Western Cape Business News

Send  Share  RSS  Twitter  15 Jul 2012

LABOUR: Unemployment's Ugly Facts


Recent Western Cape Business News

THERE was reason to be concerned about the growing unemployment rate, but even worse was the fact that the biggest job losses were in the country’s most important industries, says Mr Michael Bagraim, President of the Cape Chamber of Commerce and Industry.

He said that according the latest Adcorp survey, employment in June fell by an annualised rate of two percent and this followed an even greater decline of 3.1 percent in May.

What makes it so much worse is that the decline in agriculture was 12.7 percent, in transport 8.6 percent, in mining 8.1 percent while the decline in the construction industry was 4.7 percent,” Mr Bagraim said.

These industries are the foundations stones of our economy and they will have a ripple effect on the other sectors. In fact, it will be more than a ripple.”

He said 2012 was supposed to be the year of the job but it was turning out to be the year of jobless.

The major problems were over regulation and red tape which discouraged companies from taking on additional staff and the drop in business confidence caused mainly by uncertainties on economic policy.

South African companies are sitting on a cash pile of R500 billion but they are not investing because of fears of nationalisation and other concerns about economic policy.”

He said there was a failure to understand that the way to increase jobs was to increase the number of employers. “Without employers there are no jobs and the challenge is to encourage companies to invest and expand.”

Mr Bagraim said the Chamber was concerned at the way over regulation was distorting the labour market. “The Adcorp survey shows that there is now a significant premium on affirmative action candidates for jobs with a premium of 23.1 percent for blacks and a 36.4 percent premium for black females compared to their white counterparts.”

The premium was there because companies were forced to pay more for black staff in order to meet BEE targets. “Companies don’t receive any extra value for this money so, not surprisingly, there is a growing feeling that it is time to start phasing out affirmative action.”

He said the Chamber had always supported affirmative action which it saw as a way of righting the wrongs of the past, but the young people now entering the labour market had been born and educated in the post-apartheid era. “When you see major wage distortions in the work place it is surely an indication that we need to do some serious rethinking.”

The high premiums would discourage companies from employing blacks at a time when they should be encouraged to do so.  “Have we reached a point where the affirmative action rules are becoming counter-productive?” he asked.

Growing unemployment, especially amongst the young, was South Africa’s greatest problem and it was time to come to forget about the “pie in the sky” theories and come to grips with the hard realities of the situation.


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