S Africans will get poorer – economist

South African flag. Picture: Refilwe Modise

South African flag. Picture: Refilwe Modise

South Africans are in a depressingly “perfect storm” economically, and are only going to get poorer in the coming year, respected economist Mike Schussler has cautioned.

The only relief for the pockets of some comes in 2021, when South Africans will become 1% richer – while the rest of the world stands to increase its wealth by 17%. Presenting the 15th South African Employment Report yesterday, Schussler restated the unemployment rate at 25%.

In the next few years, the gross domestic product will be stagnant and inflation will rise, and the next decade “will be more about keeping jobs than creating them”, Schussler said in Johannesburg. “South Africans are going to get poorer in 2017. At the moment the way things are, these are going to be hard and tough times.

“Our economic growth has slowed substantially. This is the period where you start saying I have got to let things go.” Schussler pointed to sluggish worldwide growth where there “really hasn’t been any sort of upgrade”. There was also no glimmer of hope in relying on the mining industry, which will continue to see low commodity prices, slower employment and more job losses.

“Platinum is in trouble, as it hasn’t gone up more than the Consumer Price Index. There are clear indications that large retrenchments loom in this industry. It’s quite clear that mining is a sunset industry … Nobody wants to be in mining anymore, except the Guptas,” he said, adding that employee costs were the industry’s second biggest expense.

Reflecting on events that had contributed to the declining financial viability of the sector, Schussler said a 1987 strike, led by now Deputy President Cyril Ramaphosa, saw miners receive “very good increases”. Unemployment rates in the sector thereafter increased, as labour became more expensive. Schussler said in the next three to four years this industry would be more affected than others.

The manufacturing industry was, meanwhile, also in crunch mode, currently employing the same number of people it did in 1971. This industry was also severely impacted by the 2008 financial crisis. At a utility level, electricity production was currently also below the levels of 2008.

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