The Annual Labour Market Bulletin (ALMB) report released by the Department of Labour (DoL) says South Africa might need to strengthen job centred policies to reduce the risk of growing long-term unemployment.
According to the Department’s ALMB financial year 2010/11, “well designed active labour market policies, work sharing arrangements and targeted measures to support vulnerable groups, notably youth,” are some of issues to be considered on the policy front.
The ALMB is produced by the DoL’s Labour Market Policy unit and is divided into into three main sections. The first section examines the performance of the South African economy. In this section, the emphasis is put on the comparative trends analysis between Brazil, Russia, India, China and South Africa (BRICS).
Further, South African provincial commitments to job creation are also presented in response to the call made by the South African President Jacob Zuma in his State of the Nation address in 2011. The report also analyses the labour market trends over the financial year ended March 2011 and concludes with certain policy views to be considered in line with those economic and labour markets indicator changes.
The report said on the labour market front the financial year 2008/09 proved to be an extremely challenging year economically with revenues remaining relatively flat, firms focusing on cost cutting. Ultimately, a sharp drop in economic activity led to dismissals, mass-layoffs, plant closures and hiring freezes which all still contributing to high unemployment in the country. It is noted that over one million jobs have been lost across sectors in the economy during recession.
The report further adds that South Africa needs to strengthen domestic industries like agriculture and construction so that the low and semi-skilled unemployed youth can be absorbed into these industries. It stressed that the agriculture and construction sector have a high propensity to absorb the growing army of job seekers in the short-term, unlike other sectors where skilling is key and take long to realise.
Department of Labour, director of Labour Market Information and Statistics Abrahams Mutedi said the persisting unemployment situation also calls for development of job specific projects for the unskilled and put focus on variables like wage subsidy to cushion the burden towards the unemployed.
The report further adds that South Africa needs to strengthen domestic industries like agriculture and construction so that the low and semi-skilled unemployed youth can be absorbed into these industries.
Mutedi said the agriculture and construction sector have a high propensity to swallow the growing army of job seekers in the short term, unlike other sector where skilling is key and take long to realise.
Another important measure, said the ALMB to consider in order to increase employment in the long run is to reduce the mismatch between job seekers and job opportunities and better access to credit for small medium and micro enterprises (SMME’s).
In its section one, the report emphasises the political and economical shift of the South African economy by exploring the advantages and disadvantages of being one of the five emerging economies - Brazil, Russia, Indian, China and South Africa (BRICS). Thus, the report details a brief comparative trends analysis looking at key economic and labour market indicators over time.
The report said for South Africa, BRICS alliance will come with its pros and cons. However, South Africa has accepted these opportunities as a tough competition which will offer a lucrative market for goods and services and improvement of the South African labour market. Although it was difficult to ascertain when SA would start seeing tangible results of belonging to BRICS, it is reported that the next five to 10 years would be critical, “the key will be the extent and willingness to which member countries open their economies to SA exports”.
Meanwhile, the report said provincial initiatives to the country’s job-creation targets comes on the backdrop of the government’s declared intention towards the developmental state which means that it would intervene in the economy to ensure redress of past inequalities; eradicate poverty. The intention of the provincial outlook in the report was to highlight the contribution and role being played by the provinces in job creation.
On the other hand, the report stressed that the Department of Labour is indirectly contributing towards jobs creation through intense investment in the Public Investment Corporation (PIC). For example, the Unemployment Insurance Fund has invested 68% (about R35 billion) out of its R52 billion, in commercial social responsible investment portfolio, which includes central government, municipalities and parastatal bonds and money market investment infrastructure projects that create and sustain jobs.
“Despite reasonable economic growth, the South African economy remained deeply inequitable with the highest official unemployment rate (25%) of any middle income country. Nearly two years after the economic recovery officially began; job creation continues to stagger at the slowest post-recession rate.
The economy has lost 14 000 jobs in the first quarter of 2011 after a gain of 157 000 in the fourth quarter of 2010. This proves that there is still a lot of uncertainty about economic recovery associated with the poor performance of the labour market.” the report said.
According to Unemployment Insurance Fund’s data, in every financial year, a large proportion of claimants reported that end of contract was the main reason of terminations, followed by dismissals and retrenchments. This indicates that there is still existence of casualisation in the SA labour market and African youth remain the most vulnerable in the SA labour market as most of them have low educational achievements, skills and experience.
The report emphasised that, “while our labour laws are not rigid”, it appears that the Department needs to encourage investment in projects that can create decent work on a large scale including improving conditions for marginal workers.
In terms of industrial action through strikes, a total of 154 279 cases were handled by the CCMA in the financial year 2010/11. This represents an increase of about 0.4% from a total of 153 657 in the previous financial year. The report said.
In its conclusion, the report stresses the “Government needs to ensure that the economy recovers fully from the recession to boost trend growth and thereby create the five million jobs required to reduce unemployment by 2020”. Labour market policies aimed at gains in labour productivity with increased real wages are also essential, and this must be underpinned by social dialogue between workers, employers and Government,” the report said.
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