4
CDE
debbt-es I!
Unemployment - the numbers and implications for South Africa 1996
CDE held itsfourth debate on 30 September
The speakers were Labour Minister Tito
Mboweni, CDE board member and independent consultant Professor Lawrie Schlemmer, and Thandi Mathibela, president of the National Association of WOmen Business Owners and director of her own company, Thandi's Kitchen Centre (Pty) Ltd, in Diepklooj; Soweto. Ms Mathibela is also a board member of Ktsika Enterprise Promotion Agency, an agency of the Department of Trade and Industry. The debate was chaired by CDE board member Jabu Mabuza of SA Breweries.
ing that the issue of unemployment covers two matters: the statistics of unemployment, Tito Mboweni opened the debate by SOY-I
ood Ihe ;mpl;mlio", 1m Ihe coocl,y. oce:
WHAT
ARE THE CDE DEBATES"
~--
•
1996 and 1997 CDE will . run a series 0f db' e ates on tOpiCS 0f DUling
could spend most of this debate discussing the definition of employment in terms of the
-
--
and a further 350 000 earning less than R200 a month. How did the enumerators dif76000 people employed at no income at all
'"ool;ole
be"ooo .we
employed 1m oc
income and those employed income?
for a minimal
nature of work, income levels and the informal sector. Given the complexity of deflnl-
crucial importance
to current nation-
These measurement difficulti~s led the International labour Organisation s 1996
tion, the measurement proves difficult.
al policy issues. The intention is to air '"
report on South Africa to argue that this country should focus on poverty, not unem-
(CSS)
Issues underlYing the tOpiC and to
ployment.
provide quarterly figures for all industries except agriculture. These are taken from
raise the challenges that must be met
reflects an industrialised economy where most of the workforce has a realistic chance
samples of formal sector companies.
by the players and the policy mak-
at a formal sector job. The term fits poorly in
The Central
of
Statistical
unemployment Services
As the
II'
government succeeds in encouraging small, medium and micro size enterprises in South Africa, should
ers. Fo oWing
so the CSS formal sector figures reflect a shrinking share of total
employment.
But do these statistics reflect a
third world economies such as that of South Africa. One can agree that poverty in South
e ate I CDE
Africa results largely from the lack of employment opportunities, including self-em ploy-
the event. These will be widely
ment, which
t 'b t d d rl U e an
comprehensive measure of employment since it samples the labour force rather than employers. Still some anomalies emerge.
contribution
all, the 1994
h d b
of 'unemployment'
will publish a pamphlet summarising
fair indication of the trends? The CSS O cto b er H ouse h0 Id S'd urvey provi .es a more
Above
eac
The concept
pu
dis-
bl" d CDEI IClse as s
to keeping
will generate
an income ade-
quote to provide an acceptable standard of I"IVlng. The IlO ma d e an Impor . tan t pOIn: . t
the debate
being employed does not mean that the person has risen above poverty. These caveats made, the trends in for-
,
alive,
survey reports some
mal sector employment should be examined . •••••
~
....JJ
The two years since the election have brought about a stabilisation employment
in this sector rather than growth.
formal employment overall
dropped
employment
grew
by 300000. by a few
of
to 1993,
From 1994
to 1995,
percentage
points.
All
work, and the expanded
definition
is those who are unemployed
either looking or not looking for work. When one compares
From 1989
1994
new
figures
with
other
middle-level
industrialising
Chile, Turkey, Philippines and Bangladesh,
employment was created by the public sector (civil service, local and
of people
lower. Furthermore, these other four countries
The latest data from the CSS (released September cates that total employment declined quarter of 1996.
1996)
that unemployment
Africans account
for virtually all unemployed
some 98
per cent of that total - and
employed,
including self-employed.
the unemployed,
quarter of African women who count as 'employed' as unqualified
workers
earning
under
R500
underscores the need to see unemployment part of a continuum
Moreover,
Our research included interviewing
1996.
ployed and the low-skilled minimum wage
by society. This
of unskilled employment.
informal sector. Some earn comfortably.
of
unlikely,
ductivity persists.
to 39 per cent unemployed.
