Lack of investment keeps unemployment levels astoundingly high
BUSINESS LIVE / 14 FEBRUARY 2018 - 05.45 / SUNITA MENON
A continued lack of fixed investment and low business confidence have kept unemployment levels astoundingly high.
While SA’s unemployment rate improved in the fourth quarter of 2017, based largely on temporary work in the festive season, it stayed stubbornly high at 26.7%.
Picture: THE TIMES
This translated to 5.9-million unemployed people, based on the official definition of unemployment, which includes those who are not employed but are actively looking for jobs.
While the figures show that the number of unemployed people fell by 330,000 quarter-on-quarter, much of this drop came from a 351,000 decline in the size of the labour force and a 102,000 increase in the number of discouraged work seekers.
Despite the "Cyril Ramaphosa effect", which has already caused a rise in business confidence, the issue of unemployment is structural and requires a substantial increase in fixed-investment spending by the private sector.
Stanlib chief economist Kevin Lings said that unemployment could only be resolved meaningfully through a concerted and sustained effort to improve skills development and to encourage private sector fixed-investment spending, business development and entrepreneurship. It rose to 27.7% in the first quarter of 2017, the highest level since 2003‚ and worse than the rates of 23%-24% seen in the financial crises of 2008-09.
Nedbank economist Johannes Khosa said that the outlook for the job market "remains uncertain, but prospects are better".
The improving political landscape coupled with higher global economic growth and commodity prices will support business confidence, Khosa said. "[This] should ultimately encourage fixed-investment activity and employment creation by the private sector."
Despite a projected increase in fixed investment for the private sector, growth of employment in the public sector could be restricted by the need for fiscal consolidation.
The figures from Stats SA showed that the number of jobs declined by nearly 21,000 in the quarter with the private sector slashing 135,000 jobs.
The prospects for job creation remained dim given the current sluggish growth environment and the disconnect between the private sector, the government and unions, Jason Muscat, a senior economic analyst at FNB, said.
Cosatu spokesperson Sizwe Pamla said the government had so far shown no plan to resolve SA’s structural unemployment.
"Our jobs are disappearing as a result of changes in the structure of the economy and also because the available labour does not have skills or education to occupy existing posts," Pamla said.
Without the necessary policy intervention to address growth, youth unemployment and education issues, high unemployment is likely to persist into the foreseeable future, said NKC economist Gerrit van Rooyen.
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