COSATU statement on the first quarter unemployment figures

23 June 2020

The Congress of South African Trade Unions has noted the latest quarterly employment statistics showing that unemployment rose by a percentage point from 29,1 to 30,1% in the first quarter of 2020. This is the first signal of the economic firestorm facing this country.

The latest unemployment figures are an initial snapshot of the devastating impacts of covid-19 still on jobs and the economy. In comparison to last year, there are now 900 000 more people who have become jobless. The total impacts on jobs by the pandemic is not yet accurately captured in the statistics because the majority of section 189 notices are in the CCMA, the full extent of the lockdown will become clearer when the labour statistics for the second quarter are released by STATS SA. 

These first quarter numbers hide the reality of what is on the horizon. The federation believes that with the explosion of Covid-19 and the subsequent global and domestic lockdown, the situation is now far worse.  We fear that unemployment will soon in fact approach 50% in the expanded definition. 

Employers in both the private and public sectors have already begun mass retrenchments. Surveys have indicated that half of the employers receiving the UIF Covid-19 TERS relief are likely to retrench on average 20% of their workers. This is calamitous considering that youth unemployment is already at 41,7%.

This means that millions of families will be plunged deeper into poverty and this will also erode the much-needed domestic demand trapping the economy in a vicious cycle. These figures have nothing to do with the outbreak of Covid-19 but can be attributed to the misguided macroeconomic policy framework that has been implemented over the years.

The policymakers have an opportunity to redeem themselves starting with tomorrow’s supplementary budget. Our rising unemployment rate is already at a catastrophic scale – which loudly calls for a paradigm shift away from the Neoliberal macroeconomic straitjacket. This budget should herald a new dawn characterised by an alternative economic development strategy to get out of this economic quagmire.  We need an economic framework of monetary and fiscal policies that places employment creation as a priority. This must include:

Government abandoning its austerity measures and draconian cuts in the public service to stop the economy plunging into a deeper depression.

- A massive infrastructure spending and a stimulus package of more than R1 trillion.

- Encourage and compel local businesses to support the “Buy Local” Campaign to increase local production and stimulate job creation.

- Give substantial support to key strategic economic sectors on condition that they retain jobs (manufacturing, retail, hospitality, tourism, entertainment, and transport) to help create jobs and rebuild the economy. 

- Develop a labour-intensive green energy sector that will absorb jobs lost and become a key job creator for youths currently unemployed

- Impose tighter capital controls to maximise the resources available for productive domestic investment.

- Tax companies that are engaged in cash hoarding.

- Reduce the red-tape and improve co-ordination between government agencies and departments that are supposed to help SMEs. 

- Help and incentivise small businesses to encourage new business development. An increase in the number of start-up businesses will help with unemployment and tax revenue

- Improve access to affordable finance because mainstream banks and financial institutions have failed small businesses.

All indications are that we are in a deep hole and only decisive action from the government will save us from a job’s bloodbath.  Whilst the UIF Covid-19 relief of more than R40 billion to help workers struggling was designed to avoid the scale of job losses we experienced in 2008, where a million jobs were lost, it is clear that this will not be enough. 

More assistance must be given to help workers who have lost wages and jobs.  And critically to help fragile economic sectors reeling from Covid-19.  This support cannot only come from the UIF, but the government and the private sector need to contribute. The banks, investment funds, and the insurance industry must show meaningful solidarity.  Their contributions to date have been very minimal.

COSATU wants to see all companies receiving relief from the government to be compelled to retain workers. All companies that retrench should not receive any assistance from the government. Any public stimulus funding must be conditional on job retention and incentivised for job creation.

We cannot bail out companies with public funds, only to see those same companies dump workers on the unemployment scrapheap.

Issued Sizwe Pamla, National Spokesperson, COSATU, 23 June 2020