While
mating the rate of unemployment.
government has not yet created a jobs boom, it does have
opportunities.
strategies that should help generate, productive
ties.
historically
to improving deprived
In addition
directly,
should
infra-
government
ployment rates similar to ours. Morocco
longer term productive
workers,
this system should enhance
ability of individuals •
development
Qualifications
Framework.
As these examples employment
and
the
they survived, the answer generally was that they relied on other family members. This has serious implications: it means that the household budgets are being enormously eroded
development.
This challenge
and
cannot be met by government
by unemployment.
This leaves no
room for savings which has serious implications for economic growth. There are, furthermore,
cannot separate sus-
from long-run social
rate is not
None of the above should suggest that unemployment is not serious.
both productivity
illustrate, South Africa
unemployment world.
When the South African base of unemployed was questioned as to how
framework, coupled to an industrial strat-
creation
rate
the
of
egy and land reform, geared to maximising employment creation. tainable
ball park. South Africa's
beyond that of the rest of the developing
to find or create employment opportunities.
a stable macro-economic
unem-
skills for all
in the context
By upgrading
to show
per cent. South Africa may indeed, if one allows for the complexities,
infra-
equity and a substantial improve-
National
begin
shows an unemployment
of 23 per cent, Sri Lanka 21 per cent, the Philippines and Turkey 18
have been struck by
be in the world resource
in line
If one adjusts for this, then
these countries
and the private sector with regard to delivering
ment in human
as employed.
give
several partnerships
to employment
20 and
informal and unpaid subsistence sectors
the developing world. "
jobs
structural projects. the commitment
rate is between
with other countries once certain adjustments have been made. For instance, other countries have counted the entire
rate is not beyond that of the rest of
communities a stable basis for generating Already
overesti-
At this stage, with research out-
true unemployment
" South Africa's unemployment
it is
that SA has up
The CSS statistics are probably
communi-
to creating
this process
opportunities.
South Africa's
definitions,
25 percent. This puts the country
structure, basic services and housing for
standing,
in the medium
in terms of the strict international
employment
These include:
the commitment
go out and work in the
If the outcomes of the research so far are closely examined,
and ownership.
the cost to the economy of wasting human resources and low pro-
more
as to what
The research has shown that unemployed
the rewards
enjoys
questioned
not settle for an income equivalent to less than that of the lower rungs
like ours goes
relatively
in place broad
•
When
people who have social skills and experience
small share of the population
research into
the respondents said they would
of income as a
term, •
country
employed.
they would accept,
hand in hand with a highly unequal distribution employment •
in a middle-income
The
showed that it is difficult to distinguish between the unem-
of an adequate
high unemployment
- 39 per cent by
But, among that 39 per
more than R100 a month and most respondents
the cost to individuals remains high. They suffer not only from the lack translates into a heavy burden on the social fabric of communities.
•
definition
It was even higher among women.
expenditure
income, but are also marginalised
entire households and colIt was found that unemploy-
countries would count these people as employed.
to allevi-
ate it. This situation imposes three burdens: •
is two per cent,
said they spent over R50 per month on clothing .. The comparative
in South Africa is
adequately
people.
ment was worse in terms of the expanded
as
cent, most earned
very high, and the formal sector is not growing
statistic given for Bangladesh
lecting data from some 40 000
through an integrated
it is measured, unemployment
family
This number is substan-
Therefore the South African statistic requires closer scrutiny.
strategy .. In short, however
is much
include unpaid
For South Africa it is given as 33 per cent. This does not make sense.
a
are self-employed
and underemployment
among the employed.
The unemployment
a month. This figure
that must be addressed
are employers
Philippines eight per cent, Turkey five per cent and Chile six per cent.
of the
African women make up over half
but only a quarter of the employed.
or who
ify this category. Hence these other countries minimise unemployment while in our South African statistics we maxi mise it.
people -
only three quarters
like
tial in the case of Bangladesh and Turkey. South Africa does not spec-
cannot be
understood without reference to the dynamics of race and gender in South Africa.
are self-employed
workers as a category
indi-
by almost one per cent in the first
It should be flagged
who
countries
South Africa's proportion
provincial
governments and parastatals).
and
the CSS
tion is appalling:
economic
to bring up babies
alone. It
categories
of people for whom the situa-
young women who leave school pregnant and have as unemployed
people,
on a permanent
must become an integral part of the plans and projects of all actors in
dependent
the economy.
