Putting a rand value to the enormity of SA’s unemployment crisis

2020-02-04 11:11
South Africa's unemployment rate is showing no sign of easing off. (iStock)

South Africa's unemployment rate is showing no sign of easing off. (iStock)

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Many years ago, I attended an economics talk during which the speaker mentioned the average cost of creating a single job i.e. the money that someone needed to have set aside (to have, or borrow with interest) to create a single job - I recall him saying that this cost varied a lot from industry to industry.

In any event, I can't recall the figure that he used as the average cost of creating a job, but it was a staggering amount if one applied that average cost per job to the number of unemployed people in SA at that time … and the unemployment position has got immensely worse since then.

This last week I read that Toyota was to invest R4 billion in its SA operation and thereby create 1 500 jobs - how fantastic!

However, if one divides the R4 billion (that's R4 000 000 000) by the 1 500 jobs that this creates, one gets to an average cost of a job as being R2.7 million.

That's an enormous amount of money to create a single job.

Given that Toyota's operation, as a motor car manufacturer, is extremely capital intensive - there's (relatively) a lot of expensive equipment involved in its operations, I thought that I could lower the R2.7 million per job to R1 million per job to get some idea of the country's average cost of creating a job.

Thereby the annual capital investment required to provide jobs for the annual net increase in population and to make inroads into the approximately 6.7 million (29%) of our workforce that is currently unemployed (this is the August 2019 figure – it's undoubtedly a lot worse now).

Please note that this average of R1 million per job is a pure thumb-suck estimate on my part to illustrate the sort of investment figures we need to aim for.

Doing the sums:

Per Stats SA, SA's population has recently been growing by some 900 000 every year (births, immigrants offset by deaths, emigrants) - putting figures to this, that's 1.2 million births and 200 000 net immigrants, offset by 500 000 deaths.

That would mean that every year we would need to find R900 billion (that's 900 000 jobs x R1 million/job = R900 000 000 000) to provide new jobs for the net annual increase in our population.

If we wanted to eliminate (being ultra-optimistic) our currently unemployed of 6.7 million (August 2019 figures) over say 10 years - 10% per year or 670 000 new jobs each year, this would require R670 billion (that's 670 000 jobs x R1 million/job = R670 000 000 000).

Adding these two figures together, we get to a capital investment figure of R1.57 trillion (that's (R900 billion + R670 billion = R1 570 000 000 000) each year.

So for those who want to chase investment/investors away from SA (by providing political uncertainty, threatening private ownership of property/land, government interfering in business activity through BEE etc, following outdated anti-capitalist ideologies etc) please find R1.57 trillion per year from … ? (I don't know where).

The message is clear: we must do everything to encourage direct investment in SA - failure to do so will likely see the "pot boiling over", with fiscal shortages (taxes falling short), increased hunger/poverty, civil unrest (and perhaps even civil war).

We need to seriously wake up and change the way that we’re doing things.

Time is already running against us.

Robin Mun-Gavin

Durban

 

 

Read more on:    jobs  |  economy
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