Budget 2021

It's as bad as they say: Mboweni's budget acknowledges jobs crisis

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A jobs protest in the North West.
A jobs protest in the North West.
Gallo Images/Dino Lloyd
  • In his Budget speech on Wednesday, Finance Minister Tito Mboweni said while the government would continue with job support programmes, the country's lacklustre growth is expected to persist for some time.
  • Half of the workers who lost jobs in April 2020 due to lockdown restrictions remained unemployed by October.
  • The Competition Commission is working on eliminating exclusive leases, cutting data costs and monitoring price gouging.

Minister of Finance Tito Mboweni said during his Budget Speech that despite government efforts to boost job creation and soften the blow for those who lost their jobs in the past year, the unemployment crisis in South Africa is showing few signs of letting up.

According to the Budget, R12.6 billion was allocated to various sectors to create about 694 000 short-term jobs in the 2020/21 financial year. This programme is expected to continue in the 2021/22 financial year.

The Budget Review said the outlook remained uncertain and the economic effects of the pandemic would continue to be far-reaching. It said R11 billion would be allocated to the public employment initiative in 2021/22.

By January 2021, the initiative had created 430 000 temporary jobs and it aims to create another 180 000 by March this year.

However, unemployment remains a stubborn problem.

"By the third quarter of 2020, there were 1.7 million fewer jobs than in the same period in 2019. Rising unemployment and income losses have entrenched existing inequalities.

"GDP is only expected to recover to pre-pandemic levels in late 2023. Given South Africa's structural constraints, its recovery will be slower than many of its developing-country peers," the review said.

The Budget Review said by the end of January, more than 430 000 jobs were supported through the public employment initiative and another 180 000 jobs are in the recruitment process.

"Half of the workers who lost jobs in April 2020 due to lockdown restrictions remained unemployed by October, while about a third of workers employed in October had been unemployed in February," the Budget Review added.

It further said to address market distortions such as production mark-ups and lack of competition, the Competition Commission would work to eliminate exclusive leases, lower data prices, monitoring prices of essential goods and investigating price gouging.

Support for small businesses

"The economic recovery plan, in line with these findings, recommends support for small and medium-sized enterprises, cooperatives and start-ups to facilitate inclusive growth. A more competitive economy will enable higher growth and job creation while providing consumers with lower prices and more product choice," said the review.

The Budget Review said National Treasury's venture capital support programme also offered little in the way of good news, as only 37% of qualifying companies added new jobs after receiving VCC funding and over 50% of the investments appeared to be in low-risk moveable asset rental structures and low-risk income-producing investments.

The Budget Review flagged the extension of the Unemployment Insurance Fund (UIF) relief scheme for another three months to April 2021.

"This will increase spending on the Covid-19 Temporary Employer-Employee Relief Scheme to R73.6 billion in 2021/22. As at end-January 2021, the UIF had paid R57.3 billion to 13.9 million workers," the review said.

A handout accompanying the Budget Review on the Jobs Fund Grant said, as of December 2020, 146 contracted projects were implemented along with employment creation models, more than 260 000 work seekers and entrepreneurs trained and over 275 000 jobs and internships created.

"The Fund has fully allocated the initial investment of R9 billion to these job creation projects, which is disbursed in quarterly tranches. Thus far, the R5.48 billion in disbursed grant funding has crowded in R10.96 billion in matched funding to implement these initiatives," the handout said.

The handout itself acknowledges that while the Jobs Fund grant catalysed a job at R19 755, grant funding on its own would not be sufficient and further investment is required.

Mboweni's remarks come after Statistics South Africa announced that the country's official unemployment rate has increased to a record 32.5%, as the number of jobless in South Africa grew to 7.2 million in the fourth quarter of 2020.

Statistics South Africa (Stats SA) released the Quarterly Labour Force Survey (QLFS) on Tuesday, which showed that the increasing unemployment rate is due to more people joining the labour force, as economists expected.

According to Stats SA, one million more people joined the labour force.

In total, there were 333 000 job gains to 15 million in the fourth quarter of 2020. The largest job gains were made in the formal sector (up 189 000), followed by private households (up 76 000), the informal sector (up 65 000) and the agriculture sector (up 2 000).

Stats SA, however, highlighted that the movement to unemployment outweighed that of employment.

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