StatsSA, QLFS, Q2


The South African Federation of Trade Unions (SAFTU) notes the minute increase in employment announced by StatsSA, but we remain unimpressed. The only meaningful measure is of ‘extended’ unemployment – including those who have given up looking because it is fruitless – and it declined from 42,4% in the first quarter to 42,1% in the second quarter of 2023. The ‘narrow’ official unemployment rate declined from 32,9% in the first quarter to 32,6% in the second quarter.

In the last decade, unemployment has increased significantly: by the narrow definition, by 5 million people since 2013, to 7.9 million; and those measured by the expanded rate, which is more realistic, number 11.9 million people who are unemployed.

The increasing number of the working age population has not been met by a proportional rise in job creation. Consequently, over 6 million people are trapped in what is considered to be permanent unemployment.

The labour rmovement has always pointed out that the crisis we face is structural, based on numerous factors contributing to the unfolding tragedy.

  1. We inherited a colonial-style, racist economy and now thirty years after 1994, our economy remains neo-colonial, with one of the main activities continuing to be relatively-unprocessed extraction of raw minerals, which means that when depleted wealth and pollution are subtracted from our Gross Domestic Product, South Africa is left with net shrinkage of our economy (even when posting a positive GDP).
  2. Given the abundance of mining and petro chemicals, and given that our mineral wealth is not contributing substantially to our manufacturing base – which has lost half of its capacity since 1994 – it is not surprising that the most dynamic part of the economy remains the generally-parasitical financial sector..
  3. The dysfunctional education system leaks nearly 50% of our learners who begin but by 11th grade are ‘culled’ by schools aiming to have higher matric-pass rates. South Africa cannot compete even with our neighbours who have far fewer education resources.
  4. Widespread poverty sidelines the vast majority of citizens from mainstream capitalism, with estimates as high as two-thirds of South Africa living below a realistic poverty of line of R65/day.  
  5. World recorded-beating inequality that concentrates wealth in the hands of a tiny minority – with ongoing racial and gender biases.
  6. Extraordinary levels of corruption and crime that produce deplorably social crises, ranging fro gender-based violence in the household to macro-economic looting – via Illicit Financial Flows – at such high rates that South Africa was recently ‘grey listed’ in international banking markets.

Instead of reversing the structural brutalities of capitalism, government stubbornly continues down the path of neoliberalism, featuring “fiscal consolidation”: cutting expenditure even of vitally-needed social programmes, in the face of massive developmental challenges.

There will be no economic growth, job creation and poverty elimination until the ceasing of both public and private sector investment strikes.

  • In February 2019, National Treasury announced a R100bn infrastructure fund. Each year from 2019 to 2022, it made an allocation to the fund during the national budget. But each time the allocation was cancelled during the year. In 2023 there was no allocation.
  • From 2015 to 2022, public investment (by general government and public corporations) has declined by 38%.
  • Public investment by general government has declined by 25% from 2015 to 2022.
  • Public investment by public corporations has declined by 54% from 2013 to 2022.

Just as striking is private investment, which is at extremely low levels, having crashed even further during the Ramaphosa 5.5 lost years, as from the 2009-18 nine lost years.

Capitalists argue that with high interest rates, it is not profitable to invest – and they have a point. Neoliberal monetary policy is underpinned by a restrictive and punishing pursuit of inflation targeting, of between 3% – 6%, which myopic Reserve Bank officials believe can only be realised by using the blunt instrument of a high interest rate regime – even though a large share of inflation is imported, due to the falling currency and the Russian invasion of Ukraine which pushed up food and energy prices. But due to the removal of exchange controls, and due to illicit cash outflows to the tune of up to R400 billion a year, South Africa is robbed of desperate resources it needs. This is what has made the rich more richer and the poor more poor.

Further, structural unemployment is created by the laws of capitalist accumulation, by which the drive to plough capital and reap more profits requires capital intensive methods which in turn causes redundancies and retrenchments. The labour-to-capital composition has shrunk. In a recent example, Clover Dairies, the investments by Israel-based Central Bottling Company have led to the retrenchment of over 2 700 workers, when the company repurposed its production and reduced labour in order to increase its profit margins. This is exactly what SAFTU’s leadership warned of, when the Competition Commission mistakenly allowed that firm to take over a South African entity, instead of helping workers with a labour buy-out option.

The ANC is immersed in neoliberal dogma, and is allowing Treasury to cause much more unemployment by restricting government investments in goods production and service provision. Government has agreed with the International Monetary Fund and World Bank to pursue a neoliberal fiscal contraction. This is so unnecessary, especially when considering that government could guarantee jobs for those fired by the profit-driven private sector. This is especially important when it comes to South Africa’s needed decarbonisation, and yet it is obvious that in spite of rhetoric about a ‘Just Transition,’ the state is absolutely cold-hearted to those in high-carbon industries who are now more vulnerable to further job cuts.

Although government claims that we have narrowly escaped recession, it is obvious that the input costs elevated by loadshedding crisis and debt-servicing costs because of interest rate hikes have hindered businesses from hiring workers.

The combination of the poor policy choices of government and investment strike within the capitalist system have left the country perpetually leaning over social precipice. The social implosion is already unfolding, needing only a match to become an upheaval. The thousands of Zama Zamas toiling in the belly of the earth, taking advantage of 6000 abandoned mines across the country; the hundreds of thousands economic and property-related crimes that occur on a yearly basis including cash in transit heists and the opportunistic looting during community protests; the durable xenophobia; the fear that putting Jacob Zuma in jail will reignite 2021 looting and arson, are all a testament to this unfolding social crisis.

Government must U-turn now, and increase general expenditure by investing directly into the economy and creating a jobs guarantee scheme. This requires Treasury and the Reserve Bank to abandon altogether the policy of austerity that they have implemented with much devotion and dexterity. This will not only create employment at one instance but will stimulate expansion of the economy which also has the potential of job creation.

Ultimately, the multiple crises of capitalism including unemployment, can only be ended by the abolishment of capitalism. SAFTU is organising against capitalism, for the establishment of socialism.

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