JOB CREATION

Key issues and strategies for job creation

Cosatu has prepared a draft document which will form the basis of its proposals at the Jobs Summit later this year. Here we present summaries of key sections of the document, which was presented to the Nedlac labour caucus in March, and which will be further discussed at the Cosatu central executive committee and the Central Committee later this year.

Click here to access the full document as tabled at NEDLAC.

The document has two main sections:

• a framework for job creation

• core policy areas: industrial and economic development; public sector employment; key focus areas such as women, the informal sector, rural areas and youth; and labour market institutions and outcomes.

A framework for job creation

Employment in South Africa is at its lowest point in 16 years. Employment trends in different sectors of the formal economy from June 1996 to June 1997 show that all sectors have lost jobs, with the exception of wholesale/retail trade and financial services. In the formal sector 62 000 jobs were lost in the first six months of 1997, flying in the face of GEAR targets. Historical trends in job destruction from 1990 to 1996 indicate significant losses, with the manufacturing sector suffering a 9,1% loss in jobs, construction 21,3% and mining 27,5%. Due to the recently announced budget cuts, the public services will face job losses in the near future, despite a record of job creation.

Overall, astronomically high unemployment rates prevail, with total unemployment being at 29,3%. Women and youth are particularly hard hit. The majority of unemployed people have never worked (69,2%). Trends and figures speak for themselves, unemployment in South Africa is clearly at crisis levels!

Policy interventions

In recognition of this crisis a presidential jobs summit has been announced. The report of a recent Nedlac Executive Council meeting outlines a broad approach to an employment creation strategy, and the process towards the jobs summit. It describes the South African economy as "fundamentally not a labour absorbing one", and asserts that "an ambitious and coordinated policy programme will be required to address key constraints and pursue opportunities".

What kind of policy interventions will the jobs summit process need to make to significantly arrest current trends? At the heart of an effective employment creation strategy must be a conceptual framework, which addresses overall perspectives and strategic approaches. In the absence of such a framework, or in the eventuality of an inappropriately conceived framework, employment creation policies are bound to flounder. What are the necessary aspects of a framework to ensure meaningful interventions?

Causes of the Crisis

The unemployment crisis in South Africa has many causes that underscore the need for a comprehensive strategy to address the problem. The problem of unemployment in South Africa is structural — it is characterised by the evolution of the apartheid economy over time. Some of the key causes of the high levels of unemployment include:

• The evolution of apartheid capitalism which depended on a racially marginalised and exploited workforce to secure profits.

• The development of extremely capital intensive production processes in a country with scarce capital resources and abundant labour resources.

• The dramatic decrease in investment in South Africa in the 1980s and 1990s.

• The decline and labour-shedding practices of important primary industries — agriculture and mining.

• Lack of investment and falling levels of employment in the parastatals during the later years of apartheid.

• The systematic under-development of skills for the vast majority of the labour force.

• The continued economic marginalisation of women.

• The tendency to export low value-added goods using capital intensive technologies and to import high value-added goods.

• The promotion of vast income inequalities which constrained domestic demand and the expansion of productive investments.

• The marginal economic development of the former homelands and the townships.

• A relatively contractionary monetary environment and the development of a financial sector with uneven industrial and developmental linkages.

A conceptual framework

Overall, the aim must be to seriously address the question of poverty elimination, and connected to this, inequality and unemployment. The principle strategic objective to achieve this aim must be a comprehensive employment strategy involving the creation of new jobs, enhancing the quality of present jobs, and ensuring employment security. Emphasis must be placed on improving the conditions faced by the most vulnerable workers in South Africa, and strengthening employment opportunities for the most marginalised members of communities.

In order to arrest current trends interventionist policies must be established which place South Africa on a fundamentally different growth and employment path. Present approaches, conservatively framed within neo-liberal economic parameters, show little sign of working. However, the South African economy is a contested terrain and many economic policies will be subject to conflict of interests. It is important therefore to recognise that a substantial fight needs to be waged to ensure implementation. Other policies might be far less controversial, but they might fail to seriously address some of the root causes of the unemployment problem. What perspectives need to inform such interventions?

