Quantity vs quality: SA’s job-creation dilemma

“In South Africa, the level of unemployment is high and there are few jobs that people can compete for,” says Statistics SA in its report on the Quarterly Labour Force Survey for the second quarter of 2019. “About 71.5% of those in unemployment have been looking for work for a period of a year or longer.”

The economy is well into the fourth quarter of the year and very little has changed in the labour market since July, when this was stated.

What South Africa needs more than anything else is uninterrupted job creation for the next three or five years. 

However, with the current slowing down of the global economy, is uninterrupted job creation possible, even within a growing economy?

Growth does not always translate to job creation; the two terms of former President Thabo Mbeki’s administration illustrate this. But could a tighter labour market achieve an effective redistribution between employers and workers in such a way that the latter benefit through a wage boom?

At times anecdotes have very little value, but it is disturbing that most of us know a few people who have lost their jobs, some of whom may still be unemployed, and no doubt at least one who has actively given up looking for work. Add unemployed graduates who have also given up and the crisis becomes clear. Gradually, South Africa will have more people who are no longer counted as unemployed, because they are discouraged or have completely given up looking for work.

The need for a decent wage

Then there are those who are employed but can barely survive on a single wage, considering the rising costs of the basics needed for everyday living. The spending power of most low- and middle-income workers continues to decline. What has caused this?

Can the decline and stagnated wages be attributed to the assumption that where labour is plentiful, the employer adjusts wages since supply outstrips demand?

It may be that inflation-adjusted wages have risen for unionised workers, but they represent a fraction of the workforce. The International Labour Organisation’s Global Wage Report for 2018/2019 shows that global wage growth has waned to its lowest level since 2007, and South Africa is among the 64 countries with the highest wage inequality in the world.

For many South Africans, the stagnation in wages couldn’t have happened at worse time. The weakening economy has sent the cost of basic necessities skyrocketing, creating insecurity and an inability to save money.

Obstructionist politics

These are a number of issues playing out at the same time here, including the persistent obstructionist politics of the governing party when it comes to addressing enduring challenges of the economy.

For one thing, politicians consistently mention tackling the rising unemployment crisis – yet the government is never clear on how it is going to approach this task.

Unemployment is inextricably linked to inequality and poverty, yet in the past 15 years policymakers have demonstrated an inability to find an implementable strategy.

This is alarming, especially when one considers the number of underemployed workers, the scarcity of opportunities for graduates under the age of 30, and the effects of joblessness on black women who continue to be left out of the economy. In particular, the latter are burdened with being primary providers in many rural communities throughout the country, despite being the most affected by stagnant wages, the rising cost of living, and wage inequality.

There’s no getting away from the fact that the country is in serious economic difficulty, with rising unemployment, falling incomes and weakening spending power.

In the face of this, what will inform government policies on the labour market – job creation or decent wages?

By the former, I mean creating an enabling environment that allows business to simply create jobs – with the emphasis on the quantity of jobs created instead of the quality. The risk in the former is that it will bind low-earning workers to the stagnant wage growth they have faced for more than a decade. The latter, however, may see employers creating jobs that pay better – but with fewer jobs available.

The big question to be asked

Importantly, whatever policy government comes with to tackle the imbalances in the labour market, policymakers and government leaders must be able to give a convincing answer when asked this question:

What obstruction to job creation or a decent wage are their policy proposals trying to remove?

In sorting out South Africa’s unemployment problem, have they considered structural or deficient-demand unemployment types? Present-day South Africa is symbolised by structural unemployment, where there is a mismatch between skills and demands in the labour market.

Furthermore, workers displaced in a sector struggle to find employment beyond that particular sector. Think about the rock drillers in the mining industry who cannot use that specific skill anywhere else in the economy. The effects of globalisation and technological advancements are other contributing factors – work itself has changed from being secure to precarious, and technology has made some jobs redundant, replacing them with new jobs that require new skills.

Do you think our leaders can get this? Or answer these questions? I hope someone can. Maybe, just maybe, they may even have a plan. Do not hold your breath though, you might pass out if you try.