South African President Cyril Ramaphosa names job creation among his primary objectives for 2018. The country has abysmal levels of unemployment, a problem afflicting its youth most especially. As a result, the president has called public and civil society organisations to a national Jobs Summit which will take place from 4-5 October 2018. Mphuthumi Nthabeni looks at the panorama of joblessness in the country and asks what it might need to address if this is to change swiftly.
Statistics South Africa recently released the Quarterly Labour Force Survey (QLS). The study shows that the official South African unemployment rate has surged by 0,5%, to 27,2% in the second quarter of 2018.
To understand how dire the jobs situation is, consider the fact that the West generally regards 13% unemployment to be a sign that the country is in an economic recession or crisis. We saw this at the very outset of the 2008 financial crisis in the US, long before the mortgage (home loans) meltdown brought the crisis to a head.
International governments have declared a state of economic emergency once their country goes beyond the 13% unemployment threshold. They usher in, what in economic jargon is termed, a Marshall Plan.
In Greece and Argentina for instance, we saw devastating riots and protests by citizens, as soon as the unemployment rate hit 18%. Which is why I’m amazed to see the tolerance of my fellow South Africans given our present state of affairs.
President Cyril Ramaphosa during the 2018 State of the Nation address declared, as part of his New Plan, that his government’s agenda for 2018 would be job creation, especially for the youth.
The QLS shows that despite the growth in employment, of 206 000 jobs during the second quarter, the unemployment rate of young people was still at 52,4%. Also worrying is that the proportion of those of a working age that are employed, known as the absorption rate, is at only 12,2%.
The Jobs Summit (JS) convened by the President from 4-5 October is supposed to tackle these surging levels of unemployment in the country.
Speaking after the ruling party lekgotla (national meeting), President Ramaphosa said that the JS will come up with and focus upon “high-impact interventions to drive job creation, job retention and economic growth.”
It’ll bring together government, business, labour and community organisations. These will come together to advance job creation and provide a platform for open discussion on the challenges facing social partners in the creation of jobs.
It is not clear how the discussant stakeholders have been invited. A lack of transparency is fast becoming the bane of Ramaphosa’s administration as in the Zuma years. If this continues it shall soon be his undoing in this information age, where transparency seems to be the only oil capable of priming the public’s trust.
The National Economic Development and Labour Council (NEDLAC), is supposed to be the vehicle to bring together government and civil society organisations.
Unfortunately, I think it has lost much credibility: falling short of its neutrality mandate by becoming just another politicised ally of the ruling party. Like COSATU, in the public eye, its credibility has been mortally wounded.
Of major interest in this JS is the fact that is has been welcomed not only by public but also by private enterprises. Our private sector appears to have gone into hiding. It will be good to see them emerging and putting their shoulders to the wheels of our development to boost the national economy.
According to the government’s unrealistic National Development Plan (NDP), it aims to raise employment by 11 million, to 24 million by 2030. Even if the recently announced economic stimulus package to revive and boost our economy were to take effect, there’s a very slim chance that we would achieve those figures by 2030.
President Ramaphosa said the stimulus package would provide a fertile ground for the upcoming Jobs Summit and the Investment Conference later in October. I believe him. But even this will still not be enough.
The International Monetary Fund (IMF) has also warned of rising public debt and the possibility of bailouts to state-owned companies (SOEs), placing even further pressure on our fiscus.
In my opinion, this is just a silly wolf crying, considering that the “the stimulus package will be based on existing budgetary resources and the pursuit of new investments while remaining committed to fiscal prudence”, as president Ramaphosa indicated.
The general fear is that those like Transnet and Eskom, who have been bailed out by China Development Bank, will be lost to our Eastern neighbours if the bank forecloses. But, I still choose to be optimistic and assume that good financial governance within these institutions forms part of the terms of the loan agreement.
I keep asking. If the South African economy doesn’t piggyback on the amiable Sino-Afro relations at its disposal what are the alternatives – except going up in flames?
Whether we like it or not the Chinese’s economy is rapidly becoming the number one world economy. This will probably happen in the next decade given its present growth trend as reported by The Economist.
Bretton Woods institutions and Western governments are good at warning Africans of Sino debt-trap-diplomacy, but the facts are plain. SA owes less than 3% of its GDP to China. Kenya, the African country that has the highest debt to China, still only owes 7% of its GDP. Significantly, on the contrary, the US has to pay back the equivalent of 19% of its GDP. In cold numbers, it owes China a gargantuan 1,18 trillion USD, the largest and unhealthiest debt of any country in the world.
Perhaps it is time that African states start preaching back to countries like the US: Physician, heal thyself first.