If one needs to understand the Herculean task facing President Cyril Rampahosa, simply glance over the Stats SA’s quarterly labour force survey report and there you have it: more than 2.2-million jobs lost in the second quarter.
This was not unexpected as the jobs were wiped out when SA was under one the world’s toughest lockdowns, banning alcohol and tobacco sales, and restricting e-commerce companies to selling only essential items. The job losses have, in all likelihood, given SA another unwanted record of groaning under the world’s highest unemployment rate with roughly one-third of the population without work.
As alluded to by the statistician-general at Stats SA, Risenga Maluleke, the official unemployment rate — at just more than 23% — in the second quarter is deceptive.
The sharp drop from 30.1% in the first quarter was due to people not being able to go out during the lockdown to look for jobs, as required in the official definition of the unemployment rate, and were therefore classified as economically inactive.
As a result, the number of those not actively looking for work, which typically includes discouraged work-seekers, students, homemakers and those who are too sick to work, rose by more than a third to 20.6-million — putting the expanded unemployment rate a scary 42%. That’s probably more reflective of the country’s crisis than an unemployment rate at multi-year lows.
Clearly, there’s nothing to celebrate in Maluleke’s figures, which came in the same month as he issued another report that showed a horrifying 51% contraction in seasonally adjusted and annualised second-quarter GDP, extending a recession that started even before Covid-19 hit SA.
If anything, it is another piece of data that should instil a sense of urgency for Ramaphosa to make public and implement a plan he has been working on alongside labour and business to put the economy back on a growth path. It’s been months since the president talked about processes that must still unfold before the economic recovery plan can be announced to the public.
Best known for the his consensus-building skills honed in wage negotiations with mining bosses and, later, as one of the lead ANC negotiators in the 1990s to end apartheid, Ramaphosa has been stuck in a lengthy consultative process at the National Economic Development and Labour Council as business, government and labour craft something they can all live with. This process has been under way for about three months.
But SA does not have time to spare. Each week that passes brings with it the growing threat of permanent damage: the loss of businesses; the loss of employment; and the ongoing drain on business and investor confidence.
Almost every day since late March, companies have been putting out earnings reports that underscore a wave of distress that has left many with no choice but to retrench workers and cut capital expenditure in anticipation of weak demand.
Economists at PwC are not optimistic about the labour market outlook, saying even though some of the second-quarter job losses would be reversed as the economy opened up with the various stages of easing of the lockdown, SA would still end 2020 with 1.5-million jobs lost.
But it is the potential consequences of failing to act now to put millions of South Africans into jobs in the PwC statement that should make all of us uncomfortable. Government inaction is worryingly not limited to issues that require “social compacting”. Players in tourism, one of the biggest employers in the economy before Covid-19, still have no idea who will be allowed to travel here, although the borders are due to open on Thursday.
If unsuccessful in addressing unemployment issues, PwC warns that SA could face increasing social unrest, which has already been manifesting with September on track to record the most protests since Ramaphosa took over early in 2018.
We do not need to prolong talks to work out what our economy needs to get back on a robust growth path. We need action.