The South African Federation of Trade Unions (SAFTU) is vindicated by the Quarterly Labour Force Survey (QLFS) that shows South Africa suffers from structural unemployment. Despite the minor increase in employment, the growth in the working-age population and the unemployed who vacillate between actively seeking jobs and being discouraged, has led to the official unemployment increasing from 7,8 million to 8,2 million.
The economy created 22 000 jobs, dwarfed by a massive increase in the new entrants to the working-age population, of 137 000. This is not to mention expanded unemployment-measuring people who have given up looking for jobs- which has grown to 12.1 million in the 1st quarter of 2024, from 11,6 in the fourth quarter of 2023. Even more revealing, is that long-term unemployment which measures job seekers who could not find a job for more than a year, grew from 6,1 million to 6,2 million.
That the economy has only created 22 000 jobs that do not match the number of new entrants into the working-age population, keeps more than 6 million locked in a trough of permanent unemployment, and created a pool of 12,1 million unemployed people exposes the structural defaults of the economy and its inherent incapacity to employ all job seekers.
Those structural faults are inherent in the capitalist mode of production, which takes a neocolonial character and a neoliberal form. The nature, the character, and the form interact to produce these explosive levels of unemployment. To behave and survive capitalistically, business enterprises must make profits. Profits are made through greater sales and outcompeting competitors, and often this includes introducing machinery to enable mass production and reduce input costs. The process of reducing input costs always involves business enterprises retrenching workers as is the case currently throughout the economy, where several businesses including Sibanye-Stillwater, SA Post Office, Sterkinikor, Vodacom (and several others) have filed for retrenchments.
The neocolonial character of our economy means that manufacturing industries to beneficiate the minerals dug beneath our soil have not been created. The multinational companies in the mining industry are exporting such minerals, sometimes even stealing through mispricing, to turn them into manufacturing-value-added products elsewhere in the world.
Consequently, we miss out on the millions of real and sustainable jobs that could be created in this ‘mineral manufacturing sector.’ No real industrialisation can take place, now or in the future, without using minerals as the basis.
Neoliberal fiscal austerity and restrictive monetary policy combine to sabotage the economy and job creation. The government’s refusal to fiscally stimulate the economy through the Basic Income Grant (BIG), to spend sufficiently on infrastructure and defunding of state companies has led to massive retrenchments in SOEs and prevents the productive sectors from growing on the back of increased aggregate demand.
Restrictive monetary policy has consistently made it difficult for businesses to grow because of the increased debt/credit service costs, sometimes contributing to defaults and bankruptcies of business enterprises. This results in company collapse and closures. For example, between Jan and March 2024, 385 businesses have been liquidated. Though restrictive monetary policy might not be the sole factor, it certainly contributes to some of these liquidations.
It is important to note that the restrictive monetary policy also minimises aggregate demand for consumer goods as households reprioritise their spending in the wake of increased debt service costs. This again, hits on businesses who produce for the sole intention of sale and profit. For instance, aggregate demand has declined by over 10%, and this decline in demand is the main cause of the industrial capacity that idles.
The bullish capitalist class has also refused to invest in the economy. It demands that the government should protect their investments and guarantee them profits, whilst calling for it to restrain itself from investing in social infrastructure. Consequently, the government defunding and private sector investment strike have contributed to the Gross Fixed Capital Formation (GFCF) decline gradually over the past years, including in the last two quarters of 2023
