How to get SA up and working

W?hile President Jacob Zuma this week committed his government to creating five million jobs, the release of
official employment statistics shows how these plans might be frustrated.

Jobless South Africans have given up seeking work.

There are now more than two million unemployed people who believe they won’t find a job, so they have stopped looking.

At total unemployment of 4.4 million people, this means that almost one in two is classified as “discouraged”.

“It is a surge of discouragement,” says Sher Verick of the International Labour Organisation (ILO), who spoke at a
conference on employment organised by the University of Cape Town’s Development Policy Resource Unit this week.

“Delving into inactivity reveals that the largest change has been for discouraged workers; that is, those who are
unemployed but have given up the job search,” she says.

The discouraged are mostly black men and women without any education.

Any qualification, no matter how small, has a significant and incremental effect on the ability to find a job.

The pattern became evident during the recession and has continued to grow, as this week’s figures show.

So while the government has targeted a drop in unemployment to a manageable 15% down from current crisis levels, the conundrum it faces is that people will not look for work even if stimulus policies do ­begin to make a difference.

“The rise in discouragement in South Africa during the global financial crisis of 2008 and 2009 is both surprising and disconcerting, especially for policy-makers,” says Verick.

“Being discouraged implies that individuals of working age are no longer actively searching for a job due to the costs of a job search or a belief that it is not worth looking for employment.”

South Africa is a young country and new entrants to a shrinking job market have made the problem worse, says the World Bank’s chief economist for southern Africa, Sandeep Maharaj.

“The problem is not going away; it is becoming more intense.”

Most unemployed people (primarily young workers) have never had a chance to work, according to current statistics.

Maharaj says the primary reasons for this are:

» South Africa needs growth of at least 7% a year to begin affecting joblessness. The current growth rate is insufficient.

» The economy has changed its structure and needs higher-level skills.

» Unlike in other developing countries, agriculture is not a net job creator.

» The informal sector is small compared with similar-sized economies.

» Wage policies encourage a move to capital-intensive production.

“Wages are at above labour market-clearing levels,” says Maharaj.

This means that average pay is too high to clear the labour market of sufficient job-seekers. “So the issues at hand are political, not technical.”

Zuma and his Cabinet are in uncharted territory with the employment target now set.

This is because joblessness here is “unique” in the world and the “solution must be inward looking”, says Maharaj.

“Full wage flexibility is not politically feasible, so you need to think about ­second-best solutions.”

Government has identified six big- picture jobs drivers for immediate attention. These are:

» Infrastructure – these are building programmes in transport, energy, water, communications capacity and housing;

» Agriculture;

» The green economy and green jobs;

» Manufacturing;

» Tourism; and

» Mining.

The small picture shows immediate geographical challenges. Most jobless people live in townships, informal settlements and the former homelands.

Economists suggest they become discouraged because of “mobility difficulty” which, put simply, means they can’t afford transport to the areas where they may find jobs. A second tier of challenges includes skills and asset accumulation.

Treasury director-general Lesetja Kganyago says: “You need a couple of growth quarters before the economy starts creating jobs.

“There are people who are significantly affected by the costs of searching for jobs.

Some have to travel for up to three hours.

You need to have a ruthlessly efficient transport system or you must change the spatial development.”

The ILO economist, Duncan Campbell, does not believe that wage flexibility is key to South Africa’s employment dreams. “Maintaining income is a source of growth,” he says.

And by setting a jobs target the country is on the right road. Vietnam, for example, has promised to create eight million jobs over five years and India has pledged its working-age population will have at least 100 days of work a year.

“Employment is now a key component of macro-economic variables,” says Campbell.

He adds a rider: “A target is merely a political intention.”

South Africa set its fourth employment target this week: not one of its ­previous three succeeded.

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