Cosatu 'deeply distressed' by rising unemployment, blames lack of decisive leadership

(File, Cosatu)
(File, Cosatu)

Johannesburg - The rising unemployment rate in the second quarter of 2018 should be blamed on policy incoherence, lack of decisive leadership and imagination, according to the Congress of South African Trade Unions.

Statistics SA announced on Tuesday a 0.5% increase in the official unemployment rate, bringing it to 27.2%, while the expanded definition, which includes discouraged job seekers, rose to 37.2%.

"It is alarming to see both the primary sector, like mainly agriculture, and the all-important productive–manufacturing industries that make up the secondary sector, all haemorrhaging jobs at such [a] rate," Cosatu spokesperson Sizwe Pamla said in a statement.

First National Bank (FNB) said in a note that the unemployment rate was unlikely to improve significantly over the medium term, with economic growth forecasts being revised lower and amid "still-depressed business confidence".

Pamla described the rise in unemployment as "troubling", as President Cyril Ramaphosa, in his State of the Nation Address in February, promised several initiatives to tackle the high rate of joblessness.

Ramaphosa had committed to holding a jobs summit and investment summits later this year, as well as pledging to launch the Youth Employment Service (YES) programme, which he kick-started in March, with plans to employ a million young people in internships over the next three years.

Cosatu expressed concern that in the build-up to the presidential jobs summit - pencilled in for the end of September - task teams were "sending junior officials with no ideas nor proposals".

The labour federation also blamed government for having "no sense of urgency" in developing responses to automation, and said the unemployment situation was likely to worsen.

"Currently, the South African labour law allows firms to dismiss workers because of the adoption of technology. Section 189’s definition of operational requirements includes the adoption of technology.

"Already the law favours the replacement of labour with capital/machine," said Pamla.

Rising utilities wage bill

The biggest surprise in the Quarterly Labour Force Survey came from the electricity, gas and water sector (utilities) adding 18 000 jobs in the second quarter, according to a note from FNB.

The bank warned that this represented a 12.2% quarter-on-quarter increase in head-count, amid lower energy demand and production, which could hold a "significant risk" for the finances and fiscal consolidation of state-owned companies (SOCs).

The International Monetary Fund (IMF) on Monday kept its growth projection of 1.5% for 2018 unchanged, but warned that the risks related to potential bailouts of parastatals would "further constrain fiscal policy".

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