Unemployment - the numbers and implications for South Africa

4

CDE

debbt-es I!

Unemployment - the numbers and implications for South Africa 1996

CDE held itsfourth debate on 30 September

The speakers were Labour Minister Tito

Mboweni, CDE board member and independent consultant Professor Lawrie Schlemmer, and Thandi Mathibela, president of the National Association of WOmen Business Owners and director of her own company, Thandi's Kitchen Centre (Pty) Ltd, in Diepklooj; Soweto.

Ms Mathibela is also a board member of Ktsika Enterprise Promotion Agency, an agency of the Department of Trade and Industry. The debate was chaired by CDE board member Jabu Mabuza of SA Breweries.

ing that the issue of unemployment covers two matters: the statistics of unemployment, Tito Mboweni opened the debate by SOY-I

ood Ihe ;mpl;mlio", 1m Ihe coocl,y. oce:

WHAT

ARE THE CDE DEBATES"

~--

•

1996 and 1997 CDE will . run a series 0f db' e ates on tOpiCS 0f DUling

could spend most of this debate discussing the definition of employment in terms of the

-

--

and a further 350 000 earning less than R200 a month. How did the enumerators dif76000 people employed at no income at all

'"ool;ole

be"ooo .we

employed 1m oc

income and those employed income?

for a minimal

nature of work, income levels and the informal sector. Given the complexity of deflnl-

crucial importance

to current nation-

These measurement difficulti~s led the International labour Organisation s 1996

tion, the measurement proves difficult.

al policy issues. The intention is to air '"

report on South Africa to argue that this country should focus on poverty, not unem-

(CSS)

Issues underlYing the tOpiC and to

ployment.

provide quarterly figures for all industries except agriculture.

These are taken from

raise the challenges that must be met

reflects an industrialised economy where most of the workforce has a realistic chance

samples of formal sector companies.

by the players and the policy mak-

at a formal sector job. The term fits poorly in

The Central

of

Statistical

unemployment Services

As the

II'

government succeeds in encouraging small, medium and micro size enterprises in South Africa, should

ers. Fo oWing

so the CSS formal sector figures reflect a shrinking share of total

employment.

But do these statistics reflect a

third world economies such as that of South Africa. One can agree that poverty in South

e ate I CDE

Africa results largely from the lack of employment opportunities, including self-em ploy-

the event. These will be widely

ment, which

t 'b t d d rl U e an

comprehensive measure of employment since it samples the labour force rather than employers. Still some anomalies emerge.

contribution

all, the 1994

h d b

of 'unemployment'

will publish a pamphlet summarising

fair indication of the trends? The CSS O cto b er H ouse h0 Id S'd urvey provi .es a more

Above

eac

The concept

pu

dis-

bl" d CDEI IClse as s

to keeping

will generate

an income ade-

quote to provide an acceptable standard of I"IVlng. The IlO ma d e an Impor . tan t pOIn: . t

the debate

being employed does not mean that the person has risen above poverty.

These caveats made, the trends in for-

,

alive,

survey reports some

mal sector employment should be examined .

•••••

~

....JJ

The two years since the election have brought about a stabilisation employment

in this sector rather than growth.

formal employment overall

dropped

employment

grew

by 300000. by a few

of

to 1993,

From 1994

to 1995,

percentage

points.

All

work, and the expanded

definition

is those who are unemployed

either looking or not looking for work. When one compares

From 1989

1994

new

figures

with

other

middle-level

industrialising

Chile, Turkey, Philippines and Bangladesh,

employment was created by the public sector (civil service, local and

of people

lower. Furthermore, these other four countries

The latest data from the CSS (released September cates that total employment declined quarter of 1996.

1996)

that unemployment

Africans account

for virtually all unemployed

some 98

per cent of that total - and

employed,

including self-employed.

the unemployed,

quarter of African women who count as 'employed' as unqualified

workers

earning

under

R500

underscores the need to see unemployment part of a continuum

Moreover,

Our research included interviewing

1996.

ployed and the low-skilled minimum wage

by society. This

of unskilled employment.

informal sector. Some earn comfortably.

of

unlikely,

ductivity persists.

to 39 per cent unemployed.

