SAFTU ON QLFS Q4 OF 2024
The South African Federation of Trade Unions (SAFTU) notes with alarming concern, the increase in unemployment in quarter 2 of 2024. This is the second consecutive decline in employment, showing that the increases in 2023 are being reversed. Fluctuating unemployment reflects the structural defects in the economy that keep the economy on a zigzag growth path.
The 2nd Quarterly Labour Force Survey (QLFS) shows that official unemployment increased from 8,2 in the 1st quarter to 8,3 million in the 2nd quarter, whilst unemployment including those who have given up looking for jobs has grown from 12,1 million to 12,3 million in the same period.
Official unemployment amongst young people (between the ages of 15 and 34) is even higher, at 46,6%. Expanded unemployment amongst those aged between 15 and 24 is 70%. This reveals that the economy is failing to create jobs for new job entrants in the labour market.
Meanwhile, the youth that is not in any form of employment, education and training (NEET) has increased to 9,2 million, with young black women constituting an overwhelming majority. Unemployment over the past 10 has been rising steadily, supported by the dismal labour absorption rate. The increasing number of the working-age population has not been met by a proportional rise in job creation. Consequently, over 6,4 million people are trapped in what is considered to be long-term unemployment.
Previously, we have repeatedly attributed this problem to structural contradictions of capitalism, in its neocolonial character in particular. The neocolonial character means that our economy loses an opportunity to build manufacturing industries for mineral resources as they are extracted and beneficiated elsewhere, not locally.
In a country that is endowed with mineral resources of massive proportions such as ours, unemployment should not be a main problem. However, these endowments are extracted to be turned into value-added products elsewhere, creating employment in those countries and growing their economies. South Africa should build the manufacturing base of the minerals dug beneath our soil so that all jobs in the value-addition chain will be created locally.
In addition to this colonial character of our economy, the capitalist logic creates structural unemployment. The accumulation of capital dictates that capitalists increase their machines in order to lower the unit cost of their products so that they can be competitive. As a result, the composition of capital as compared to labour has increased, with lesser demand for human labour. The retrenchment of workers in decent jobs in the industry has been replaced by underemployment, where jobs have been casualised and temporary. The Quarterly Employment Statistics (QES) of quarter 1 2024 corroborates this, as it shows that employment creation in the formal sector was predominantly part-time.
The other structural problem of capitalism that is creating this crisis of lack of growth and high unemployment is financialisation. Capitalists argue that with high interest rates, it is not profitable to invest in productive sector, as high interest rates mean high profits in the casino economy. Neoliberal monetary policy is underpinned by a restrictive and punishing pursuit of inflation targeting, which incentivise the capitalists even in non-financial firms to pack their surpluses in interest bearing financial assets and thus disincentives them from investing in productive sectors of the economy.
Additionally, the capitalist class has become more parasitic than ever before. It requires government to create an enabling environment for their investments before they can invest. These include introducing structural reforms, de-risking of investments and government guaranteeing markets and fiscal consolidation, which are all geared at ensuring private sector enterprises make profits. In the absence of these guarantees to the maximum, the private sector has been bullish and embarks on an investment strike.
Instead of reversing the structural brutalities of capitalism, government stubbornly continues down the path of neoliberalism, featuring “fiscal consolidation” as demanded by the private sector: cutting expenditure even of vitally-needed social programmes, in the face of massive developmental challenges.
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.
There will be no economic growth, job creation and poverty elleviation until the ceasing of both public and private sector investment strikes.