Key perspectives

In order to link job creation to economic transformation, assumptions around what actually constitutes a job must be challenged. This must include addressing current employment trends that disguise unemployment through the erosion of well-paid, secure, meaningful work. A job creation strategy must address the quality of jobs created, not simply the quantity relative to a production process. Human beings are not produced commodities whose living conditions should be subject to the whims of the market! An integrated strategy must also recognise unpaid household labour.

The nature of the relationship between employer and employee also needs to be addressed, aimed at shifting present ownership patterns and economic power relationships. The resulting redistribution of productive assets would have a strong potential to redefine the nature of employment in South Africa. A job creation strategy which seeks to redress current power imbalances must also incorporate the issues of job retention and employment security.

A goal of both job creation and job enhancement requires developing employment strategies over a longer time frame than would be the case if the aim were to rapidly create short-term, poor quality jobs. In addition, while labour is central to economic growth and development, economic growth does not necessarily mean employment growth. Such an approach would require that South Africa focus on a medium-term employment growth strategy rather than simply a medium-term growth policy (for example, GEAR) that presumes that a primary derivative of growth will automatically be more jobs.

The way economic resources are distributed to sustain a population is a critical social issue. Jobs, wages, and benefits are the key instruments for distributing economic resources to the population. Employment plays a central role in determining inequality and poverty in a country. Three aspects of distribution should be addressed in a job creation strategy:

• distribution of economic production between wages and profits, that is, wage-led versus profit-led growth strategies;

• distribution of wages amongst those currently employed, that is, the wage gap; and

• distribution of employment opportunities within the labour force, that is, who gets the jobs and who remains unemployed.

CORE POLICY AREAS, ISSUES AND STRATEGIES

Macro-economic policy proposals

Macroeconomic policies must be predictable, achievable, and generally acceptable to the public. Macroeconomic credibility must extend beyond building investor confidence, and also have the support of labour.

Macroeconomic policies must encourage employment growth. As such the objective must be a balanced set of policies which create a conducive environment for employment creating strategies. A macroeconomic framework, by itself, is not a sufficient employment creation strategy but macroeconomic policies must facilitate the implementation of the appropriate industrial, investment, labour market, and public sector policies.

Key areas of macroeconomic policy which would support a broader employment-creation strategy include:

• Maintain and expand demand for domestically produced goods and services.

• Meet increased demand through an expansion of production, which in turn would generate new jobs.

• Stimulate demand by lowering interest rates, pursuing redistributive fiscal policies, and developing effective strategies to boost exports.

• Create an environment conducive to boosting the productive capacity in the economy. Increase investment to ensure that increased demand can be met through domestic production, and not through greater levels of imported goods.

• Ensure that the parameters of fiscal policy are consistent with employment creation and retention strategies. Avoid rigid and rapid deficit reduction targets which limit public expenditure and infrastructure development.

Challenges

A less conservative macroeconomic policy could meet with substantial opposition from some parts of government and some interests within the business community. Some of the key areas of potential conflict are:

• b Lowering interest rates will likely lead in the short-term to higher levels of inflation because lower interest rates will increase consumer and investment spending which is financed through borrowing.

• Unsustainable debt: The build-up of the apartheid-era debt has saddled South Africa with very high debt servicing costs. The need to reduce these debt servicing costs has led to the development of policies which aim to reduce government deficits by cutting expenditures (i.e. fiscal discipline).

• Exchange rates and foreign reserves: lowering interest rates without attracting more international inflows of finance could lead to a falling value of the rand and a reduction in the level of foreign reserves as investors withdraw short-term capital from South Africa.

• Crowding-out: Some policy analysts would argue that increasing government expenditures through borrowing will push up interest rates and therefore reduce private spending.

Investment Policy proposals

Investment policy, both public and private, must play a pivotal role in any medium-term employment creation strategy.

Job-creating investment must be productive investment. Speculative financial investments must be avoided.

The state must play an active role in encouraging and directing investment to achieve the objective of employment growth. Policies should be put in place to limit the mobility of capital and reduce volatility in the economy due to rapid short-term capital movements.