While

mating the rate of unemployment.

government has not yet created a jobs boom, it does have

opportunities.

strategies that should help generate, productive

ties.

historically

to improving deprived

In addition

directly,

should

infra-

government

ployment rates similar to ours. Morocco

longer term productive

workers,

this system should enhance

ability of individuals •

development

Qualifications

Framework.

As these examples employment

and

the

they survived, the answer generally was that they relied on other family members. This has serious implications: it means that the household budgets are being enormously eroded

development.

This challenge

and

cannot be met by government

by unemployment.

This leaves no

room for savings which has serious implications for economic growth.

There are, furthermore,

cannot separate sus-

from long-run social

rate is not

None of the above should suggest that unemployment is not serious.

both productivity

illustrate, South Africa

unemployment world.

When the South African base of unemployed was questioned as to how

framework, coupled to an industrial strat-

creation

rate

the

of

egy and land reform, geared to maximising employment creation. tainable

ball park. South Africa's

beyond that of the rest of the developing

to find or create employment opportunities.

a stable macro-economic

unem-

skills for all

in the context

By upgrading

to show

per cent. South Africa may indeed, if one allows for the complexities,

infra-

equity and a substantial improve-

National

begin

shows an unemployment

of 23 per cent, Sri Lanka 21 per cent, the Philippines and Turkey 18

have been struck by

be in the world resource

in line

If one adjusts for this, then

these countries

and the private sector with regard to delivering

ment in human

as employed.

give

several partnerships

to employment

20 and

informal and unpaid subsistence sectors

the developing world. "

jobs

structural projects. the commitment

rate is between

with other countries once certain adjustments have been made. For instance, other countries have counted the entire

rate is not beyond that of the rest of

communities a stable basis for generating Already

overesti-

At this stage, with research out-

true unemployment

" South Africa's unemployment

it is

that SA has up

The CSS statistics are probably

communi-

to creating

this process

opportunities.

South Africa's

definitions,

25 percent. This puts the country

structure, basic services and housing for

standing,

in the medium

in terms of the strict international

employment

These include:

the commitment

go out and work in the

If the outcomes of the research so far are closely examined,

and ownership.

the cost to the economy of wasting human resources and low pro-

more

as to what

The research has shown that unemployed

the rewards

enjoys

questioned

not settle for an income equivalent to less than that of the lower rungs

like ours goes

relatively

in place broad

•

When

people who have social skills and experience

small share of the population

research into

the respondents said they would

of income as a

term, •

country

employed.

they would accept,

hand in hand with a highly unequal distribution employment •

in a middle-income

The

showed that it is difficult to distinguish between the unem-

of an adequate

high unemployment

- 39 per cent by

But, among that 39 per

more than R100 a month and most respondents

the cost to individuals remains high. They suffer not only from the lack translates into a heavy burden on the social fabric of communities.

•

definition

It was even higher among women.

expenditure

income, but are also marginalised

entire households and colIt was found that unemploy-

countries would count these people as employed.

to allevi-

ate it. This situation imposes three burdens: •

is two per cent,

said they spent over R50 per month on clothing .. The comparative

in South Africa is

adequately

people.

ment was worse in terms of the expanded

as

cent, most earned

very high, and the formal sector is not growing

statistic given for Bangladesh

lecting data from some 40 000

through an integrated

it is measured, unemployment

family

This number is substan-

Therefore the South African statistic requires closer scrutiny.

strategy ..

In short, however

is much

include unpaid

For South Africa it is given as 33 per cent. This does not make sense.

a

are self-employed

and underemployment

among the employed.

The unemployment

a month. This figure

that must be addressed

are employers

Philippines eight per cent, Turkey five per cent and Chile six per cent.

of the

African women make up over half

but only a quarter of the employed.

or who

ify this category. Hence these other countries minimise unemployment while in our South African statistics we maxi mise it.

people -

only three quarters

like

tial in the case of Bangladesh and Turkey. South Africa does not spec-

cannot be

understood without reference to the dynamics of race and gender in South Africa.

are self-employed

workers as a category

indi-

by almost one per cent in the first

It should be flagged

who

countries

South Africa's proportion

provincial

governments and parastatals).

and

the CSS

tion is appalling:

economic

to bring up babies

alone. It

categories

of people for whom the situa-

young women who leave school pregnant and have as unemployed

people,

on a permanent

must become an integral part of the plans and projects of all actors in

dependent

the economy.

general who do not have the social skills and confidence

basis

on others for the rest of their lives; and school leavers in to go out

and earn a living in the informal or formal sector.

