‘Unprecedented’ jobs crisis has unions up in arms

South Africa was heading for an unprecedented jobs crisis this year which could increase unemployment to nearly half the working-age population, an expert has warned. This as unions and politicians have entered panic mode over the thousands of retrenchments announced by several companies amounting to at least 10,000 people leaving the workforce this year.

Employers shedding jobs included those in the mining sector who blamed low productivity as a result of load shedding as well as global and domestic economic factors.

Head of capital markets research at Intellidex, Peter Attard Montalto, warned that low business sentiment, a lack of investment interest and the perils of state power utility Eskom’s unreliability has seen wide-scale downsizing of businesses.

This as the economy was forecast to only grow by 0.9% in 2020, according to the World Bank.

Montalto said the latest unemployment figures for the fourth quarter of 2019 did not bode well for the near future.

The fact that overall unemployment remained unchanged at 29% despite the annual spike in seasonal jobs, meant that the economy was struggling to absorb the increasing work population.

According to Stats SA’s latest labour data, the working-age population increased by 145,000 or 0.4% in the fourth quarter of 2019 compared to the third quarter of the same year. Year-on-year the working age population increased by 594,000 or 1,6%.

Montalto predicted that unemployment was likely to hover around 41% to 43% by the middle of the year under the current economic climate.

Unions were unsympathetic and collectively blaming government and the private sector for not doing enough to save jobs.

Trade union federation Cosatu’s parliamentary coordinator, Matthew Parks, said employers were largely choosing profits and fat CEO salaries over saving jobs, suggesting that many of the planned retrenchments were preventable.

“Well, it is very difficult to reduce unemployment when you are retrenching thousands of people. There are alternatives which they could have looked into, especially in the mining sector where CEOs can earn R20 million a year, when the mineworkers earn around R150,000 a year. At Telkom the CEO gets paid R12 million a year, why can’t he and the top management take a salary cut?”

Meanwhile, rival trade union federation Saftu and mining union Amcu were set to lead a “militant” campaign against austerity, job losses and mass unemployment. The groups were reaching out to all trade unions and social movements to join their mass action campaign ahead of the 2020 State of the Nation address and national budget speech.

According to Stats SA, the number of workers increased by 45,000 to 16.4 million and the number of unemployed people decreased by 8,000 to 6.7 million in fourth quarter of 2019 compared to the third quarter of 2019, resulting in an increase of 38,000 in the labour force.

The formal sector recorded the largest employment increase of 117,000 followed by agriculture (6,000). Agricultural jobs were up 1% from the third quarter of 2019 and up 4% (or 36,000) from the last quarter of 2018, estimated at 885,000.

Agricultural economist for Agbiz Wandile Sihlobo said South Africa’s agricultural sector had the potential to contribute to employment creation. “The potential improvement in summer crops production, following an 8% expansion in area plantings, coupled with the expected increase in wine grapes production and other fruits could lead to an increase in employment, albeit some of this could be seasonal,” he said.

Accounting firm PricewaterhouseCoopers said the 159,000 jobs lost in the (wholesale and retail) trade sector were a cause for concern as the fourth quarter usually saw an increase in retail employment – and an accompanied decline in the unemployment rate. This was because retailers increased staff for the November (Black Friday) and December (holiday) periods.

– simnikiweh@citizen.co.za

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