general who do not have the social skills and confidence
basis
on others for the rest of their lives; and school leavers in to go out
and earn a living in the informal or formal sector. Professor Lawrie Schlemmer, who is at present a visiting fellow at the SA Institute for Race Relations conducting
Thandi Mathibela
a major study on unem-
plex matter of judgement. demons:
complacency;
if too high, they can have almost the
same effect in that the problem becomes too daunting to deal with. The CSS in accepted
1994
Diepkloof, township
Rates of unemployment can be turned into
if they are too low, they cause disinterest and
gave
two
internationally
definitions of unemployment:
inition is those who are unemployed
I
CDE
entrepreneur.
She spoke of
experienced
by township
debbl"es
available With
the difficulties
in
alone
Gauteng
per
cent
of the
of three million.
immigrants,
camp and township population 41
and
with these problems.
has a population
the influx of illegal than
and obstacles
business people
solutions in dealing
Soweto
More for
as a business
She has been running her kitchen company
Soweto, for the past 11 years and regards herself as a true
I
the strict defand looking
spoke from her personal experience
owner in a township.
ployment, agreed that unemployment and underemployment needed to be seen as a continuum. Where one cuts the continuum is a com-
of
the squatter
is growing
rapidly.
the unemployed
in
are black and, as Professor Schlemmer point-
" South Africa's opportunity is
ed out, 50 percent of these are women.
Are South Africans
much greater than its crisis."
under the age of 301 are unemployed. The obvious
implications
affected
structures and
by crime. They
Opportunities
are certain targets. Crimes against them are seldom reported because of the perceived
meagreness
entrepreneurs are
latent talent for the economic
The first strategy must be co-operation
ships are poverty, crime, lack of dignity and disease. are particularly
of the amounts involved.
role models for communities;
ment for family breadwinners.
local
business
their weight
larger
with academics
employers
resource development. because
they think it is too difficult up labour
ers of stolen goods. Business owners need to stand together and refuse
labour
has become
to buy stolen goods, most of which find their way into the townships.
need to realise that South Africa
How does a Johnnie deal which will produce new
skill and flair to
in securing collateral.
and
townships.
of price by the forces
Africa's opportunity
are
because
Companies
to be a supplier
of
skill and
self-reliance
but on sound business principles. and
give opportunities
the communities.
of corBig busi-
to business in the
Business people
in the
societies which have large clienteles
need to look at the possibilities of reinvesting in the
This would
be for the mutual benefit of all concerned.
for the cue from government
Finally, government gramme.
Life is not all doom and gloom in the townships. The old Chinese
Now
in terms of incentives.
can look into this matter.
needs to speed
up its public
works
pro-
is the time to deliver.
South Africans are a winning nation. If South Africans could exude
rings true. There are
in the townships.
initiative,
Surely local and national government
the competition.
unemployment
inside the borders.
rewarding
and so develop
Banks are waiting
At the end of the day, an awful mentality prevails: shoot
realistic solutions to curbing
corporations
South Africa
has ceased
human
nothing was spent on human develop-
Fourthly, banks and building
Some areas of township business are grossly
saying that every crisis has a latent opportunity
outside
to
from hiring
These should not be based on the conscience
in the townships
by most township residents
of the free market system and the determination overmanned.
Identifying
attention
are shying away
townships need to stay there to develop those communities. Their exodus will create slums.
is often synonymous with death, as illustrated
by the taxi industry. There is no recognition of supply and demand.
ment.
townships
As prop-
erty prices fall, banks are reluctant to grant loans with fixed property as collateral. lastly, competition
labour. For decades
ness should sub-contract
is the difficulty
and universities throwing
to fire. large
projects
too expensive
porate social responsibility,
keep his business afloat. Another hindrance
intensive
cheap
tively explored.
poverty rife, the town-
has to have that extra marketing
lacking.
Thirdly, the links between small and big business must be produc-
youngsters are the majority who care little for shares in large corpoship entrepreneur
greatly
results in productivity.
benefit a jobless township youth? These about jobs. With
area
must give
Big companies
setting
Sadly, most South Africans are no better off today than they were
an
behind the initiative.