Professor Lawrie Schlemmer, who is at present a visiting fellow at the SA Institute for Race Relations conducting

Thandi Mathibela

a major study on unem-

plex matter of judgement. demons:

complacency;

if too high, they can have almost the

same effect in that the problem becomes too daunting to deal with.

The CSS in accepted

1994

Diepkloof, township

Rates of unemployment can be turned into

if they are too low, they cause disinterest and

gave

two

internationally

definitions of unemployment:

inition is those who are unemployed

I

CDE

entrepreneur.

She spoke of

experienced

by township

debbl"es

available With

the difficulties

in

alone

Gauteng

per

cent

of the

of three million.

immigrants,

camp and township population 41

and

with these problems.

has a population

the influx of illegal than

and obstacles

business people

solutions in dealing

Soweto

More for

as a business

She has been running her kitchen company

Soweto, for the past 11 years and regards herself as a true

I

the strict defand looking

spoke from her personal experience

owner in a township.

ployment, agreed that unemployment and underemployment needed to be seen as a continuum. Where one cuts the continuum is a com-

of

the squatter

is growing

rapidly.

the unemployed

in

are black and, as Professor Schlemmer point-

" South Africa's opportunity is

ed out, 50 percent of these are women.

Are South Africans

much greater than its crisis."

under the age of 301 are unemployed.

The obvious

implications

affected

structures and

by crime. They

Opportunities

are certain targets. Crimes against them are seldom reported because of the perceived

meagreness

entrepreneurs are

latent talent for the economic

The first strategy must be co-operation

ships are poverty, crime, lack of dignity and disease. are particularly

of the amounts involved.

role models for communities;

ment for family breadwinners.

local

business

their weight

larger

with academics

employers

resource development. because

they think it is too difficult up labour

ers of stolen goods. Business owners need to stand together and refuse

labour

has become

to buy stolen goods, most of which find their way into the townships.

need to realise that South Africa

How does a Johnnie deal which will produce new

skill and flair to

in securing collateral.

and

townships.

of price by the forces

Africa's opportunity

are

because

Companies

to be a supplier

of

skill and

self-reliance

but on sound business principles. and

give opportunities

the communities.

of corBig busi-

to business in the

Business people

in the

societies which have large clienteles

need to look at the possibilities of reinvesting in the

This would

be for the mutual benefit of all concerned.

for the cue from government

Finally, government gramme.

Life is not all doom and gloom in the townships. The old Chinese

Now

in terms of incentives.

can look into this matter.

needs to speed

up its public

works

pro-

is the time to deliver.

South Africans are a winning nation. If South Africans could exude

rings true. There are

in the townships.

initiative,

Surely local and national government

the competition.

unemployment

inside the borders.

rewarding

and so develop

Banks are waiting

At the end of the day, an awful mentality prevails: shoot

realistic solutions to curbing

corporations

South Africa

has ceased

human

nothing was spent on human develop-

Fourthly, banks and building

Some areas of township business are grossly

saying that every crisis has a latent opportunity

outside

to

from hiring

These should not be based on the conscience

in the townships

by most township residents

of the free market system and the determination overmanned.

Identifying

attention

are shying away

townships need to stay there to develop those communities. Their exodus will create slums.

is often synonymous with death, as illustrated

by the taxi industry. There is no recognition of supply and demand.

ment.

townships

As prop-

erty prices fall, banks are reluctant to grant loans with fixed property as collateral. lastly, competition

labour. For decades

ness should sub-contract

is the difficulty

and universities throwing

to fire. large

projects

too expensive

porate social responsibility,

keep his business afloat.

Another hindrance

intensive

cheap

tively explored.

poverty rife, the town-

has to have that extra marketing

lacking.

Thirdly, the links between small and big business must be produc-

youngsters are the majority who care little for shares in large corpoship entrepreneur

greatly

results in productivity.

benefit a jobless township youth? These about jobs. With

area

must give

Big companies

setting

Sadly, most South Africans are no better off today than they were

an

behind the initiative.

