Adcorp Employment Index: Tough decisions needed to address jobs crisis

The Democratic Alliance (DA) notes the release of Adcorp's monthly employment index yesterday with concern. Although there has been some debate about the methods employed by Adcorp in producing this index, the DA believes the results to be indicative of a generally negative trend in our country's employment situation. Political considerations - in particular, the influence wielded by unions - have hampered the ability of successive ANC administrations to effectively tackle unemployment.

If the Zuma administration is serious about tackling this crisis, it needs to start providing decisive leadership and stand up to unrealistic union demands, enact the appropriate reforms to change our regulatory environment and develop and implement labour market interventions that will help to incentivise increased employment. The DA calls on the Zuma administration to take these steps as a matter of urgency.

Thus far, the Zuma administration has shown itself to be incapable of resisting union pressure, and has suggested four labour laws that would make our labour market even more restrictive than is already the case. On the first two counts, the Zuma administration has therefore failed completely.

However, the current government has begun to make some progress with regard to the third objective. Both Finance Minister Pravin Gordhan in his budget speech earlier this year, and President Zuma in his State of the Nation address, have suggested a youth wage subsidy, and some targeted interventions have also been suggested. These are positive developments that the DA supports, but they have not yet been fully implemented - with the youth wage subsidy seemingly stalled for now after Cosatu voiced its disapproval.

Adcorp's survey reveals the impact that this administration's lack of economic direction, and its determination to continue pandering to unions' demands, has had on the ability of ordinary South Africans to find work. The key results of the survey are the following:

• 4.4 million South Africans are currently unemployed;
• 2 million South Africans are permanently discouraged work seekers;
• 2.1 million South Africans are underemployed;
• 61% (2.7 million) officially unemployed South Africans have been unemployed for    more than a year;
• 66% of the unemployed are younger than 35.

The survey also reveals some of the underlying, structural problems in our labour market, such as wage increases that have not been accompanied by commensurate increases in productivity. If one considers this decoupling of wage increases from productivity, and further losses in productivity due to longer and more frequent strikes, it becomes clear that unions themselves have contributed to making employment more difficult in the current labour market. The survey also highlights the negative impact of South Africa's overly-stringent labour legislation, which the ANC has been resistant to change due to union pressure.

In response to this crisis, the DA has proposed several positive interventions in the past, and we will continue fighting for these policies. We believe they will be hugely beneficial to ordinary South Africans who are seeking work. DA proposals in this regard include a general wage subsidy, a tax holiday for newly founded small-scale enterprise, an opportunity voucher for school-leavers, a tax rebate for skills development, making business easier and cheaper by cutting red tape, and reforming our labour laws to make hiring new people much easier. These opportunity-driven policies are the only way out of poverty and unemployment, and into employment and prosperity, for our people.

Statement issued by George Boinamo MP, DA Shadow Deputy Minister of Labour, July 12 2011

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