Harmful policies worsen unemployment – Solidariteit
Trade union Solidarity today expressed its concern over and shock at the current unemployment levels in South Africa. According to figures released by Statistics South Africa yesterday, unemployment in its broad definition increased in the first quarter of 2017 to 36,4% from the 35,6% in Q4 of 2016. This means an estimated 9,3 million people in South Africa want to work, but don’t have work.
According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute (SRI), it is particularly worrying that unemployment has not come down even amid more favourable macroeconomic conditions that prevailed during the first quarter of 2017.
“The first quarter of 2017 coincided with, among other things, a stronger rand and higher international commodity prices. It was also before the aftermath of the Pravin Gordhan fiasco. Even under those more favourable conditions in the first quarter of 2017, employment could not grow sufficiently to reduce unemployment in the least; on the contrary, it increased,” Van Onselen said.
“This is indicative of an economy that is inhibited on a large scale by a harmful policy. Due to the ANC’s economic policy the market is unable to perform in such a way as to adapt to new macroeconomic realities. Investment is discouraged by policy uncertainty and harmful policies that increase the risks associated with private enterprise. This means that production and associated employment are largely suppressed,” Van Onselen explained.
According to Van Onselen, the proposed national minimum wage applicable to a largely young and low-skilled population of working age, and which will come into force in 2018, is a telling example of such policy blunders. “It is self-evident that it will create a further barrier for young and low-skilled persons to enter employment. Unemployment figures in respect of the younger age groups are already disconcerting – 41% for those in the age group of 25-34 years,” Van Onselen said.
“The fact is that the current policy, with an increasing focus on ‘radical economic transformation’ is inhibiting the possibility of a vibrant economy and the strong employment that should result from it. Under these circumstances, the Solidarity Research Institute does not expect the unemployment rate to improve significantly in South Africa,” Van Onselen said.
What is called for is that government should radically do away with harmful policies that fly in the face of freer markets. This has to be done so the market can start performing again in order to save South Africa from further economic decline,” Van Onselen said.
Statement issued by Gerhard van Onselen, Economics Researcher: Solidarity Research Institute, 2 June 2017