Secondly,

The frequency of armed robberies and

Business people in the townships are targets for stolen goods; the

rations; they are concerned

growth and

between local government

people,

criminals see them as loaded with money. Some are also used as buy-

black faces in a boardroom

to and

and viable projects which can be created in the town-

ships need to be identified

But township

they provide employ-

car hijacks is worse in the townships than in the suburbs.

three years ago.

enough

this potential

prosperity of the country?

in the town-

Township entrepreneurs

creative

harness and develop

Some 60 per cent of the youth (people

as much enthusJJsm for business and

South

sports, then the reduction

is much greater than its crisis. South Africans have

productivity

in unemployment

and

as they do for the six per cent

growth rate targeted by the Finance Minister becomes child's play.

in their hands huge resources of untapped human potential and talent.

Points raised during open discussion ...

As a trade

unionist,

I

must point out that often companies

which publicly claims to be developing small business. It is dishonest.

which contract out services pay less than half the rate negotiated

Jabu Mabuza

responded to the claim of dishonesty on the port of

by a trade union which would apply to a company employee. Sub-

big business by saying that if any major player in any sector was seen

contracting

to lack honesty in its commitment to broadening

can lower standards,

and can frustrate the achieve-

ments which organised labour has taken a long time to negotiate.

Thandi Mathibela between organised

said sub-contracting

should not lead to conflict

The majority

ened of out-sourcing because it is perceived as leading to job losses. between

business associations,

areas of sub-contracting,

such as office cleaning,

proved more labour intensive than the company in-house. Sub-contracting Mr Mboweni

of the unemployed

we are talking about - the

youth, particularly women - have never learned any business skills

conflicts and

and have had no entrepreneurial

concerns can be addressed. In her experience, the issue of lower rates' for sub-contractors had never arisen. Professor Schlemmer said although it was a problem to defend low wage employment,

base

lose out to a competitor. No big business wanted to lose market share.

labour and small business. labour might be fright-

But with co-operation

the economic

through ownership, management development and skills transfer, it would

from

these people

training. But there are initiatives

themselves to become

business-wise.

They

deserve to be listened to and supported.

in some

the sub-contractor

As the son of a football family, I see soccer as a means of com-

that had kept the task

batting crimes committed by youth. Every black child is a football player and through specially devised development

may be increasing the rate of employment.

programmes,

referred to an article written in Business Day by Thami

every child could play for a local team. The idea would be for the

Mazwai which raised the issue of a low wage buying half a loaf of bread versus no bread at all. He said the trade unions needed to answer

youngster to build an allegiance to his area or township and to get him off the streets.

this question in a manner that showed they were committed to iob creation and not only to addressing the issue of unemployment from the view

An agricultural

of those currently employed. The challenge for the trade unions, he

job does not necessarily break the poverty barrier. Poverty, he

said, was to expand employment at what wage rate?

I

As a worker in the Field of developing entrepreneurs and facilitating sub-contracting, I have found larger companies reluctant to enter into written contracts with smaller suppliers. Generally they prefer

CDE

said, not only related to income, but to services such as water supply, schooling and infrastructure.

debb'tes !

He

urged the government to shift the RDP from third into first gear.

Greater

genrleman's agreements which are not legally binding on themselves. I Find this hypocritical from a sector

expert agreed with the minister that a formal

equity between management

had to be achieved. No manager

and labour

should earn more

If South Africa wanted to see

Professor Schlemmer pointed out that pay equity was unrealistic,

economic development take place in earnest, this was the way to go.

as China had found. That country, which used to have a narrow eight-

than 10 times the lowest paid worker.

When asked by Jabu Mabuza what he would say to managers, with

level system, now has to pay international

their portability of skills, pocking their bags to take advantage

management

of

market-related

comporative international salaries, the contributor said this would be

any attempt to artificially

unpotriotic.

that work in a large industry or in government

reduce unemployment

modity. There should be no interference,

about

and suggested rather is now a scarce com-

however, in a person's abili-

ty to create his own work. Under-utilised technical colleges could be

The country's policy engineers need to focus on job creation and shift resources to accommodate

salaries to

in order to attract investment. He was sceptical

encouraged

this initiative. So much money is

to approach

communities

and

pass on the necessary

social skills which would assist with entrepreneurial

spent on curbing crime; some of this funding could be used to devel-

Thandi

op small and medium enterprises (SMEs). Government lost an oppor-

Mathibela

producing

said

tunity when establishing the present ministries by not developing and

towards

involving SMEs. Developing sectors which are potential large scale

sis had to be readjusted.