Secondly,
The frequency of armed robberies and
Business people in the townships are targets for stolen goods; the
rations; they are concerned
growth and
between local government
people,
criminals see them as loaded with money. Some are also used as buy-
black faces in a boardroom
to and
and viable projects which can be created in the town-
ships need to be identified
But township
they provide employ-
car hijacks is worse in the townships than in the suburbs.
three years ago.
enough
this potential
prosperity of the country?
in the town-
Township entrepreneurs
creative
harness and develop
Some 60 per cent of the youth (people
as much enthusJJsm for business and
South
sports, then the reduction
is much greater than its crisis. South Africans have
productivity
in unemployment
and
as they do for the six per cent
growth rate targeted by the Finance Minister becomes child's play.
in their hands huge resources of untapped human potential and talent.
Points raised during open discussion ... As a trade
unionist,
I
must point out that often companies
which publicly claims to be developing small business. It is dishonest.
which contract out services pay less than half the rate negotiated
Jabu Mabuza
responded to the claim of dishonesty on the port of
by a trade union which would apply to a company employee. Sub-
big business by saying that if any major player in any sector was seen
contracting
to lack honesty in its commitment to broadening
can lower standards,
and can frustrate the achieve-
ments which organised labour has taken a long time to negotiate. Thandi Mathibela between organised
said sub-contracting
should not lead to conflict
The majority
ened of out-sourcing because it is perceived as leading to job losses. between
business associations,
areas of sub-contracting,
such as office cleaning,
proved more labour intensive than the company in-house. Sub-contracting Mr Mboweni
of the unemployed
we are talking about - the
youth, particularly women - have never learned any business skills
conflicts and
and have had no entrepreneurial
concerns can be addressed. In her experience, the issue of lower rates' for sub-contractors had never arisen. Professor Schlemmer said although it was a problem to defend low wage employment,
base
lose out to a competitor. No big business wanted to lose market share.
labour and small business. labour might be fright-
But with co-operation
the economic
through ownership, management development and skills transfer, it would
from
these people
training. But there are initiatives
themselves to become
business-wise.
They
deserve to be listened to and supported.
in some
the sub-contractor
As the son of a football family, I see soccer as a means of com-
that had kept the task
batting crimes committed by youth. Every black child is a football player and through specially devised development
may be increasing the rate of employment.
programmes,
referred to an article written in Business Day by Thami
every child could play for a local team. The idea would be for the
Mazwai which raised the issue of a low wage buying half a loaf of bread versus no bread at all. He said the trade unions needed to answer
youngster to build an allegiance to his area or township and to get him off the streets.
this question in a manner that showed they were committed to iob creation and not only to addressing the issue of unemployment from the view
An agricultural
of those currently employed. The challenge for the trade unions, he
job does not necessarily break the poverty barrier. Poverty, he
said, was to expand employment at what wage rate?
I
As a worker in the Field of developing entrepreneurs and facilitating sub-contracting, I have found larger companies reluctant to enter into written contracts with smaller suppliers. Generally they prefer
CDE
said, not only related to income, but to services such as water supply, schooling and infrastructure.
debb'tes !
He
urged the government to shift the RDP from third into first gear. Greater
genrleman's agreements which are not legally binding on themselves. I Find this hypocritical from a sector
expert agreed with the minister that a formal
equity between management
had to be achieved. No manager
and labour
should earn more
If South Africa wanted to see
Professor Schlemmer pointed out that pay equity was unrealistic,
economic development take place in earnest, this was the way to go.
as China had found. That country, which used to have a narrow eight-
than 10 times the lowest paid worker.
