Unemployment crisis: SA seeing effects of ‘a very weak policy environment’, say experts

Jobless South Africans have lost all hope in government as they continue to bear the brunt of unemployment, following Statistics South Africa’s report that the unemployment rate hit a record high in the fourth quarter of last year, crossing the 35% threshold.

Unemployed graduate Gaopalelwe Khunou said this was a clear indication of the deepening job crisis the country was facing.

“I’m surprised that I’m shocked because at this point nothing should shock me.

“I’ve been job hunting for more than four years with no luck, so I guess it shouldn’t have come as a surprise,” he said.

“I’m very disappointed that the government we voted for can never fulfil its promises and, just like Covid, we have to learn to live with the R350 grant and our record-breaking unemployment.”

Compared to the same period in 2020, the expanded unemployment rate – people who are employable but have given up looking for work – increased by 3.6% to 46.2%. Political economy analyst Daniel Silke said it was not surprising unemployment had increased as there was no large-scale investment in the country.

In addition, state-owned enterprises were continuing to weaken while business confidence remained low. “I think we are simply seeing the effects of a very weak policy environment, combined with a lack of investor confidence, both foreign and domestic,” Silke said.

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“And Covid has obviously not helped the situation.”

According to Don Consultancy Group chief economist Chifi Mhango, the Quarterly Labour Force Survey revealed that job creation and retention continued to be a challenge within key traditional sectors of the economy as the unemployment rate increased.

“The government has continued to emphasise the need for job creation.

“However, the Quarterly Labour Force Survey data clearly reflects the challenge that the government faces,” Mhango said.

“The data reveals that not only are jobs not being created in key traditional sectors of the economy, but also there is a challenge of job retention due to de-industrialisation in the South African economy.

“This is depicted in the declining share of key traditional sectors’ contribution to gross domestic product.”

Mhango also said speedy policy implementation and proper alignment of government job creation initiatives were key to dealing with rising unemployment.

“Job creation and retention involves the active participation of both the private and public sector through investment into the economy, in a conducive environment,” he added.

“However, an environment of high electricity costs, unreliable electricity supply, rising logistical costs and an inefficient railway system, among others, only derails job creation, as it’s unsustainable to investment in such an economy.”

Global Business Solutions human resources expert John Botha said pending legislation might exacerbate the unemployment landscape.

“Specifically, the Employment Equity Amendment Act has been identified as having a potentially detrimental impact on employment levels for a number of reasons. These include the fact that employers with more than 50 employees have to fully comply,” Botha said.

“Further to this, we have the pending Employment Services Act amendments, which will significantly impact the employment of foreign nationals by imposing strict skills justifications if they are to be employed.”

With potentially up to 500 000 foreign nationals exiting the SA labour market, Botha said it was unlikely that employers would replace all these positions as it would be an opportunity to re-engineer.

The Congress of South African Trade Unions (Cosatu) said the real danger was that the all-time high rate of unemployment might rise further in the next quarter as the war in Ukraine unfolded and the global oil and domestic fuel prices skyrocketed.

“This is very alarming because it means that in no time, about 50% of people in the working-age population will be officially unemployed,” Cosatu said.

“What has backfired, is the government’s decision to suffocate the economy by implementing a framework of economic policies that do not make employment creation a priority, but are geared at reducing the budget deficit and containing the debt burden.”

– reitumetsem@citizen.co.za