Some key policies which can boost productive investment and encourage employment creation are:

• Expand the production of infrastructure and of public investment in the economy.

• Lower interest rates. Lowering interest rates can have a substantial impact on investment in an economy.

• Create a stable economic environment. Creating a stable economic and social environment, however, must not require pursuing highly restrictive macroeconomic policies or a repressive labour relations regime.

• Create supply-side incentives to encourage job-creating investment. Investment policy must be linked to a well-defined industrial policy. Incentives can include subsidies to enterprises which invest in job-creating activities, and higher taxes on firms which are destroying jobs.

• Give women access to financial resources. Develop small-scale lending programmes to ensure that women can access financial resources.

• Implement expansionary economic policies and ensure adequate demand.

• Establish capital controls. Discourage unproductive, speculative investment and limit damaging capital outflows. Use measures such as exchange controls, taxes on speculative investments, and short-term capital gains taxes.

• Prescribed assets and control over pension funds. Implement a policy of prescribed assets to channel investment funds into job-creating opportunities.

• Focus on parastatals as key investors.

• Directed credit and finance reform. Financing and credit relationships between finance and industry must be reformed with an aim to building relationships which promote job creation. Directed credit and differential interest rates could be used to help foster such changes.

Challenges

A strong relationship exists between profitability and investment. Capitalists make private investment decisions and control the profits. This can be a key source of conflict.

Such a class dynamic can lead to capital strikes, pressures to lower wages and employment standards, and labour-displacing investments.

Industrial Policy proposals

Industrial policy broadly refers to any set of policies which directs, shapes, or influences the type of productive economic development which occurs in an economy. Industrial policy not only focuses on what types of industries and economic activities should develop, but also the linkages between different productive areas of the economy, the level of competition or concentration, the types of technology, and import and export patterns.

The structure of South African industry can have a dramatic effect on the level of employment. It is not enough to remove the distortions of the South African economy, such as its capital intensive nature, and allow the market to take over. Market forces will replicate and entrench these patterns. Instead, a well-defined set of industrial policies is needed to create jobs.

These policies could include:

• Maximising the impact of those sectors which are job creating. Industries which can serve as an engine for job creation in South Africa must be identified. This should extend beyond identifying labour intensive industries. In addition, the down-stream and up-stream linkages (e.g. between companies which supply components or distribute the product manufactured) must be identified and actively promoted.

• Develop the capacity to produce intermediate goods (inputs used in the production of final goods) and capital goods (e.g. machinery), and reduce imported goods and services.

• Supply-side incentives explicitly linked to job creation. Supply side measures which are currently in place (e.g. those linked to export promotion or technological innovation), should be evaluated and implemented taking into account their employment-generating effects. Punitive supply-side measures can also be introduced, for example tax disincentives to job shedding.

• Incorporate a job creation element into government procurement practices. Use the impact on employment creation and the ability to maintain labour intensity and good labour standards, along with other criteria, to award public sector contracts. Procurement policy can also be used to guarantee no job losses in a particular company during the period of its government contract.

• Use employment subsidies. Employment subsidies, which lower the cost of hiring labour while maintaining real wages and benefits, can be used as a tool for promoting labour intensive development. However, such subsidies would need to be strategically and selectively used to prevent windfall profits accruing to employers.

• Reform development financial institutions. Development financial institutions (DFIs) such as the IDC and the DBSA must play a much more significant role in job creation, and be incorporated into job creation strategies. Their investments need to be in labour intensive production processes with high employment multipliers.

Challenges

Small, medium and medium sized enterprises (SMMEs) are often portrayed as the primary engine for employment creation in modern, globally integrated economies. Policies such as downward variation of labour standards and wage moderation are put forward as being necessary to maintain profitability in SMMEs and to allow them to survive.

• While SMMEs can be linked to substantial gross job creation, small enterprises are much more likely to fail, eliminating jobs from the economy.

• Net creation of sustainable jobs (once jobs linked to failed SMMEs are taken into account) is far less impressive.

