In his state of the nation address in February 2018, President Cyril Ramaphosa, who was then riding a wave of “Ramaphoria”, said the government would initiate measures to set the country on a new path of growth, employment and transformation of the economy.
“At the centre of our national agenda in 2018 is the creation of jobs, especially for the youth,” he said. “We are going to embark on a number of measures to address the unemployment challenge.
“It is therefore a matter of great urgency that we draw young people in far greater numbers into productive economic activity of our country,” he continued. “Young South Africans will be moved to the centre of our economic agenda. Next month, we will launch the Youth Employment Service (YES) initiative, which will place unemployed youth in paid internships in companies across the economy. Together with our partners in business, we have agreed to create a million such internships in the next three years.”
The president said he would convene a Jobs Summit “to align the efforts of every sector and every stakeholder behind the imperative of job creation. We expect this summit to come up with practical solutions and initiatives that will be implemented immediately.”
In March 2018, he launched the YES initiative, together with business leaders. The initiative promised to create 300 000 jobs a year. In October 2018, government, business, labour and community stakeholders at the National Economic Development and Labour Council (Nedlac) agreed on about 80 projects and initiatives that would create 275 000 jobs a year. Everyone at the posh summit, which was held at the Gallagher Convention Centre north of Johannesburg, had a job.
Twenty months later, these two gimmicks of the Ramaphosa presidency have failed to create jobs.
According to Statistics South Africa’s latest labour force survey from 29 October 2018, the number of unemployed South Africans has increased by 1.1 million people since Ramaphosa became president. There are 10.3 million unemployed people in South Africa, according to the realistic expanded definition, which includes “discouraged work seekers” who have lost hope of finding work and had not searched for a job during the last four weeks of the survey. The expanded unemployment rate for black African men and women is 43%. The figure for black African women is 47%.
No clout to YES promises
The YES initiative says it has created 25 000 internships for young people, a fraction of the 300 000 jobs a year that were promised. But the official statistics illustrate the scale of the youth unemployment crisis.
The expanded unemployment rate for young people, aged between 15 and 24, has increased to a staggering 70% from 65.7% when YES was launched. According to Statistics South Africa, 155 000 young people lost their jobs during the same period and the number of unemployed young people increased by 161 000 and 2.6 million. There are now 8.2 million people aged between 15 and 34 years who are not in employment, education or training. This figure is equivalent to 40% of the 20.4 million people who are in this age group.
An analysis of the official statistics in the year since the Jobs Summit agreement was signed shows that the number of unemployed South Africans has increased by 513 000 people. The number of employed people declined by 5 000. This is all a far cry from the 275 000 jobs that were promised. A Nedlac progress report presented to Ramaphosa in August 2018 highlighted the incompetence of government departments in implementing projects.
“There are multiple projects that have been stalled because it has not been possible to secure meetings with the relevant government department, or because the processes are not being implemented in accordance with agreed upon time frames,” the report said. “There is a need for these government departments to fully commit to the process.”
At the stakeholder meeting with Ramaphosa and Minister of Employment and Labour Thulas Nxesi in August, it was said that implementation of the summit resolution had been disrupted by the elections.
“We had to admit that not much has been done for a simple reason,” said Nxesi, who was interviewed by the SABC at the time. “Immediately after the Jobs Summit, the focus was on the elections. After the elections, there was the reconfiguration of the government. After the reconfiguration of the government, there were new ministers who had to acquaint themselves with the issues.”
After the August meeting, Ramaphosa agreed to go to Nedlac with his deputy, David Mabuza, at the start of every month to review progress.
Congress of South African Trade Unions spokesperson Sizwe Pamla says the government has done nothing to kick-start the economy.
“The unemployment statistics are a scorecard that show the failures of government policies,” he says. “The government’s behaviour in retrenching workers has emboldened the private sector to do the same. The first Jobs Summit report was disappointing. It showed how government had done nothing to implement initiatives we had agreed on.
“Examples included curbing illicit outflows of capital and stemming the tide of cheap imports, especially in sectors such as clothing and textiles. This is demotivating for small and medium enterprises in the sector.
“All the government commitments cannot be implemented by a single department. They had not had a single meeting between government departments to coordinate implementation. We have also seen resistance by National Treasury to implement commitments that we had agreed to,” says Pamla.
The acting chief executive officer of business organisation federation Business Unity South Africa, Cas Coovadia, says businesses are closing down because the economy is not growing. “This is not rocket science. We have to create an environment which shows that we are open for investment and enables businesses to create jobs.”
Indeed, there is a relationship between economic growth and job creation. Between 2004 and 2008, the economy grew by an annual average of 4.8%. As a result, 1.9 million net new jobs were created between September 2003 and September 2008. The official unemployment rate fell to 21% from 24.8%.
Between 2009 and 2018, gross domestic product grew by an annual average of 1.5%. As a result, the economy only created one million formal sector jobs between December 2008 and September 2019. But the labour force increased by 5.9 million people over the same period as school-leavers entered the labour market at a rate of almost 600 000 a year. The number of unemployed people has increased by 4.3 million since December 2008. Therefore, projects alone cannot increase overall employment if the economy is stagnant.
Neil Coleman, the director of the Institute for Economic Justice, which assisted the labour constituencies during the Jobs Summit process, says: “The problem with such engagements is that there is a philosophy that says we must focus on so-called low-hanging fruits, where we can easily reach agreement. We end up with projects and voluntary agreements that have no enforcement mechanisms. As a result, we avoid the hard questions about contested issues such as macroeconomic policies, which are never addressed.”
Macroeconomic policies look at the functioning of the whole economy. They include monetary policies (interest rates and the exchange rate) and fiscal policies (government spending).
“At the summit last year, we deferred these questions because of the urgency of the situation,” says Coleman. “Nedlac has now established a task team to look into these issues. But how are we supposed to have meaningful engagements with social partners about macroeconomic policies when National Treasury unilaterally released an economic growth strategy and austerity measures (or budget cuts) that will destroy jobs without discussing them at Nedlac?”