HAMLET HLOMENDLINI: Let’s be alert to the potential for job creation in agriprocessing

It should terrify us that many economic sectors now provide fewer job opportunities and that many organisations are scaling down on employment. Ultimately, this indicates the economic reform agenda and policies — no matter how good they seem or sound — amount to nothing if it means deserving individuals remain jobless.

According to the recent quarterly labour force survey issued by Stats SA on August 24, unemployment increased to more than 34% in the second quarter. This was despite the economy recording unexpected growth of 1.2% for that period. However, if the definition of unemployment is broadened to include those who were available and actively seeking jobs but have given up, the unemployment rate climbs to more than 44%. Since the 2008 labour census SA has never had such a high unemployment rate.

It may be unfair to argue that SA is probably losing the war on unemployment, especially when taking into account Covid-19, which has adversely affected not just SA but many other economies on the jobs front. However, the fact that SA’s unemployment rate has remained over 20% for at least two decades, (despite an average output of more than 4% from the years 2000 to 2006), is highly revealing. The worst part of this is that young people have been disproportionately affected, with over 74% of the youth (aged 18-34) out of work. This is SA’s most pressing problem.

Unfortunately, the unemployment rate is likely to worsen in the third quarter as the government was forced to tighten Covid-19 restrictions through most of the period in response to a third wave of infections. While this may have been necessary, it will certainly have a significant effect on efforts to revive an economy that fell 6.4% last year.

Some may disagree, but what the quarterly labour force survey clearly indicates is that manufacturing is no longer the answer for large-scale employment and holds downward risks due to automation. The service sector unfortunately faces the same risks. Specialised skills for select process areas are now a hard fact in these sectors.

While the objective here is not to criticise, bemoan or ascribe failure to other sectors, compared with manufacturing or services — which remain critical to the economy from a growth perspective — agriculture and value-added activities related to it hold the highest short- to medium-term potential for job creation. The notion of higher farm incomes might spark debate on whether this applies to real or notional incomes. What cannot be contested, however, is the fact that any material improvement in agriculture and its allied sectors makes the nation more productive and self-sufficient and helps address unemployment.

Some may question agriculture’s propensity to create jobs, but the reality is that it was one of only two sectors that managed to gain employees in the second quarter, increasing by 8% year on year from 792,000 to 862,000 workers. The majority of these job opportunities were created in primary agriculture, particularly in the horticulture space. When taking into account other value-added activities, including post-harvest activities classified as secondary agriculture or agro-processing, employment in the sector rises quite considerably.

Many people who continue to question agriculture’s ability to create employment often interpret its activities as a primary sector. This interpretation confines agricultural workers to biological production and related actions like sowing, rearing, cultivation and harvesting. However, unlike mining, the majority of agricultural production can be consumed directly by end users (as in the case of many food items) or fed into the manufacturing sector.

The economic value that is captured from the output of agricultural activities is inextricably connected to other economic sectors. Unless eaten by a farmer, agricultural output has nominal material worth until it connects with other consumers. If an agricultural product is to be monetised in its primary format as a product, marketing services are required to capture value, and furthermore it must be integrated as a feedstock into secondary sector activities, for example processing, before being turned into a consumable product.

The processing of agricultural products is therefore an important activity in the agricultural value chain and not only plays a critical role in connecting farmers to other value chain actors and markets but generates additional jobs and income for agribusiness role players, including farmers. This is where real value and a high propensity for employment creation lie and must be taken seriously in policy consideration.

• Hlomendlini, an agricultural economist, is senior agriculture specialist at Absa Group’s agribusiness unit. He writes in his personal capacity.