• Workers in SMMEs are much less likely to be unionised, and on average they already face poorer working conditions. This raises concerns about the viability and desirability of SMMEs as a vehicle for substantive and quality job creation.

Trade Policy proposals

International trade patterns and trade policies have a direct effect on jobs in export industries and in sectors which face strong foreign competition. South Africa’s trade policy will have a direct impact on job creation and job security. This is because the types of protective measures (e.g. tariffs, customs administration and rules of origin) as well as incentives (export marketing assistance, credit assistance) are able to channel economic resources towards more labour intensive productive sectors in the economy. Trade policy is able to direct resources towards producing goods higher up the value chain, thus shifting the focus away from exporting commodities and primary goods. This is likely to be particularly important given the crisis in the gold mining sector.

Trade policy reforms, consisting largely of tariff cuts, have resulted in job losses, particularly in the more labour intensive industries such as clothing, textiles and footwear. The effects of trade reforms are likely to be regressive. The worst impact will be felt by women, economically depressed regions and those sections of the population with the highest unemployment rates and lowest per capita income.

To create new jobs and protect existing jobs trade policy needs to:

• Stop the damaging effects which trade liberalisation has on employment. Where South Africa has lowered individual tariff rates to below GATT commitments and these have resulted in job losses, these must be increased up to the GATT binding rate.

• Link trade policies to employment creating industrial developments. An active trade policy should specifically target incentives, and supply-side measures, e.g. skills training to those industries that create jobs directly, or either up-or-down stream of the targeted industry.

• Pursue both import substitution and export promotion. Production for the export market tends to be less labour intensive and therefore creates fewer jobs than production for the domestic market. Import substitution will also stimulate the domestic production of intermediate (inputs used in the production of final goods) and capital goods (machinery) which will also have large employment effects.

• Address the problem of illegal imports. Government should increase resources allocated to regulating the flow of goods into South Africa. This would include increasing the inspection rate of containers, especially of labour intensive imports, adopting more sophisticated computer systems, etc.

• Stop unfairly subsidised imports into South Africa. We should make increased usage of anti-dumping and safeguard duties. It is crucial that safeguard duties take national interests into account. Job losses resulting from a sudden increase in imports should be prioritised when implementing safeguard duties to protect domestic industry.

• Implement rules of origin provisions. In the event of SADC becoming a free trade area, which would allow for the free movement of goods across boarders, one way to protect South African industries and develop the economies of SADC countries would be the impose rules of origin. This would mean that countries have to prove that the goods they are exporting consist of, for example, 25%, 50% etc. of domestic production.

• Implement a social clause. This serves to discourage countries from competing on the basis of labour repression, exploitation and poor or non-existent health and safety standards. A number of SADC countries are already using such strategies to improve competitiveness. Malawi, Mauritius, Mozambique, Namibia and Zimbabwe already host or are in the process of establishing EPZs.

• Implement strategies to address the impact of migrant and undocumented workers, including regional development, extending legal rights and union organisation of such workers.

Challenges

The SA government seems to be placing an excessively strong focus on export promotion (export-orientated development) to the detriment of domestic production. Part of the justification for this is the need to earn foreign exchange. However, export promotion is not the only way to improve foreign exchange reserves. Import substitution also helps improve foreign exchange reserves. This is because rather than paying for imports, these are produced locally, thus saving foreign exchange.

It is vital that South Africa secures a better deal with the European Union in the current round of trade negotiations. Unless South Africa obtains better access to the European market, particularly for agricultural exports, an agreement is likely to be very costly resulting in job losses.

It is widely agreed that South Africa needs to take a developmental role within the SADC region. Part of such a strategy involves an agreement to create a free trade area in SADC within eight years. Within this agreement South Africa, because of its relative stronger economic position, would lower its tariffs faster than the other SADC countries. As a result the tariff protection enjoyed by domestic producers would be lowered, making certain industries more vulnerable to foreign competition which could lead to job losses.

Technology Policy proposals

Technology and technological innovation that does not displace labour or inhibit job creation requires technology policy to be redirected away from dependency on First World technology. Technology policy has to be informed by the following objectives :

• building self reliance and complimentary links with southern Africa and other developing countries;

• a participatory process of policy formulation and innovation driven by social forces rather than the market;

• defining a developmental role for the state in "new frontier" technologies.

