Only 43.1% of adult South Africans, or just more than four of every 10 of us, have paid jobs of any sort. When we talk about economic exclusion and the urgent need for SA’s economy to be far more inclusive, that surely goes to the heart of it.
On the face of it, however, the third-quarter figures seem to provide some reason for optimism. Unemployment rose because many people — almost a quarter of a million of them — who had previously given up looking for work were reported to have popped up again and started looking, causing them to join the ranks of the officially unemployed.
That drove up the unemployment rate even though, according to the labour force survey, the economy created 288,000 new jobs during the third quarter.
That would be most encouraging, but while this survey tends to show the broad trends quite accurately, the details tend to be wildly volatile and often inexplicable. So, for example, agricultural employment suddenly jumped by almost 7% in the third quarter, in the midst of one of the worst droughts in decades.
Figures for other sectors are also hard to explain, and the quarterly breakdowns need interrogating.
The bottom line is that, on a year-on-year basis, employment has essentially been flat over the past year, with a minimal 5,000 jobs added from last year’s third quarter to this year’s. That is consistent with the economy, which over the period has been hugging zero growth.
Nor is the outlook particularly good: growth this year could reach 0.5% or so (the pessimists still expect little more than 0.2%) and is expected to lift to only about 1% next year.
Chances are, then, that the economy is unlikely to create jobs at a meaningful rate and on a sustainable basis anytime soon, and the unemployment rate could continue to rise.
That doesn’t seem like a particularly good time to introduce a national minimum wage, at a level the committee of experts advising Deputy President Cyril Ramaphosa say should be R20 an hour, or R3,500 a month.
The committee is well aware of how fragile SA’s economy is and has sought to strike a balance, with a minimum wage that is high enough to make a real difference to poverty levels and inequality, but not so high that it will cause widespread job shedding. It has sought, too, to build in an adjustment period to allow businesses time to adjust and the authorities time to evaluate the effect of the new dispensation before they take it any further.
It may be that a minimum wage would be positive for the economy and the lives of working people, as its supporters contend, and that it would indeed boost consumption and growth, at least in the short term, without costing jobs.
But there is a possibility it could drive up SA’s unemployment rate to even higher levels, as some economists have forecast. We simply don’t know.
And even if it did not cost existing jobs, we could never know its cost in terms of jobs that are never created, but might have been had wages been lower.
The proposal has already elicited strident criticism from those who view R3,500 as too high as well as those who view it as way too low. That’s probably a sign that the committee’s proposal is a good basis for negotiation, one that hopefully will reach a sensible conclusion in the not too distant future.