LABOUR: Job Recession On The Cards
Recent Western Cape Business News
THE unintended consequences of South Africa’s inflexible labour law environment are beginning to pile up and create a serious risk of a “job recession”, says the Cape Chamber of Commerce and Industry.
The evidence can be found in the latest Adcorp employment index which shows that employment in the formal sector has declined for the sixth consecutive month.
Michael Bagraim, President of the Chamber, said the worst job losses were in the mining, manufacturing and construction sector where employment should actually be increasing to meet the demands of the infrastructure development programme.
“This is the part of the economy where we should be beefing up but instead we see a loss of 16 000 jobs,” he said.
Also distressing was the fact that South Africa’s labour law environment was now rated the second worst in the world in the World Economic Forum’s Global Competitiveness Report. “We now rank 143rd out of 144 and it is likely that we will slip to the bottom of the pile when new amendments to our labour laws come into effect.”
One of the unintended consequences was that companies were more reluctant to employ inexperienced or temporary workers. Instead they preferred to use agency “temps” and thus outsource their labour relations risks.
Another consequence was an increased reliance on mechanisation to reduce dependence on labour.
Adcorp’s labour economist, Loane Sharp, was quite right when he pointed out that the trend in the rest of the world was to relax restrictive laws to get more people into the work place. “We are making it more difficult and the unintended consequences can be seen in the job losses and the failure to bring more young people into the labour market where they could gain experience and develop skills,” Bagraim said.
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