  To ensure job creation, unions have to engage in technology policy development. This includes:

• Asserting worker and community control over the National System of Innovation envisaged in the White paper on Science and Technology, through participation and links with universities, local research and development centres, NGO’s and the factory floor.

• The state should facilitate worker and popular control over science and technology development; intervene directly to develop certain sectors like micro-electronics and ensure increased finance for R&D. Procurement policy should be used to influence innovation in labour intensive technology.

• Optimal utilisation and development of technology has to happen through increased numeracy and literacy skills, as part of an integrated education and training policy that links scientific, mathematical and computer skills education.

Challenges

Technology development has a strong tendency to be associated with profit maximisation and ultimately capitalist modernisation.

South Africa has a limited pool of scientists and engineers and a non-integrated science and technology system.

At a micro-level there is a continued dependence imported technology, low levels of R&D expenditure, and a lack of an effective regulatory environment.

Public Service Policy proposals

• Create the conditions for sustaining the public service. This should not mean reducing the public service. Policy measures which can dramatically enhance public service sustainability include lower interest rates, broadening the tax base, restructuring the taxation system and reducing the burden of the apartheid debt.

• Restructure the public service. The structure of the public service must be changed to improve the quality of public employment. Public service employment equity policies should serve as a model for the rest of the economy. Training and building a stronger skills base should be on-going for public service employees. Hierarchies within the public service should be collapsed and the wage gap should continue to be narrowed substantially. Equal access to employment opportunities must be ensured and the degree of employment security increased. Finally, a solid system of management accountability must be put into place to assure an efficient delivery of resources.

• Participatory medium-term expenditure planning. The evolution, development and extension of the public service requires the creation of effective planning instruments and budget processes. The need for a multi-year planning tool to ensure the effective development of the public service must be recognised and an alternative medium-term budget framework developed which directly incorporates employment creation.

• The roots of the local government financial crisis must be addressed to prevent further a decline.

Challenges

Creating a sustainable public service is difficult in the current economic climate. There are pressures to reduce the size of the government and, as a consequence, public employment in South Africa. Most importantly, the size of the apartheid debt has left South Africa with large debt-servicing costs which cut into public expenditures. High interest rates, sluggish economic growth, and the poorly structured taxation system are some of the other factors.

Many local governments in South Africa are facing financial crises. These financial crises have a number of causes, from non-payment of rates to poor financial management. This stands to threaten the sustainability of local public service jobs.

Public Works Programmes Policy proposals

Public works programmes (PWPs) internationally have been an effective short-term employment creation strategy with important implications for longer-term development. PWPs can play a key role in addressing SA’s unemployment crisis. The allocation of resources to PWPs should therefore be prioritised.

Existing national and community-based PWPs have been driven by inadequate and at times inappropriate strategic approaches and policy vision. A basic framework of implementation strategies should include:

• efficient co-ordination of policies across government departments;

• reorientation of public sector investment and restructuring the industrial and agricultural base;

• creation of productive, labour-absorbing jobs through labour intensive approaches;

• large-scale PWPs, including mass provision of housing;

• significant development of the National Public Works and community-based PWPs;

• conducting effective targeting strategies;

• prioritising education and training for programme participants;

• early and full involvement of local communities;

• ensuring adequate incomes and labour standards for jobs created;

• effective administration, monitoring and evaluation.

Particular attention should be paid to the following:

• PWPs’ overall goal should be to facilitate sustainable income generation through education and training leading to longer-term, permanent formal sector employment.

• PWPs must be intrinsic to longer-term socio-economic solutions, and be supported by the appropriate macro-economic policies.

• PWPs should be maintained for as long as serious poverty and unemployment prevails.

• Projects must target the most vulnerable and marginalised and include fully integrated gender perspectives.

• PWPs should not be limited to the construction industry and should also encompass agricultural production.

• Large-scale projects should be emphasised. Contracting of services should prioritise partnerships with co-operatives, NGOs and SMMEs owned by members of local communities.

