SA’s unemployment rate is still catastrophic at 34.5% in the first quarter of 2022, even if it’s less of a catastrophe than the record 35.3% in the fourth quarter of 2021.
One thing the latest official figures suggest is how much methodology matters. Statistics SA is getting back to the way it used to do the labour force survey before the pandemic, with the result that it’s as hard as ever to tell to what extent the trends reflect reality vs methodology. But another thing the figures touch on is the role government’s jobs programmes seem to be playing — programmes that have lately been the subject of an important debate, at the centre of which are a couple of former senior Treasury officials.
The previous figures raised some economic eyebrows because they were based on a response rate so low that it was hard to believe they could be accurate. When the Covid lockdowns began early in 2020, Stats SA switched from face-to-face interviewing of the households it samples for the quarterly labour force survey to telephone interviews. Inevitably, that introduced bias and also made it harder to get responses.
By the fourth quarter, the response rate had fallen to just 44% — from well over 90% prepandemic — with ultra-low rates in the economic heartland provinces of Gauteng and Western Cape. Happily, in the first quarter of 2022 the statistics agency sent some fieldworkers back into the field, partly using face-to-face and telephonic interviewing. The response rate jumped to more than 64% (even if among the good citizens of Johannesburg it was still just 23%). From now on the surveys will be fully face-to-face so quality should keep improving. Meanwhile, though, there’s plenty of “noise” in the numbers, as economists say.
Numbers for 2021 may well have undercounted the recovery in employment. The latest numbers show an unexpectedly big jump, with a net 370,000 jobs created in the first quarter, which more typically sees a seasonal drop. The unemployment rate tends to be driven as much by work-seeking behaviour as by job growth, with a rather odd jump in the number of “discouraged” workers helping this time to reduce the rate. But there were some oddities too on the employment side, which suggest all is not yet normal.
For instance, domestic work was an inexplicably large swing factor, losing 186,000 jobs during the quarter after gaining 126,000 in the previous quarter. And, tellingly, the community and social services sector accounted for the bulk (281,000) of the jobs that were created — a sector Standard Bank economist Elna Moolman points out typically captures government’s temporary employment programmes. Indeed, given the large scale of the rollout of these programmes during the lockdown, she is surprised they didn’t contribute more.
The government has put various public works programmes in place since 1994. The old established extended public works and community works programmes are still going and were allocated R6.1bn in this year’s budget. But President Cyril Ramaphosa added a new presidential employment initiative to that as part of his Covid package, and the government is spending R9.2bn a year on the new programme, so a total of R15bn on public employment annually. Former Treasury deputy director-general Andrew Donaldson has sounded a strong call for these public employment programmes to be scaled up significantly and made more permanent.
At a time when government has extended the Covid special relief of distress grant, which targets those same unemployed young people, Donaldson is arguing that a better balance is needed between spending on grants and public employment. Even if structural reforms will help lift growth eventually, that will take time to create jobs in meaningful numbers and some form of public employment is needed to fill the gap — so the argument goes.
It certainly looks like the president, who has conceded that SA needs some sort of basic income grant, is also trying to respond to the critics — including in his own presidential economic advisory council — who urge that the focus should rather be on jobs. But should those jobs be temporary posts funded with taxpayers money? Or should we be pushing much harder to get the economic growth that would create sustainable private sector jobs, which would cost taxpayers nothing?
Instead of proper policy debates that take a holistic look at how best and even whether to spend government money on job creation, the president’s jobs programme is politically driven. Former Treasury deputy director-general Michael Sachs says: “The president is backing the basic income grant and this presidential employment initiative. If he had a serious growth strategy these could be good complements, but in the absence of being serious about growth they become substitutes.”
The presidency has said the new programme addresses many of the shortcomings of the older public works programmes. But Sachs asks why a new programme was launched on top of the old ones, instead of just closing them if they were deemed to have failed. He draws attention to the contradiction within a government that it is committed to fiscal consolidation and curbing the public sector wage bill but is at the same time employing workers in public programmes who could end up being permanent and expensive.
Public sector trade unions have pushed successfully for some of the community health workers in these programmes to be employed permanently. There is a push to do the same for the young teacher assistants who are the bulk of the presidential jobs and account for about R6bn of the spending. There may well be educational spinoffs, but their employment is the result of a presidential pet project, not of policy choices about whether education is better served by teacher assistants or more teachers, Sachs notes.
There’s a similar lack of policy discussion about whether government should be spending money on temporarily hiring unemployed youth itself — or on providing more incentives for the private sector to hire and train them. In a context in which there are ever more calls on a public purse that is likely to be ever more constrained as the economy slows, these are real trade-offs — which government is studiously avoiding.
• Joffe is editor-at-large.
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