There are now 8.9 million jobless people in South Africa, according to the latest StatsSA quarterly labour force report, released this week. This is the highest jobless number ever recorded in our country.
It is easy to regard these just as numbers – but we can’t forget that this number represents people – fathers, mothers, young people – all without work, and fast losing hope in a shrinking economy.
SA’s jobs crisis is not just the aggregation of 8.9 million individual lives in crisis. It puts our whole country critically at risk – socially, economically and politically, impacting the fate of all South Africans for generations to come.
I am tempted to introduce a new word. Supercrisis. There are so many legitimate crises facing South Africa right now – our jobs crisis, our basic education crisis, our higher education funding crisis, our water crisis, our fiscal crisis…I could go on – that it seems necessary to have a word such as ’supercrisis’ in order to keep the nation’s sharp focus on our apex priority, which is job-creating economic growth.
The National Development Plan estimates that SA will need to create 11 million new jobs by 2030 in order to achieve the international norm that roughly 3 in every 5 adults should be in work. Statistician-general, Pali Lehohla, admitted this week that government is “unlikely to meet its 2030 targets”. This is a hopeless understatement. Yet it would be possible if we made bold changes to our current jobs strategy.
Why is unemployment so high?
Unemployment is so high because the ANC government has taken a “big government, big business, big union” approach that looks after those who are already in the economy, but locks out everyone else. Our labour market regime reflects this mindset. Policies are geared toward the needs of big government, big business and big unions. We could call them the “insiders”.
The unintended consequence of this jobs strategy, is that it has unfairly disadvantaged, and thus discouraged, emerging businesses, especially those that are low-skill labour-intensive. In so doing, it has unfairly disadvantaged both unskilled work-seekers, and also new entrants into the job market, who necessarily lack experience.
This explains why such a disproportionately large number of the unemployed in SA are young. Young people (age 15-34) make up a full two thirds of the unemployed (5.9 million youth out of a total of 8.9 million who can’t find a job or have given up looking) while they constitute only half of our labour force (12 million youth out of a total of 24 million adults).
For young people it’s a double whammy: government has failed to equip them with the skills they need to get high-skilled jobs, while systematically blocking the creation of low-skilled jobs. At 54%, our age 15-24 unemployment rate (on the narrow definition which excludes those who have given up looking for work) is some 4 times higher than the global and African average of 13%, according to the International Labour Organisation.
It is entirely fair and accurate to label young people, the unemployed and entrepreneurs as the “outsiders” in government’s current jobs strategy.
What is the solution?
The solution is to change the jobs strategy entirely, by making the small-business and youth labour markets much more flexible in order to enable the emergence of low-skill, labour-intensive businesses. This, coupled with providing quality schooling and post school training, is the only route to mass employment.
There is wide agreement that only the SME (small and medium enterprises) sector can create entry-level jobs on the massive scale we require in South Africa. Big business plays a hugely important role in SA, but it will never be able to create 11 million new jobs, by 2030.
This week, Zuma made much of a joint government-business task team that has been set up to accelerate SME growth and job creation by providing funding and support to high-potential SMEs. We welcome this initiative fully. Any effort to support entrepreneurs and help create a nation of small businesses will have our full support. Especially when that initiative is led by some of South Africa’s most successful and visionary entrepreneurs – people like Adrian Gore of Discovery.
However, this initiative cannot and does not obviate the need for deep, fundamental structural reform of the laws and policies that are strangling our economy.
We must not avoid the key issue – that our entire jobs strategy needs changing. The new-found closeness between business and government is an opportunity for the former to advocate volubly for a levelling of the playing fields.
The DA-run City of Cape Town has proved that even in a hostile national policy environment, local government can have a major impact on job creation by doing the basics right and creating a business-friendly environment. This is why at 21.7%, Cape Town has the lowest unemployment rate of any metro, with the other seven metros ranging from 27% to 37%.
In general, where the DA governs, unemployment is much lower. DA local governments create local conditions for businesses to flourish by ensuring a business-friendly local regulatory environment and by facilitating job-creating investment. In addition to this, they create an enabling infrastructural environment by improving and expanding public transport, rolling out broadband internet, and delivering quality basic services.
In the local government elections on 3 August, you can bring the change that SA needs to create jobs, by voting for the DA. A vote for the DA is a vote for job creation.