Challenges

A key challenge is locating PWPs in the context of longer-term development strategies, and avoiding a trade off for immediate needs and political imperatives.

A central issue is the extent to which the state is prepared to prioritise PWPs in channelling the necessary human and material resources.

Excessive adherence to GEAR’s stringent fiscal requirements in the face of high interest rates and debt-servicing costs potentially undermines policy implementation.

PWPs tend to create low-paid, low-quality jobs, with a lack of attention to generating sustainable employment. Whether such a compromise on job quality is necessary or desirable is an area of debate. Determining the appropriate wage rates and payment systems is a contentious issue.

Targetted strategies aimed at women, youth and job creation in rural areas have not been effective.

Restructuring State Assets

 Challenges

• Privatisation internationally has been accompanied by substantial job losses and a depletion of governments’ wealth. In South Africa, preparation for privatisation began in the mid-80s. Between 1985 and 1996, up to 60 percent of labour in certain public enterprises had already been retrenched as a result of corporatisation (state assets turned into autonomous business units) and commercialisation (assets turned into business units with shares — 100% owned by the state).

• The under-investment in state assets under apartheid means that substantial capital resources are needed now to revitalise parastatals and to provide basic infrastructure and services.

• Finding strategic equity partners in the private sector or overseas involves the danger of surrendering the delivery of basic needs to private, profit-driven corporations.

Policy approaches

The linkages between state asset restructuring and industrial policy should be more fully explored. Such an integrated approach should ensure that economic development is directly linked to employment creation objectives. Enterprise restructuring must be approached in a holistic manner.

Government must play a critical role in the process. Whether interventions require state ownership should be determined for each enterprise within an integrated framework. Restructuring of state assets can be directly linked to job retention, job creation, and job enhancement objectives. Elements of a restructuring programme which promote these goals include:

• Employment equity. In restructuring state enterprises and parastatals, ensuring employment equity and affirmative action within the organisations can be used to improve access to jobs.

• Investment and training. Retrench-ments should not be used as a tool for improving productivity and the performance of state enterprises. Instead, capital resources must be mobilised within a medium-term time frame to retool South Africa’s public corporations. Training of employees should occur to ensure that the skills-base of these institutions is also restructured.

• Employment impact assessments. All restructuring processes should be required to produce a medium-term (4-6 years) assessment of the impact of the proposed restructuring on job retention and creation, produced by an independent agency. The proposal must then be modified accordingly.

• Job retention and employment security policies. The restructuring process should include an explicit policy statement of how the restructuring proposal will contribute to job creation or ensure job retention. A social plan must be provided where retention is regarded as impossible.

Social Wage Policy proposals

A social wage can be defined as direct transfers of income (e.g. an old age pension) and a set of social subsidies (e.g. free public health care) to cover the costs of basic needs.

Implementation of a social wage must be directed at a set of policies which create a social safety net below which no one should be able to fall. A social wage package could include a guaranteed basic income, family maintenance grants, universal access to health care, public support for child care and housing subsidies.

A social wage has important implications for those who perform unpaid labour in the household. It would help reduce the costs of reproductive labour and relax constraints to formal employment on those who have household labour responsibilities. The gender dimensions of a comprehensive social security programme should be explicitly recognised. There are two broad models for a social wage programme:

• a targetted means test aimed at the most vulnerable; and

• a universal social wage, where all citizens have access to services. The financing of this package must be progressive, in that the wealthy contribute more to the programme.

In developing a social wage programme, a number of approaches can be taken into account:

• There should be a movement towards a comprehensive social security system. In designing such a system decisions will have to be taken on whether it should be based on a targeted, means-tested or a universal approach to a social wage.

• In linking the establishment of a social wage programme to employment creation, there should be an emphasis on socialising the non-wage costs of employment. This could reduce the indirect costs of hiring workers. To achieve this, appropriate methods of financing the social wage need to be in place, such as a progressive income or payroll tax or a tax on monopoly profits.

• The process of designing a social wage programme must embrace broad principles of equity, transparency and democracy.

