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Media Centre  |  COSATU Press Statements

COSATU concern at slow jobs growth

13-12-07

The Congress of South African Trade Unions has noted with grave concern the slowdown in the rate at which new jobs are being created.

According to Stats SA, employment in the non-farm formal sector rose 2.4% in the third quarter of this year from the same quarter last year. This is lower than the rise of 2.8% in the previous quarter. Amere 30 000 formal jobs were created in the third quarter, only a 0.4% quarterly rise in the total number employed, lower than the 0.5% rise in the previous quarter.

This year so far only 96000 new jobs have been added to the total, despite economic growth accelerating to 4,7% in the third quarter, up from 4,5% in the second. Consequently the official rate of unemployment, which excludes those who have given up looking for work, remains unchanged, at 25.5%. The more realistic expanded unemployment rate rose to 38,3% in March, from 37% in September last year!

The phenomenon of jobless growth is becoming more and more pronounced. Despite these modest increases in growth, the rate at which new jobs are being created comes nowhere near enough to reduce unemployment at all, let alone to reach the ASGI-SA target of halving the 2004 levels by 2014.

Of particular concern is the net loss of jobs in the crucial manufacturing sector  15 000 in the year to September - a drop of 1.1%. Although there were 38 000 new jobs in mining, this reflects the high price of minerals on the world market, which cannot be guaranteed indefinitely. COSATU has continuously warned against too much dependence on mining and exporting raw materials rather than focussing on the more stable manufacturing sector.

As the COSATU General Secretary told the Financial Times this week: "We are in the longest period of economic growth in South Africa's history, and I appreciate that. It gives a signal to everybody that we can manage the economy. But I am absolutely frustrated that we have seen jobless growth, that economic growth has not helped us really dent unemployment."

He went on to put forward COSATU's solution: "We should have deliberately shifted the economy away from capital-intensive sectors to labour intensive sectors. We should have looked at more processing, food. We should have looked at issues of infrastructure , at beneficiation of mineral resources. We should have looked at many things of that kind. We didn't and I think we will pay.

"We have this massive financial sector that is internationally competitive, we have these big chemical plants, and we have this mining industry. Unfortunately this mining industry is not labour intensive. The chemical plants are not labour intensive. That' s why you have an economy that grows but doesn't create sufficient employment."

One of the main reasons for this latest slowdown is undoubtedly the repeated rises in the base lending rate, which, as COSATU has kept warning, were bound to slow down the rate of job creation, as firms face higher and higher burdens of loan repayments, an d the cost of borrowing money to set up new businesses is becoming prohibitive.

COSATU will be arguing strongly at the ANC National Conference next week for new economic policies which put employment creation and povery reduction at the top of the agenda, and commit the ANC government to the use of strong state intervention to increase invetment. Government must direct that investment into areas like manufacturing and benficiation that can dramaticaly increase the rate at which new and sustainable jobs are being created. We shall campaign hard for the abandonment of the Reserve Bank's inflation-targetting mandate in favour of an employment-targetting strategy.

Only then can we serioysly tackle the related problems of poverty and inequality which deprive millions of South Africans the economic fruits of their political liberation thirteen years ago and leave them mired in poverty and misery.

Patrick Craven (National Spokesperson)
Congress of South African Trade Unions

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