Every country subjected to a Covid-19 lockdown needs to be decisive and strategic in formulating its economic recovery plan from the pandemic. For countries that already had poor economic fundamentals the pathway to recovery is laden with pitfalls and exogenous influences that will be a monumental challenge to overcome.
Variables relating to unemployment, ease of credit for businesses and income and wealth inequality will become the primary prism through which the success or otherwise of the economic recovery process is best analysed. This week’s Stats SA unemployment data delivered the expected (a rise in unemployment) and the sobering (the sheer volume of young people out of work).
The primary indicator, the unemployment rate, reached a record high of 30,1%, which translates to more than 7-million people actively seeking employment and struggling to get it. An important feature of the unemployment reports is the distinction made between those actively seeking work but failing to get it and those who no longer bother to look. Including this group of the discouraged and disillusioned into the conversation gives a figure of 10,8-million working-age citizens now jobless.
The sobering aspect of this data is that a high number (72%) of the unemployed are classified as “long-term unemployed”, which means they have been in the job seekers market for more than a year. The known reality is that the time lag between jobs has adverse consequences for job seekers. The longer one remains unemployed with no alternative income the more expensive the pursuit of a job becomes. That long-term job seekers dominate the unemployed group even before we incorporate the discouraged indicates the abject failure of our economy to deal with its most crucial fault line.
That SA has a jobs crisis warrants no repeating. What policymakers and business leaders can take away from the latest report, however, is the data relating to which sectors tend to punch above their weight in the employment conversation. Sectors that absorb a greater share of the workforce in relation to their overall GDP contribution warrant special attention from all of us. The trade sector contributed just 16,6% of nominal GPD but absorbs 20% of the workforce. Construction and agriculture collectively contribute 4,6% to GDP but carry 13,5% of the workforce. These indicators may be reflective of the lower average wage in those sectors, but more importantly in times of high unemployment may represent the best way to initiate large scale work opportunities that give more people an opportunity to work.
Last week, in a conversation I participated in alongside tourism minister Nkhensani Kubayi-Ngubane, the tourism sector was also highlighted as a sector that punches above its weight in this regard. Data from the World Tourism Council indicates that across 10 countries surveyed the tourism sector employs more young people than other sectors. In seven of the 10 countries the youth employment share of the sector is double that of the overall economy. Barriers to access — in terms of skills and educational levels to access a job opportunity — are also lower compared with other sectors.
When one looks at SA’s youth unemployment figures — 59% of the youth are unemployed and remain less employable than other age groups regardless of educational levels — the solution to the employment crisis has to focus on giving life to sectors that illustrate such trends. As the country gradually eases its lockdown, this sector should be the focus of the national response to a pandemic that threatens to condemn a generation of young people to the economic margins for a long time to come.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
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