A few days before last week’s state of the nation address (Sona), in the middle of promises of disruption and despondency, Stats SA published the quarterly labour force survey. This suggested that, notwithstanding marginal improvements in employment creation, the proportion of the population with jobs remained largely unchanged between the third and the fourth quarters of 2019.
But if the SA economy created 45,000 jobs — fewer than during the usual December holiday rush — why did the unemployment rate not improve? The answer to this lies in two related areas of our labour market. Statistician-general Risenga Maluleke observed that it was the first time since the 2007/2008 financial crisis that unemployment did not decline in the fourth quarter. Something is surely happening on the shop floor and at the factory gate.
Despite a marginal annual rise in retail sales in the fourth quarter compared to 2018, a 5.9% year-on-year decline in manufacturing production shows the effect of sluggish demand on production and employment. Employers are weary of the demand conditions in the economy; add to that load-shedding and sector-specific concerns, and it triggers a reluctance to expand production and employ more people.
The second issue relates to the rise in the workforce since the 2007/2008 crisis. There has been a 6.7-million increase in the number of people in SA aged between 15 and 64. This suggests that a 45,000-strong rise in seasonal jobs over the festive period was simply insufficient to move the dial on unemployment, certainly at the scale necessary to avert the social risks of the jobs crisis.
The picture presented by Stats SA also indicates interesting geographic trends, such as a drain of labour from rural provinces such as Limpopo, the Free State and the North West, which saw marginal rises in the workforce, and a rise in urban provinces such as Gauteng. In the latter, the size of the workforce rose from 8.2-million in the fourth quarter of 2008 to 10.4-million in the fourth quarter of 2019. Jobs have been created far slower than the folk entering the marketplace hoping to take them up.
Where have all these new labour market entrants gone, in an economy challenged by not only the creation of jobs but also the retention of existing employment? Recent work by the Southern Africa Labour and Development Research Unit at the University of Cape Town, the Agence Française de Développement and Stats SA on inequality shows churn in the labour market and “zigzag” transitions. More than half of those not economically active in one observation period were likely to be in the same state in successive waves. Conversely, those in regular formal-sector employment were more likely to still be employed in successive observation periods.
Our economy also exhibits weak mechanisms to transition into the labour market those who have experienced periods outside it. Moreover, the data suggests that those looking for jobs have almost the same chance of being in regular employment or giving up the search altogether between observation periods. It is these issues that must be addressed by policy changes.
The remarks in the Sona on the Presidential Youth Employment Initiative are important not only in terms of the cross-cutting nature of the challenge as seen through the suggestion of “top-slicing” 1% of the budget, but also in confronting many of the post-school transitional issues faced by young people. The creation of a pathway management framework for young people working alongside labour centres and other placement ecosystem actors is important.
For these ideas to create “new and innovative ways to support youth entrepreneurship and self-employment”, municipal bylaws and other regulations need to be responsive to growing self-employment initiatives in the informal market and interface with post-school training activities. Put simply, for many of the plans in the vision the president presented, the state has to work better within itself and scale the response to this challenge. The stakes couldn’t be any higher.
• Cawe (@aycawe), a development economist, is MD of Xesibe Holdings and hosts MetroFMTalk on Metro FM.
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