• There should be a consistent move to deprivatise the social wage. While a combination of public and private social wage provision might be the only way of ensuring universal access to a social wage at this stage in South Africa’s development, there should be a commitment to move away from private provision as a way of strengthening the public sector.

Challenges

If economic resources are relatively scarce, the social wage package would have to be relatively modest to remain affordable.

The type of social wage programme depends on the relative strengths of the social forces that exist. The extent of a social wage programme reflects the ability of civil society to stake a claim to economic output.

While business could benefit from a modest social wage programme, extensions of that programme that compromise capitalist power (a safety net can make the threat of unemployment less severe for workers) will likely generate opposition from organised business.

Socialising non-wage employment costs could prove difficult as employees might not be willing to give up their private benefit packages because of a perceived lack of quality in the provision of public services.

Informal Sector Policy proposals

The informal sector includes a wide range of economic activities which tend to be small scale and which form an important part of the South African economy. An estimated 17% of SA’s employed population in 1995 were informal sector workers. Seventy percent of these are women. A comprehensive employment strategy cannot ignore the existence of the informal sector. Interventions could include:

• Developing a comprehensive informal sector database to ensure effective policy-making.

• Incorporate the informal sector into the formal sector: Economic activities within the informal sector should be subject to the same regulatory framework as formal sector activities. Incorporation would allow the development of extensive and integrated policies to address unemployment and underemployment.

• Tax payments: Informal sector activities which generate substantial incomes should be linked to industrial policies and should pay taxes to support the public sector.

• Design effective development strategies for the informal sector. Barriers which prevent access to financial, educational and productive resources undermine development and should be removed.

Challenges

The elimination of jobs from the formal sector will tend to push more workers into the informal sector, increasing the level of competition and economic risk in the sector.

People working informally support formal sector economic activity but under very poor, highly competitive, and unregulated conditions. These connections between formal and informal economic activities are poorly understood and under-explored.

Policies that aim to create new economic opportunities through micro-enterprises and the informal sector often ignore the fact that most informal sector activities are characterised by low incomes, unstable employment, high risk, long hours, and a lack of regulation. Micro-enterprise development can mean continued marginalisation of many workers, particularly women, within the economy and a failure to address the sources of poverty and dislocation in South Africa.

Women and Job Creation

Policy proposals

Women’s employment is constrained by various factors, including inequality in access to education and training and productive resources, household responsibilities and gender stereotypes. Where women are employed, they face discrimination and disadvantage. They are employed in lower paid, less secure jobs and have limited access to economic resources, including land, capital, credit and technology. Their contribution to the economy through unpaid labour remains unrecognised and undervalued.

The unemployment rate for women, particularly rural women, is shockingly high. Women face deteriorating job standards. More women are being drawn into atypical work, as opposed to full-time, permanent, regular employment. To create both more and better jobs for women, a number of crucial policy interventions are needed.

• An integrated policy development approach which takes into account all the roles women play in the economy and fundamentally challenges unequal gender relations.

• Mainstreaming women in development strategies: Women’s concerns must be directly integrated into all economic development policies and programmes. These should counter the ongoing marginalisation of women’s concerns and ensure that resources are used in a gender-sensitive manner.

• Gender-sensitive macroeconomic and industrial policies should include an explicit analysis of any gender-biased impacts, such as the impact rapid trade liberalisation has on sectors in which women hold a substantial number of jobs.

• Harmonising work and family responsibilities: There should be equal sharing of family responsibilities; employers must provide facilities and offer flexible working time arrangements to accommodate parental responsibilities; and governments should provide social support services and infrastructure to enable families to cope with family and work responsibilities.

• Targeted job creation for women: Unless women are actively targeted for job creation it is unlikely that they will benefit. Mechanisms such as quotas and incentives for employment of women could be explored.

• Public sector employment: The public service is a major employer of women, and the quality of jobs created in the public sector can potentially play a major role in promoting gender equality. Public sector cutbacks mean that women will lose their jobs as well as crucial social services.

• Public works programmes: PWPs can provide short-term, targeted poverty relief for women. If linked to a longer-term development programme, there can be additional gains in the form of sustainable benefits for women. PWPs should target the development of infrastructure that would benefit women.

