo Mkhabela

Mpumelelo Mkhabela | SA's jobs crisis: nothing drastic being done to show an appreciation for the urgency of the situation

2020-02-13 12:35
The latest numbers show that overall unemployment stands at 38.7 percent, a staggering 10.4 million people. (iStock)

The latest numbers show that overall unemployment stands at 38.7 percent, a staggering 10.4 million people. (iStock)

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In the final analysis, no solution will work if it's not based on making Eskom, SAA and other state-owned companies efficient profit-making entities, writes Mpumelelo Mkhabela 

It is almost as if the job of South Africa's statistician-general is to consistently convert the indignity of unemployment into depressing statistics.

Pali Lehohla, the former statistician-general, did much of the dishing of the depressing numbers before he retired in 2017.

In the last decade or so in office, Lehohla had become vocal about the fact that policy makers were ignoring data generated by Statistics South Africa.

One of the terrifying statistical revelations was that young South Africans had relatively become less skilled than their parents.

As usual, this great regression was largely ignored by policy makers.

So far, they have failed to fix our education system.

It still cannot produce the relevant skills, including instilling the much-needed competitive attitude necessary to fight in the labour market.

Our policy makers have also failed to encourage millions who are outside to enter the education system, making their prospects of finding jobs even dimmer.

Year in and out, statistics show that, notwithstanding the net rise in unemployment, those with higher qualifications (even if inadequately prepared by our education system) stand a better chance of finding employment than those who never went to school nor obtained post-matric education.

Since his retirement Lehohla has continued to preach to the stubbornly un-convertable policy makers.

The more he "statisticised" the horrible lived reality of millions of the unemployed, the more the politicians verbalised it in their political rhetoric, promising to reduce unemployment.

The more they promised, the more unemployment grew.

Resinga Maluleke took over the reins in October 2017 as the numbers man.

He continued to relay the depressing numbers.

The latest numbers, released timeously ahead of President Cyril Ramaphosa's much-anticipated 2020 State of the Nation Address, show that overall unemployment stands at 38.7 percent, a staggering 10.4 million people.

There was a time in the mid-2000s when President Thabo Mbeki questioned Lehohla's statistics which revealed there were four million unemployed people.

The economy was growing at the time, hence Mbeki famously suggested that, like women's mini-skirts, unemployment statistics suggested more than they revealed, the reality beyond the hem.

The number has more than doubled, meaning there is no longer a need to try to imagine what lies beyond the hem of the skirt.

And we know why: unlike during Mbeki's time, economic growth has nearly come to a halt.

The most frustrating thing about lack of growth is that the reasons are known.

But political rhetoric, promises and ideological bickering in the ruling alliance, means nothing drastic is being done to demonstrate an appreciation for the urgency of the situation.

In the previous administration, there were discussions about making it attractive for companies to employ younger, inexperienced people by creating a two-tier labour market, with a second tier sector where restrictive labour laws would not apply.

This idea was shot down.

Critics, particularly unions, suggested it would encourage exploitation and increase inequalities.

But even without the implementation of this idea, inequality has increased alongside unemployment.

And it has become apparent that the longer people are kept out of any form of employment, the less likely they will ever find employment.

So, the number of those discouraged from looking for jobs has swelled, leading to the staggering total number of unemployed.

During Jacob Zuma's administration, Treasury devised a tax incentive for companies to provide internships for young graduates.

This system is now part of the Youth Employment Service which Ramaphosa is pioneering with the private sector.

Still, the uptake by the private sector is not significant to diminish growing unemployment. That uptake of black graduates would help boost companies' black economic empowerment credentials has not helped.

Ramaphosa, unlike his predecessors, has taken it upon himself to actively participate in discussions between a representative of business, labour and community under the auspices of National Economic Development and Labour Council (Nedlac) to find solutions.

This initiative too has not borne fruit.

It might be worth an exercise for the government to hold one-on-one discussions with companies to understand their unique circumstances that prevent them from investing further and employing more people.

The decline in private sector employment has made it politically difficult for state entities to retrench even in instances where pruning has become necessary.

There are, of course, common concerns among investors.

The common denominating staller of economic growth has been a poorly managed and heavily indebted Eskom.

The proposed Cosatu solution to stabilise Eskom's finances by pumping R250-billion of government employee pension money to pay off part of the utility’s debt, seems to have too much risk than it does benefits.

Firstly, the Public Investment Corporation doesn't have that kind of money sitting around waiting to be donated. The money is invested in various instruments including equities.

By disposing of some of the holdings at the time when the markets are generally under-performing, the government pension fund stands to make losses.

Experts in investments will tell you that a good investor buys low and sells high.

Secondly, there is not much foreign investment coming into our equities. In fact, foreigners have been selling. So, withdrawing such huge sums could contribute to the decline.

That on its own is not desirable in this gloomy economic period we are in.

Thirdly, the inter-connectedness of our financial system means one big economic event can be contagious, causing a financial crisis.

By taking huge sums in pension money, which is guaranteed by the government, and pouring it into Eskom’s debt, which is also guaranteed by the government, we would actually be borrowing from one creditor to pay another - oh except that the pension money is styled as a conditional donation!

It would actually create a fertile ground for an event to trigger a huge financial crisis.

The advance of R3.5 billion to South African Airways by the Development Bank of Southern Africa, was another act of consolidating a toxic contagious fuse in the economy.

Both SAA's debt and the amount advanced by the DBSA are guaranteed by the government.

Financial institutions are no longer prepared to extend loans to the state-owned enterprises because they are concerned about the over-exposure of government and the likely failure of the companies to honour the debt commitments unless they are significantly restructured.

In the final analysis, no solution will work if it's not based on making Eskom, SAA and other state-owned companies efficient profit-making entities.

This would require a painful injection to cure the ills of these companies.

The government seems hellbent on avoiding the pain.

It’s not clear how long the government will avoid the inevitable pruning so it can prepare for growth.

For without it, confidence in the economy will continue to slide.

And our statistician-general will without fail continue to dish out the horrible numbers on a quarterly basis.

- Mkhabela is a regular columnist for News24.

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