There is one certainty in South African life and all the data backs it up. Uncertainty breeds chaos. The best indicator of that is the country’s mounting jobs crisis. And policy makers appear incapable of thinking differently to fix the mess they have helped create.
Some six million South Africans cannot find work, no matter how much they try. Many are youngsters, with little useful education and certainly no training or marketable skills to their names. Unless the country can deliver meaningful jobs-rich growth, the numbers will continue to deteriorate. The country’s official unemployment number sits at more than 27%. A more realistic number includes the half a million people who have given up trying to find work – the euphemistically named “discouraged workers” which take the real rate of unemployment to 37.2%.
Rather than anchor the future on growth principles, the timing of next year's election is leading to mounting populism as the governing ANC struggles to provide political leadership to generations of supporters who feel the liberation movement has failed their ambitions of a better life.
Formal sector employment is not even absorbing the growing number of people who hit working age and the number of discouraged workers is on the rise.
One of the primary reasons for this lack of growth is a lack of fixed investment spending by the private sector. Business confidence is low and remains so. The rising levels of social and political tension in the economy and the apparent inability of the state to create a policy environment conducive to growth means the situation is unlikely to improve markedly in the short term. It’s a spiral. Business won’t invest until there is more certainty, government keeps adding obstacles to investment in the belief that greater regulation will force business to behave against its natural instinct for efficiency and profit.
Those in work are carrying the can for those who simply would not otherwise not be able to survive.
Stanlib economist Kevin Lings recently pointed out the considerable expansion in the number of social grants paid by the state each year. In the year 2000 fewer than three million people received state-assistance and that has ballooned now to more than 17 million. There are just about as many people in work as there are receiving social grants. That’s not sustainable. To make a grants system work for those who require help, countries need to have far higher rates of employment with a greater number of its citizens paying tax.
More than 50,000 taxpayers have lost their jobs in the mining industry alone this year. There are lots of reasons. Commodity prices are low. Costs are high and rising. Reserves are harder and harder to reach in the country’s aging mines and most importantly there is no incentive for new exploration for new mines while investor-negative proposals remain in the Mining Charter.
Mineral Resources Minister Gwede Mantashe’s social media outburst last week as Impala Platinum announced plans to reduce its workforce by 13,000 over the next two years provides some insight into the pressure the chief architect of the mining charter is under.
It wouldn’t be as big a problem if the mining sector was drawing new investment, but the new draft mining charter is causing investors to baulk at the prospect of putting fresh capital in the mining sector
Urgent fix needed
Ironically, the new mining charter could be designed to give new impetus to an industry that is shedding tens of thousands of jobs, but government's obsession with divvying up the spoils of new projects does not bode well for security in the sector.
Mantashe accused the company, which has held out longer than its peers to take the inevitable decision to cut jobs amidst depressed prices for its key commodity, of being duplicitous and uncaring about its workers.
“Today's announcement by Implats that it will retrench 13,000 workers is a clear example of a company that is careless, and mindlessly committed to implement its own pre-determined outcome; no matter how unworkable it might be. Their reckless actions add injury to insult (sic)” read a message posted on his Twitter biography. “We have constantly maintained that only an industry that does not regard workers as a valuable asset behaves in this manner.”
Implats in turn pointed out that remedial action would save 27,000 remaining jobs rather than allowing the firm to collapse under the burden of a large workforce when the company just is not making profits.
Impala’s announcement follows those of other industry players in recent years which have cut back on operations substantially over time putting tens of thousands out of work.
This is a government problem. It has to fix it urgently. Otherwise South Africans are going to ask a new crop of policymakers to do it for them.
Bruce Whitfield is a multi-platform award winning financial journalist and broadcaster.
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