South Africa’s alarming unemployment rate is both a crisis and an
indictment on us all, and represents double trouble for the country, business
groups have warned.
The Cape Chamber of Commerce and Industry and the Black Business Council expressed concern over the country’s latest unemployment figures – which have risen to a record high, according to Statistics South Africa’s Quarterly Labour Force Survey.
South Africa’s official unemployment rate for the first
quarter of 2016 stands at 26.7%, representing a 2.2 percentage point increase
compared to the last quarter of 2015. This means 5.7 million out of South
Africa’s 36.4 million people of working age were unemployed during the first
four months of 2016.
The largest job losses were recorded in the manufacturing,
construction and trade sectors. The expanded unemployment rate, which includes
discouraged job seekers, amounts to 36.3%, or 8.9 million people. The gap
between the official and expanded unemployment rates increased from 7.2% in the
fourth quarter of 2008 to 9.6% in the first quarter of 2016.
Double whammy
The Cape Chamber of Commerce and Industry cautioned that the rise
in the unemployment rate represented double trouble for South Africa.
First, having nearly six million people out of work created a
massive social problem with consequences that were difficult to predict and,
second, it underlined the poor performance of the economy, it said.
“This double trouble will be very difficult to overcome,” said the
chamber’s president Janine Myburgh.
“Business confidence is low and the government has been very slow
in implementing the structural reforms the National Development Plan recommended
for economic growth.”
These changes include labour market and industrial relations
reforms.
“Our priority should be to remove all obstacles to job creation.
The approach to business should be ‘What can we do to encourage you to employ
more people?’. Instead, the approach was to over-regulate and prescribe to
business on how it should go about running companies.”
Myburgh said the long-term problem was education which, despite
massive investment, was not producing the required results. She also criticised
policies and legislation that discourage foreign investment, such as the new
expropriation bill and the requirement that security companies from overseas
should dispose of 51% of their shares to local investors.
“We must also ask ourselves how [much] jobs ‘mistakes’ like the
unnecessary visa regulations have cost the tourism industry and the country,”
Myburgh said.
“What we need is less interference in the economy. This will
improve business confidence and we will see more investment and skills training
leading to economic growth,” she said.
The Black Business Council warned that if not addressed,
unemployment could reverse many of the country’s gains since democracy was
attained.
A crisis and indictment
“It is both a crisis and indictment on us all that more than 520
000 people have been added to the unemployment pool between the fourth quarter
of last year and the first quarter of this year,” said chief executive Mohale
Ralebitso.
He said the need for structural reform in the economy could not be
overemphasised.
“We also need to get to grips with better enabling the informal
sector and elementary workers who are the most vulnerable to a negative economic
climate.”
Ralebitso called on the private sector to implement urgent
interventions, like making use of accumulating Skills Development Levies and the
Employment Tax Incentive, which incentivise employers to not only improve the
absorption rate but also enhance skills among the employed to boost their global
competitiveness.
“We cannot expect to have any productivity improvements and
flexibility in the labour market if we are not helping the employed improve
their marketability while improving the feeder network in parallel.”
He also recommended more radical transformation measures, such as
the accelerated development of black industrialists.
“This will not only boost economic growth in key sectors most
affected by the job losses, but furthermore diversify the employment
opportunities available as more players participate in the market,” Ralebitso
said.
“To this end, we urge that government substantially grow funding
for the likes of the National Empowerment Fund so they can continue to play
their catalytic role and build a deeper pipeline for the Black Industrialist
programme, while accelerating existing Black Industrialists.”
The Black Business Council implored the private sector and
government to work together aggressively to create an environment conducive to
job creation and skills development, through measures that stimulate and sustain
industrialisation and increased economic growth.
“We need to keep the rainbow nation dream in our sights and not let
unemployment, poverty and resultant inequality rob South Africa of its
potential,” Ralebitso concluded. – Fin24