PROSPECTS OF UNEMPLOYMENT LOOM AS SARB INCREASE INTEREST RATES
The South African Federation of Trade Unions (SAFTU) notes the minor decrease in unemployment, but remains doubtful that we have entered a trajectory of growth for both the economy and employment. The Quarterly Labour Force Survey (QLFS) shows that the expanded unemployment has declined by 1% from 44,1% in the second quarter to 43,1% the third quarter.
But the minor gains in overall employment are not distributed evenly and fairly. The black working class, black women and the youth continue to be the face of unemployment.
Quite illustrative of this fact, is that unemployment amongst black women increased from 51,3% in the second quarter to 51,4% in the third quarter, even when unemployment amongst women in general declined.
Coinciding with the poor education system that sheds 40% of the pupils out of the schooling system before they reach matric through drop-outs, and the failure to transmit these learners into other forms of training, the number of the youth between the ages of 15 and 24 who are not in any form of employment, education or training (NEET) have increased year-on-year, from 33,5% in 2021 to 34,5% in 2022. If we add the youth between the ages of 25 and 34, the NEET youth remains at a staggering 44%.
Even more telling about the plight faced by this group, is the labour absorption rate which is at a dismal 10,4%. In other words, of the youth between the ages of 15 and 24 looking for employment, only 10,4% are likely to be employed.
Interest Rates Undermine Employment Creation
The neoliberal monetary policy, which is hegemonic currently, has guided central banks across the globe to always fight inflation by increasing costs of borrowing by hiking interest rates. These rate hikes are unfortunately going to induce defaults, unemployment, diminish the buying power and cause recessions. In fact, governors of these central banks have come out explicitly to suggest that recession and unemployment will be necessary to wrestle the current inflation.
The negative impact of the successive interest rates in the past 12 months, resulting in a combined 350 basis points, will soon be felt in the economy generally. Currently, they are already being felt by the working people through the increased costs of servicing their loans, credit cards and retail credit facilities.
But because working class households – especially middle income earners – are also employers of domestic workers, their impoverishment is already affecting employment. In fact, in this quarter, private households have shed 36 000 jobs. It is arguable that as costs of financial liabilities for households increased i.e., paying mortgage, car loans, credit facilities, etc, it became more unbearable for these households to pay wages of their domestic carers/domestic workers. Consequently, they have let them go. This trend is most likely to continue into the near future.
Capitalism and profits
In the past, SAFTU has argued that unemployment is woven into the fabric of capitalism. It is a by-product of profit maximisation, hence it is structural. It is a permanent feature under capitalism, and only fluctuates with intervals of adaptability between introduction of new machines and old machines.
In other instances, as shown in monetary policy, it is a choice of political economic policy as it links to profiteering. Hence policy rates are used to induce unemployment to fight inflation whilst protecting profits of the financiers whose returns are threatened by rising inflation.
To highlight other dynamics that induce unemployment, we have previously noted that:
the captains of finance and industry in the Johannesburg Stock Exchange are hoarding at least R1.4 trillion of investable money. This phenomenon, which accompanies what can be called an investment strike, is a systemic decline in real gross fixed capital formation, one that has lasted for a decade, at the expense of new machines, plant, buildings and employment. The situation worsened from 2018, coincidentally when President Cyril Ramaphosa took office, with jobs in manufacturing and construction the main victims of the investment strike. But all sections of the service sector have also suffered from net job losses during 2020-21. Only mining employment has increased, as a result of what everyone acknowledges is an unsustainable bubble in commodity prices.
On 25 November 2022, Independent Online reported that one of McDonald’s big outlets in Durban, called workers for a Christmas bash only to inform them of intentions to retrench an “undisclosed” number of them. The fast food restaurants have been moving with fast speed to digitise through self-serving kiosks, and in the process, leaving a jobs bloodbath.
Mechanisation and digitisation have more prevalently been adopted by the banking sector. This could be one of the reasons it shed most jobs in the economy, as they restructure to set their business on a profit maximising path.
These machines, which under capitalism leads to unemployment and poverty of the working class; under a different system, they could be used to add value into our societies without impoverishing people. Capitalism must be abolished, and be replaced with socialism. Socialism will harness technology to enhance human lives and societies, not to create a hate relationship between technology and people.
Today, people, as shown in the energy transition debates, end up opposing solutions and progressive steps because imperial capitalism has used new technologies to marginalise workers through unemployment in pursuit of profits and dominant capitalist countries have used such advantages to colonise and recolonise former developing countries.