EDITORIAL: Quick fixes won't fix anything
MIXED messages are emerging on South Africa's job-creation efforts, a situation that is rapidly becoming the norm concerning any aspect of South African life that is touched by government policy. For every step forward, there seem to be two steps back, an outcome of the ideological tug-of-war that is raging in the governing alliance.
South Africa's narrow unemployment rate fell below 25% in the first quarter, reflecting a net gain of 25,000 jobs, and that is cause for muted celebration. But that still leaves almost 4.5-million people who want work but are unable to find any, and the reason for the statistical improvement seems largely technical.
In addition, apart from questionable figures for the mining sector, most of the new jobs were created in the public sector, a trend that has been in place for some time. That's undoubtedly great for the newly employed, but given continuing service delivery failures and the steadily increasing state wage bill, the sustainability of such job-creation efforts has to be in doubt.
The only economic sectors that have the potential to generate sufficient jobs to make a meaningful dent in the jobless rate - trade, manufacturing, agriculture and mining - are either still shedding workers at an alarming rate or the official figures are suspect. The first three lost 91,000, 44,000 and 18,000 jobs respectively, while mining ostensibly gained 21,000 even as the industry's output contracted sharply and mines shut shafts that were no longer viable. Something doesn't add up; one doesn't have to be a pessimist to conclude that even if the mining figure is correct, it cannot carry on growing.
Considered in this context, the public-sector wage agreement between the unions and Department of Public Service and Administration also represents a mixture of good and bad news for future job creation. The 7% average increase agreed for this year is above inflation and therefore a potential drag on the fiscus, especially since the budget allowed for a 5% increase in the state wage bill. The extra R8bn will have to be found somewhere, and unless there are genuine efficiency improvements or the budget deficit ends up being higher than forecast, this will be at the expense of some other expenditure item. That does not augur well for service delivery.
At the same time, Finance Minister Pravin Gordhan will undoubtedly be able to work some budgetary magic to cover the 7% increase without spooking the international credit rating agencies too much, and the fact that the agreement covers a three-year period using the official inflation rate as a benchmark must be seen as a positive outcome. The expansion of the state's wage bill as a proportion of budgetary spending is a concern, but regular and invariably violent annual strikes have been even more destructive to the economy.
Continuing in the same vein, the Congress of South African Trade Unions' (Cosatu's) concession that it has lost the battle to ban labour brokers is to be welcomed, while many of the other proposed amendments to South Africa's labour laws are not. It now seems likely that, when the smoke has cleared, the effect will be largely jobs-neutral, tending towards the negative in some sectors. But the precedent that has been set through the government allowing itself to be influenced by Cosatu to withdraw amendments that had already been thrashed out in the National Economic Development and Labour Council (Nedlac) is concerning.
The same applies to indications that the African National Congress is putting pressure on the government to abandon its yet-to-be-implemented youth wage subsidy in favour of a job-seekers' allowance. The focus on such unsustainable quick-fix solutions to unemployment has to end. South Africa needs long-term policies that address the structural impediments to job creation and, above all, it needs economic growth. As things stand, the government will not deliver either.
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