Little hope of hitting job-creation target

When he took office in May 2009, President Jacob Zuma promised to create 500000 jobs by the end of that year.

But by the end of last year there were 237000 fewer people employed in SA than when Zuma made his promise.

Official unemployment reached a high of 25.3% in last year's third quarter.

Although unemployment fell to 24% in the fourth quarter, the chances of creating fivemillion jobs by 2020, as promised last year, are looking slim.

SA's labour force participation rate is 53.6% compared with a world average of 69.2%, said Mike Schüssler, an economist at Economists.co.za.

The labour force participation rate is the proportion of the population of working age, between 15 and 64, who are either employed or unemployed. That means everybody who works or who wants to work.

The problem, said Schüssler, is that it is difficult to be counted as "unemployed".

According to the official Stats SA definition, to be classified as unemployed a person should have been actively looking for work in the previous four weeks and be available to start work immediately.

The rest of the working-age population are classified as "not economically active". These are the discouraged workers who are not actively seeking work or who simply do not want to work.

The number of discouraged work seekers rose by a massive 25.7% in the past year and the number of people not economically active by 5%.

Schüssler said that classifying people as discouraged work seekers, rather than as unemployed, is a worldwide phenomenon as it makes a country's unemployment figure look better.

Stats SA's quarterly labour force survey indicated that 13.13million people of working age were employed in the fourth quarter of last year and 19.06million, the unemployed and the not economically active, were not.

"The truth is that SA is simply not creating enough jobs," said Schüssler.

Econometrix's Azar Jammine said there are three main reasons for this.

"There is lack of basic skills and education. The effective illiteracy and innumeracy of a big part of the population means the only jobs they can do are the really menial and manual. And we do not only need graduates, we need artisans," said Jammine.

The role of trade unions is the second big obstacle to job creation as they prevent people who do not have many skills from doing menial or simple jobs at a low wage, said Jammine.

It has become extremely unattractive to take on workers and become tied into contracts that are very difficult to get out of.

Jammine said the third obstacle was that small business and entrepreneurship was simply not encouraged and was not allowed to play a constructive role in SA.

"Small businesses create three to five times as many jobs for a given amount of capital investment as big businesses," he said.

"In the State of the Nation address, an incentive of R20-billion was announced for investment purposes, but it will only be available for companies that invest at least R200-million in the economy. So the small business sector is once again left behind."

The social grant system is another reason why small business is not thriving, Jammine said.

Last year, almost 13million people received social grants.

"People rely on the state for hand-outs rather than working hard and starting up their own small businesses to create jobs for themselves."

Schüssler said only 1.2million South Africans are self-employed.

"It is as if people are afraid to employ themselves," he said.

According to Stats SA, most sectors were still shedding jobs in the fourth quarter last year, although a net total of 157000 jobs was created.

The government played the biggest part in the increase in employment, with 148000 jobs being created in community and social services.

The South African Institute of Race Relations said this month that one in eight people who were employed in SA, or almost 13%, worked in the public sector.

This did not include employees of public institutions such as water boards and liquor and tourism boards.

Average public sector earnings last year were 44% higher than those in the private sector.

The period for comment on four controversial labour law amendment bills, published in December, ended on Thursday.

In its submission to the labour portfolio committee of parliament, the Free Market Foundation warned that these amendments would raise the cost, risk and difficulty of creating jobs and sustaining existing jobs.

The forum warned that the amendments would increase unemployment in SA.

Business Unity SA and the South African Chamber of Commerce and Industry both called for the bills to be withdrawn.

A southern African analyst at Control Risk said that if the bills did eventually become law they would be a watered-down version of what was published in December.