Tito Mboweni

employers, such as tourism, should be encouraged.

the present

employment.

education

system leaned

job seekers rather than job creators. The emphaagreed that implementation was all important. He said

joint partnerships between the private and public sector had been established as part of infrastructural development

The debate should be turned around: over-employment should be curbed by a four-day week with

projects. Ohen this meant

importing international management expertise. He said it was vital that all

the unemployed being given the

involved in politics and in policy making remain focussed on employment

chance of working the overtime.

creation. Government had put its macro-economic structure in place and what was needed now was a change in the negative attitude on the part

Out-sourcing is the way the world is moving, but in South Africa it is done mechanically. No scrutiny is made of training and develop-

of potential foreign investors. This brought a challenge for the trade unions

ment programmes in domestic componies.

who had to show that they are concerned about the unemployed.

Concluding remarks by CDE executive director Ann Bernstein One of the frustrating

issues about unemployment

and job cre-

cussed. One is the concept

ation is that there are so many tentacles to the debate. One wants to

people spend a year

ask

in disadvantaged

'Who

is. accountable?'

but too many different aspects of gov-

ernment and private sector policy affect the issue. One is always talking around the topics of unemployment

and job creation.

of a national

economics

building facilities

areas.

The second is the globalization

How does

youth corps where young

'serving the nation' , e.g. by of the economy

People who think

is a question of morality inside South Africa are looking at

one deal with this issue directly?

South Africa's official statistics are, as usual, unreliable and there-

this the wrong way around. The tough news is that, if South Africa is

fore Professor Schlemmer's research is beginning

about moral issues at all. It's about people deciding

area with fascinating get

groups

which

to succeed, we have to be part of the global economy and this is not

to unpack a complex

outcomes. His work will help to identify the tarshould

be

influenced

and

the policies

investment will

to be

The theme of entrepreneurship, be supported.

with the entrepreneur as hero, must and

popularise

Tonight's debate

did

not focus sufficiently

on practical

matters of policy which

ENTRE

International

policy

must be dis-

•I

FOR

to regional

leaders

is to sustain

jobs in cities and

regions and not lose them across borders.

business as an

inherently positive and patriotic activity. issues. But there are important

The challenge

investment in their areas and keep and increase

Education is vital, and so is the manner in which polit-

business leaders perceive

where their best

step in as the South African

region opens up to capital and to labour - both legal and illegal. This will affect wages.

employed.

ical and

be. Entrepreneurs will

developments

pose tough challenges

for both the

unions and political

leaders on how to sustain investment in South

Africa

it. This is a national

and to grow

and regional

issue which

goes beyond morality.

EVELOPMENT

AND

NTERPRISE

BOARD E Bradley

(chairman),

o Dhlomo,

J McCarthy,

F Bam (deputy chairman),

A Bernstein (executive

WP Esterhuyse, A Lamprecht, J Latakgomo, I Mkhabela,

S Mogoba,

L Phalatse,

S Motau,

R Plumbridge,

K Mthembu,

L Schlemmer,

M Mthembu,

N Segal,

INTERNATIONAL

1936,

Johannesburg

2000.

Tel: 27-11-4825140

The views expressed

in this publication

G Barr, D Bucknall,

S Ndukwana,

K Shubane,

W Nkuhlu,

M O'Dowd,

C Simkins, M Spicer

Professor M. Weiner

(MIT)

Pilrig Place, 5 Eton Road, Parktown, Johannesburg Fax: 27-11-4825089

are not riecessarily

C Coovadia,

JB Magwaza,

ASSOCIATES

Professor P. Berger (Boston University),

POBox

director),

R Lee, G Leissner, A Lukhele, J Mabuza,

2193,

South Africa.

e-mail: cde@milkyway.co.za

those of CDE. This pamphlet

reflects a public

debate

hosted by CDE.