• Anti-discrimination legislation and developing a regulatory framework: Employment equity legislation can help to prevent discrimination and break down the structures of segmentation faced by women. Legal aid and education programmes should be available for women to challenge any infraction of their basic economic rights.

• Education and training: Programmes should specifically target the needs of women and contribute to breaking down occupational segregation.

• Access to productive resources for women: This includes land, natural resources, capital, credit, infrastructure, technology and skills.

Challenges

Patriarchal ideology: A central challenge to developing an integrated job creation strategy for women is challenging the patriarchal values and ideology deeply entrenched in our society.

Strategies that simply try to alleviate the position of women, without fundamentally challenging the source of their oppression, are bound to fail. There are no quick-fix solutions to women’s employment.

Agriculture and Rural Employment

Policy proposals

Rural South Africa is characterised by high levels of unemployment and poverty. Black women in particular face marginalisation stemming from inferior employment opportunities, economically and socially imposed dependency on males and barriers to land access and security of tenure. A vision for rural employment needs to take into account both economic justice and equity issues. This means a twin strategy of returning people to their land and of securing and improving the employment conditions of rural workers.

Returning people to the land:

• Land redistribution with state support. Millions of people could gain access to opportunities for productive activity through a comprehensive programme of land redistribution. Productive land requires state support. The higher the level of support, the more jobs can be generated, especially if support is geared towards producing and marketing surpluses.

• Women on the land. Equal and independent access to land for women must be made a practical right. Women perform the bulk of subsistence and small-scale agricultural production, although most do not own the land.

• Building and transforming co-operatives. The state can play a role in establishing and transforming agricultural co-operatives, which could be purchased collectively by members over time to achieve full ownership.

• Decentralisation of processing and storage. The decentralisation of processing and storage of raw agricultural produce would ensure that the local rural economy benefits from value-adding, instead of large-scale urban-based conglomerates. The prime beneficiaries of decentralisation could, with state intervention, be small-scale processors in rural areas. These would be more labour intensive.

• Exploration of share-equity options for farm workers. Rural redistribution could include infrastructure on the land.

• The extension of formal collective bargaining onto the farms must be prioritised to ensure that jobs are not lost and that employment conditions are systematically improved.

• Retrenchments and evictions from white-owned commercial farms must be stopped as well as the long-term trend towards a declining workforce.

• Improving employment conditions. The state should intervene in areas such as the establishment of a national training fund, pro-active monitoring of farms to ensure adherence to legislation and education on legal rights.

• Protecting and extending the basic employment rights of casual, seasonal, sub-contracted and migrant workers must be a priority.

• Shifting to labour-intensive production — in sub-sectors such as deciduous fruit and vegetables, which are labour intensive and situated in a rapidly growing world market.

• Regional integration — explore initiatives which allow the rest of southern Africa to make fuller use of its fertile land and South Africa to make use of its infrastructure.

Challenges

Rural employment creation poses many challenges, including:

• The physical limits to agricultural expansion such as the availability of fertile land and water.

• Land redistribution must be accompanied by access to resources to ensure productive land use.

Youth

Policy proposals

Youth unemployment should be addressed through:

• Job creation: ensuring the expansion of employment opportunities within the South African economy.

• Job allocation: ensuring that young workers have access to employment opportunities as they become available. This should involve skills development, better information on employment and ending discrimination. Public works programmes should target youth.

Challenges

• Incentives to hire youth, for example, through lower wages and labour standards could reinforce the segmentation and marginalisation of young workers. This would effectively create a second tier to the labour market. It could apply significant downward pressure on working conditions in the primary labour market.

• Active education and training programmes, combined with an overall employment creation strategy would be more effective.

• There is a need to consider employment subsidies for youth and the application of quotas in public and private sector employment.

Cosatu’s draft document on job creation also includes a section on labour market institutions and outcomes dealing with social plans, hours of work, collective bargaining and labour market restructuring. This was not included in the print version of The Shopsteward due to space constraints, but is available elsewhere on the COSATU web site.