When asked by Jabu Mabuza what he would say to managers, with
level system, now has to pay international
their portability of skills, pocking their bags to take advantage
management
of
market-related
comporative international salaries, the contributor said this would be
any attempt to artificially
unpotriotic.
that work in a large industry or in government
reduce unemployment
modity. There should be no interference,
about
and suggested rather is now a scarce com-
however, in a person's abili-
ty to create his own work. Under-utilised technical colleges could be
The country's policy engineers need to focus on job creation and shift resources to accommodate
salaries to
in order to attract investment. He was sceptical
encouraged
this initiative. So much money is
to approach
communities
and
pass on the necessary
social skills which would assist with entrepreneurial
spent on curbing crime; some of this funding could be used to devel-
Thandi
op small and medium enterprises (SMEs). Government lost an oppor-
Mathibela
producing
said
tunity when establishing the present ministries by not developing and
towards
involving SMEs. Developing sectors which are potential large scale
sis had to be readjusted. Tito Mboweni
employers, such as tourism, should be encouraged.
the present
employment.
education
system leaned
job seekers rather than job creators. The emphaagreed that implementation was all important. He said
joint partnerships between the private and public sector had been established as part of infrastructural development
The debate should be turned around: over-employment should be curbed by a four-day week with
projects. Ohen this meant
importing international management expertise. He said it was vital that all
the unemployed being given the
involved in politics and in policy making remain focussed on employment
chance of working the overtime.
creation. Government had put its macro-economic structure in place and what was needed now was a change in the negative attitude on the part
Out-sourcing is the way the world is moving, but in South Africa it is done mechanically. No scrutiny is made of training and develop-
of potential foreign investors. This brought a challenge for the trade unions
ment programmes in domestic componies.
who had to show that they are concerned about the unemployed.
Concluding remarks by CDE executive director Ann Bernstein One of the frustrating
issues about unemployment
and job cre-
cussed. One is the concept
ation is that there are so many tentacles to the debate. One wants to
people spend a year
ask
in disadvantaged
'Who
is. accountable?'
but too many different aspects of gov-
ernment and private sector policy affect the issue. One is always talking around the topics of unemployment
and job creation.
of a national
economics
building facilities
areas.
The second is the globalization
How does
youth corps where young
'serving the nation' , e.g. by of the economy
People who think
is a question of morality inside South Africa are looking at
one deal with this issue directly? South Africa's official statistics are, as usual, unreliable and there-
this the wrong way around. The tough news is that, if South Africa is
fore Professor Schlemmer's research is beginning
about moral issues at all. It's about people deciding
area with fascinating get
groups
which
to succeed, we have to be part of the global economy and this is not
to unpack a complex
outcomes. His work will help to identify the tarshould
be
influenced
and
the policies
investment will
to be
The theme of entrepreneurship, be supported.
with the entrepreneur as hero, must and
popularise
Tonight's debate
did
not focus sufficiently
on practical
matters of policy which
ENTRE
International
policy
must be dis-
•I
FOR
to regional
leaders
is to sustain
jobs in cities and
regions and not lose them across borders.
business as an
inherently positive and patriotic activity. issues. But there are important
The challenge
investment in their areas and keep and increase
Education is vital, and so is the manner in which polit-
business leaders perceive
where their best
step in as the South African
region opens up to capital and to labour - both legal and illegal. This will affect wages.
employed.
ical and
be. Entrepreneurs will
developments
pose tough challenges
for both the
unions and political
leaders on how to sustain investment in South
Africa
it. This is a national
and to grow
and regional
issue which
goes beyond morality.
EVELOPMENT
AND
NTERPRISE
BOARD E Bradley
(chairman),
o Dhlomo,
J McCarthy,
F Bam (deputy chairman),
A Bernstein (executive
WP Esterhuyse, A Lamprecht, J Latakgomo, I Mkhabela,
S Mogoba,
L Phalatse,
S Motau,
R Plumbridge,
K Mthembu,
L Schlemmer,
M Mthembu,
N Segal,
INTERNATIONAL
1936,
Johannesburg
2000.
Tel: 27-11-4825140
The views expressed
in this publication
G Barr, D Bucknall,
S Ndukwana,
K Shubane,
W Nkuhlu,
M O'Dowd,
C Simkins, M Spicer
Professor M. Weiner
(MIT)
Pilrig Place, 5 Eton Road, Parktown, Johannesburg Fax: 27-11-4825089
are not riecessarily
C Coovadia,
JB Magwaza,
ASSOCIATES
Professor P. Berger (Boston University),
POBox
director),
R Lee, G Leissner, A Lukhele, J Mabuza,
2193,
South Africa.
e-mail: cde@milkyway.co.za
those of CDE. This pamphlet
reflects a public
debate
hosted by CDE.