DEVELOPMENT BULLETIN-SOUTH AFRICA: Unions Propose Job-Creation Strategy

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Gumisai Mutume

JOHANNESBURG, May 2 1998 (IPS) - South Africa’s labour unions warned Wednesday that the high rate of job loss in the country had to be averted to avoid political instability.

Announcing proposals for job creation ahead of a Presidential Job Summit due sometime this year, the leaders of the three major labour federations in South Africa said employment was at its lowest point in 16 years.

In the past year, some 115,000 jobs have been lost and, between June 1996 to June 1997, there were job losses in all sectors of the economy with the exception of the wholesale, retail and financial services. Some 62,000 jobs were lost in the first six months of 1997 although the government adopted a new macro- economic policy, the Growth Employment and Redistribution strategy (GEAR) in mid-1996.

“The longer the summit is delayed the more the unemployment crisis will engulf the country with all the consequences,” ran a statement by the Congress of South African Trade Unions (COSATU), Federated Unions of South Africa (FEDUSA) and the National Council of Trade Unions (NACTU).

GEAR, adopted in June 1996, aims to create 400,000 jobs annually by the turn of the century and achieve annual economic growth rates ofsix percent. However, the economy is now growing lethargically at about two percent each year, much lower than the five-percent average being achieved by an increasing number of other sub-Saharan African countries.

“We believe that any fiscal policy should be judged by its own capacity to generate new jobs in the economy,” said Zwelinzima Vavi, assistant secretary-general of COSATU. “If it can’t do so we will argue that such a fiscal policy should be reviewed or possibly scrapped.”

Over the last three years, unemployment has grown from 33 percent of the potentially active population to an estimated 40 percent, according to figures from the Central Statistical Services. Other estimates put the rate at between 32 and 50 percent, mostly people who have never worked before.

This year, the rand has dropped to its lowest level ever against major currencies and the gold price fell to its lowest in two decades, resulting in massive retrenchments of miners.

The unions say the crisis is a result of the evolution of the apartheid economy which, among other things, emphasised capital- intensive production in a country with scarce capital resources and abundant labour reserves. On the other hand, business argues that wages are too high by international standards in relation to the level of productivity of the economy and that unless this is addressed, jobs will not be created.

The forces of globalisation have impacted negatively on job creation since South Africa entered the international community in 1994. Labour proposed Wednesday that “strategic trade policies must ensure that jobs are not destroyed through blind liberalisation and that the proper trade relations are developed to support an employment growth path”.

The proposals call for the development of small-scale lending programmes to provide women access to finance, and for the state to be an engine of job creation and intervene in certain sectors of the economy.

Labour says another critical area for the labour market is parastatal reform. Government is currently restructuring its loss- making companies. Similar efforts led to the retrenchment of up to 60 percent of the workforce in some public enterprises between 1985 and 1996. Labour says the agenda for the summit should be structured around job-creation measures, steps to support the unemployed, dealing with job losses and assisting the informal sector to become formalised.

Labour Minister Tito Mboweni is on record as saying the Summit will be held later this year. However government has not yet tabled its proposals and this is seen in some areas as an indication that the conference may still be a long way off.

“With regard to when the summit will be held, we would want the summit to be held yesterday,” said Vavi, whose 1.8-million- strong COSATU is South Africa’s biggest labour federation. “However, we remain available to engage with other formations so that the summit can be held as soon as possible.”