The prospects of newly appointed employment and labour minister Thulas Nxesi creating much needed jobs are near impossible, analysts say.
They argue that Nxesi is being set up for failure if fundamental issues preventing employment in SA are not dealt with.
Nxesi, the former public works, and sports minister, is the deputy national chair of the SA Communist Party (SACP). He also had a stint as the general secretary of the SA Democratic Teachers’ Union.
His appointment to President Cyril Ramaphosa’s reconfigured cabinet comes a few weeks after data from Statistics SA revealed that the unemployment rate jumped 0.5 percentage points to 27.6% in the first quarter of 2019.
The economy lost 237,000 jobs in the first quarter of 2019, and the leading sector was construction, which shed 142,000 jobs, followed by finance (94,000), and community and social services (50,000). Private households shed 31,000 jobs, mining 20,000 and agriculture 12,000.
When asked how he will turn the situation around and assist in creating jobs to reignite the economy, Nxesi said he has not yet assumed his duties.
“I still need a briefing from the departmental officials.”
Econometrix chief economist Azar Jammine noted that unless the bottlenecks to job creation are addressed, “they are setting themselves up for failure”.
The government should implement appropriate education and skills development policies that will render more South Africans employable.
“Job creation is growing more slowly in the formal sector than the economy itself. This has been going on for an entire decade,” Jammine said.
This means there is something they are doing right that we are doing wrong [and] that has to do with the freedom of the labour market
— Econometrix chief economist Azar Jammine
The embattled SA economy, Africa’s largest and most industrialised, grew 1.3% in 2017 and tanked to 0.8% in 2018. The World Bank projects 1.3% and 1.7% growth in 2019 and 2020 respectively.
Jammine said the government should improve the labour market as jobs are being lost because of improvements in technology.
Despite the US being the leaders of technology worldwide, it has the lowest unemployment rate in nearly 50 years, he noted.
“This means there is something they are doing right that we are doing wrong [and] that has to do with the freedom of the labour market.”
Jammine said unless some of the basic issues preventing unemployment are tackled, “we won’t improve in creating jobs”.
Wits School of Economics senior lecturer Lumkile Mondi said the economy requires serious restructuring from what he described as the “existing minerals and energy complex”.
“I don’t think we are going to see many jobs being created until we restructure all the laws that talk to employment equity and empowerment,” Mondi said.
Requires job losses
The government has not entertained the possibility of restructuring the economy because of its alliance partners, the SACP and labour federation Cosatu, he said.
“Restructuring the economy requires job losses in the short term, but in the medium to long term it will result in a highly competitive market and more jobs being created,” Mondi noted.
Labour consultant Tony Healy said the creation of the employment and labour department is meant to project the image that the cabinet now has a ministry that has employment as one of its responsibilities, rather than a focus on employment law regulations and compliance.
He said the department could only do so much in enhancing the private sector’s potential to grow jobs.
“Employment is going to come from the private sector, not the public sector. I think the focus is going to be job creation and job security. How do you improve job security, on the one hand, and enhance employment on the other?”
Healy said that job growth in the private sector has to follow an upward trend in GDP, and that government policy, and consumer and investor confidence would help steady the ship.
Power cuts
“The one ministry is not on its own going to enhance employment.”
Healy added that power cuts discourage investment and negatively affect small, medium-sized and micro enterprises. If they are not dealt with it will result in a “limited ability to impact positively on jobs” by the state.
Miriam Altman, commissioner in the National Planning Commission, says a ministry that is explicitly responsible for employment is a great idea. She noted that the proposal to have a ministry, or at least an office, focused on employment was put forward after the 1998 Presidential Jobs Summit, for which she had been the programme leader.
Altman said more focused attention is needed to shift the economy to a more employment-oriented path, and stressed that Nxesi could not be expected to create jobs.
“Instead, his role will be to ensure effective orchestration across government to achieve National Development Plan employment-creation goals.”
Nxesi has to strengthen the functioning of the labour market and ensure that access to education “is such that it is more aligned to employers’ needs and that young people have access to employment opportunities”.
Altman said the construction sector could help to stimulate economic activity through big infrastructure projects and through smaller housing delivery. Infrastructure spending was meant to have stimulated the economy.
“It is imperative that capacity be strengthened in project preparation, procurement, [and] municipal executive management. The government will have to work with the construction sector to rebuild and attract skills back to SA,” Altman said.
“How the different coordinating offices in government, such as the national planning commission, the department of planning, monitoring and evaluation, the new policy office in the presidency, and this new ministry, dovetail still needs to be seen.”
Efficient Group chief economist Dawie Roodt said a lack of job creation, not unemployment, is SA’s problem. “That department should be replaced by a department that will get rid of obstacles to economic growth. To grow the economy, they must protect private property rights, get rid of corruption, and reduce taxes,” he said.
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