COSATU statement on the second quarter unemployment statistics

31 July 2018

The Congress of South African Trade Unions has noted with deep distress the reports showing that the official unemployment rate increased by half a percentage point to 27.2% from 26.7% in the first quarter. The Quarterly Labour Force Survey (QLFS) figures for the second quarter of 2018 released by Statistics South Africa today are depressing to say the least. The figures show that about 90 000 people lost their jobs in the second quarter of this year. This leaves the expanded unemployment rate at 37.2% according to Stats SA.

Both the formal sector and the informal sector recorded employment losses between first and second quarters of 2018 and the industry that recorded the most job losses was manufacturing which accounted for 105,000 jobs. It is alarming to see both the primary sector like mainly agriculture and the all important productive – manufacturing industries that make up the secondary sector all haemorrhaging jobs at such an alarming rate.

This is troubling because in his State of the Nation Address, President Cyril Ramaphosa promised to embark on several measures to address the unemployment challenge.

The policy incoherence, lack of decisive leadership and imagination are the real source of this depressing state of affairs. The fact that no one at the National Treasury still talks about the implementation of most of the “structural reforms” outlined by former Minister Malusi Gigaba in his nine point plan means that government is all over the place. In fact, given the continuing wavering in government and policy confusion, the situation is likely to get worse.

This is happening at a time when we now know from the report released  in August 2017 by Statistics South Africa that more than half of the South African population live in poverty. In fact, the number of people living in extreme poverty (i.e. persons living below the 2015 Food Poverty Line of R441 per person per month) increased by 2,8 million, to nearly 14 million. Women, children and the elderly are the hardest hit by poverty. This reality of the deepening and widening poverty was also confirmed by the South African Reserve Bank (SARB), which reported that ‘in per capita terms South Africans are poorer than they were in 2014.

Since the adoption of the NDP by the ANC led government in 2013, the country’s fifth administration continues to preside over economic contraction and job-losses, despite the fact that the mandate from the ANC 53rd Mangaung Conference was for urgency and determination in turning around this trajectory in pursuance of the radical second phase of our transition.

As COSATU, we still continue to argue that the adoption of the NDP in its current form was a mistake. It represented an end to the attempt to forge an alignment of the macroeconomic policies, in particular the monetary policy, with the industrial policy and job-creation as proposed in the New Growth Path. The NDP chapters on macroeconomic and labour market policies continue to represent a return to the same old failed conservative policies inherited from GEAR.

Statistics South Africa and even the IMF have argued that that black Africans and coloureds require more intervention from the state to help them move out of poverty compared to white and Indians/Asians. Our government’s failure to drive economic recovery is deeply regrettable.

This unemployment situation is likely to get worse because there is currently no sense of urgency in discussing and developing responses to automation and mechanisation in the country. The technological advancement in robotics, automation and artificial intelligence is only welcomed if it makes the life of the workers better. Replacing workers with machines will indeed make the plight of workers worse and we therefore need a government led intervention to cushion the workers from the effects of this so-called fourth industrial revolution.

Currently, the South African Labour law allows firms to dismiss workers because of adoption of technology; section 189’s definition of operational requirements includes adoption of technology. Already the law favours the replacement of labour with capital/machines.

COSATU expects both government and business come to the presidential jobs summit with serious plans and proposals.  We are worried that so far in the task teams they are sending junior officials with no ideas  nor proposals.

The priority should be to ensure that big business abandons its investment strike. Big Business still benefits from tax breaks since the Company Income Tax was reduced to 28% from 34% five years ago. It can't simply be government that is supposed to secure investment and create jobs , while companies are not pulling their weight.

There are priority sectors where we can quickly create jobs ,like  water, energy, recycling, land reforestation, transport etc. But government and business must stop dilly dallying and play ball. Ministers, Mec’s and Mayors who have no jobs plans must be fired.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 31 July 2018