No one magic formula for SA’s soaring unemployment rate - writes Prof Willie

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SA’s unemployment rate has risen to a staggering 34.4%. This figure accounts for the expanded definition of unemployment.

Included here are those individuals who are now discouraged in seeking employment.

All this accentuates into bad news, laying bare the peculiarity of our situation.

An estimated 7.8 million people are classified as unemployed.

The released second-quarter figures by Stats SA show an increase of 1.8% from the first-quarter figure of 32.6%.

To worsen the situation, forecasts on the horizon all point to a negative GDP outlook.

Uncertainty created by the Covid-19 pandemic does not help the situation either. 

The most-affected vital economic clusters include mining, manufacturing, the service industry and tourism.

As a result of lockdown restrictions there have been lots of job losses as uncertainty about the future grows. 

Our concentric focus of economic development often makes us fall short.

Development efforts are often centred in the urban areas. This does not go far enough in addressing unemployment. 

 

With a high rural to urban migration rate, the plight of rural communities in the unemployment challenge is magnified.

Challenges around service delivery and local economic development in rural communities evidently stall progress in addressing the soaring unemployment rate.

All this puts in the throes, the toil and toll of our unemployment situation.

On one end, response to the unemployment figures is likely to result in a surge of distrust and misinformation.

A superficial glance at social media comments in leading news outlets appears to attest to this.

For instance, questions often arise as comparison. The issue being how are we to trust the government in managing runaway unemployment when there is an already existing challenge of the vaccine rollout.

Added to this, there is the issue of growing levels of vaccine hesitancy, including the low vaccination numbers, especially among males.

All this not only questions the efficacy of government response but frames it as lackadaisical.

The government again is caught between a rock and a hard place.

Criticism is mounting in some quarters as to how current responses to the Covid-19 pandemic have turned us into a welfare state.

Conversely, others view the R350 Covid-19 relief grant as meaningful even though an inadequate response to the devastation before us.

 

For those still in employment, the struggle also continues. A significant level of uncertainty potentially exists on the ground.

How many of those now employed would rate their experience as fitting decent work conditions?

Borrowing from the classification by Duffy and colleagues, the emphasis would be on experiences of work that promote five essential elements.

These include: a) safe working conditions; b) access to healthcare; c) adequate compensation; d) time and rest, and e) complementary values between actors within the employment sphere.

The current situation for those in employment is likely to tear and rip into these minimum expected work conditions.

So you are employed but not benefiting to the fullest from this experience of employment.

Then there is the case of the most affected in society. Attribution would be to young people, between the 15-34 age cohorts.

In the current research we are conducting, we are tracking the experiences of unemployed youths trying to find work during pandemic times.

 

A familiar narration among our participants is their sordid experiences, an indictment of the rigid labour market. These include, in some cases, requests for upfront payment to guarantee an interview.

Others cite challenges around resource constraints as limitations to full participation in this challenging labour market.

Then there is the internship opportunity, a masquerade where early career entrants to the labour market are often exploited in the name of getting work experience.

There is no one magic formula in seeking a solution to the toil and toll of our unemployment situation. 

A starting point could be the necessary work to critique the current policies and role of created structures as a response to the unemployment challenge.

A typical admission by analysts appears to point to a rethink of policy direction, including the need for more government certainty regarding the unemployment challenge.

This clarion call covers not just national government but also provincial efforts on the ground.

Compounding the situation are the perceived rifts and often public factional contestations within the ANC, as the governing party.

These have often created more confusion to this earlier request for policy direction and certainty.

A second focal point would be to channel investment into the areas where the money is.

The prediction by some here is the need to pay attention to the township and informal economy.

An estimated 30% of economic activity as a result of the Covid-19 pandemic will likely be concentrated in the township and informal economy.

 

Investment efforts are needed in such focal areas. A precursor to this is the need for a well-ordered and capable township and informal economy.

Priority should centre on improving dynamic capabilities that encourage local economic development in such areas.

There is also a need to address the reasons behind businesses failing to absorb more employees.

This can be in the form of creating incentives for business efforts.

First, reward businesses that stimulate employment creation at a large scale rather than in pockets.

Second, award incentives to businesses that encourage an inclusive economy with priority being given to those most affected by the scourge of unemployment of youths and women.

Third, more private and public sector platforms of collaboration and engagement to [address] the unemployment challenge are needed.

This can include bringing higher education on board. The urgency here being placed on the creation of partnerships and collaborations that promote the skills and trades of a revitalised economy.

Much work needs to be done. There is no room for slacking.

 

Willie Chinyamurindi, Professor and head of the Department of Business Management at the University of Fort Hare. He writes in his personal capacity

 Published in the DispacthLIVE on 29 August 2021

https://www.dispatchlive.co.za/news/opinion/2021-08-29-opinion-no-one-magic-formula-for-sas-soaring-unemployment-rate/