GIULIETTA TALEVI: Don’t be fooled — this level of unemployment isn’t normal
The latest jobless figures have once again been met with hardly a reaction from civil society, let alone the government. Have we become so inured to the human crisis that continues to play out around us?
Who wants a job anyway? Well, all the desperate job seekers in SA do. They now constitute the 7.2-million unemployed — which is 8,000 more people than at the end of last year.
On the narrow definition of unemployment, 32.6% are without work — which is the highest since Stats SA began producing its quarterly labour force survey in 2008. But if you look at the expanded definition, which includes those who’ve given up looking, this unemployment number balloons to 43.2%. Dig deeper, and you’ll see that, horrifically, 74% of the youth have no job and, at this rate, scant hope of ever being employed.
It is a bone-chilling figure of economic failure, yet Tuesday’s figures, once again, met with hardly a reaction from civil society, let alone the government.
Have we become so inured to the human crisis that continues to play out around us? Have we begun to believe this is normal?
While SA is among the world’s worst, the jobs carnage due to Covid is a global phenomenon: the International Labour Organisation reckons that 75-million jobs will disappear worldwide this year and that there will be a global shortfall of a further 23-million jobs in 2022.
Depressingly, it says: “Projected employment growth will be too weak to provide sufficient employment opportunities for those who became inactive or unemployed during the pandemic and for younger cohorts entering the labour market.”
And it adds: “Many previously inactive workers will enter the labour force but will not be able to find employment.”
While this is playing out in many lower-income countries, the situation in the world’s richer regions is the opposite — a shortage of staff to do the work.
Last month, The Economist wrote: “In America a surge of spending is creating job openings, but few people seem willing to fill them. The number of vacancies, at over 8-million, has never been so high.”
The Financial Times (FT) also reports that a shortage of workers across Europe — and in this case, Berlin — “is hampering the reopening plans of hotels, restaurants and bars, which threatens to hold back an expected economic rebound as vaccinations accelerate and Covid-19 restrictions are eased further.”
Clearly, spending time at home on a government subsidy — a real subsidy, not a paltry R350 à la the SA government — has led to a lot of introspection and life-changing decisions.
“One reason I think we have these shortages is that people working in hospitality went home, and over the past six months, they’ve reassessed their lives,” Emily Harman, co-owner of Berlin’s Ora restaurant, told the FT.
“It highlighted issues in the sector: low pay rates, long hours . . . If I didn’t own this business, I’m not sure I would have stayed in this industry.”
Someone else, identified as Franco, reckons that the quality of service workers in Berlin was a “disaster” even before the pandemic. “I love to serve people, but if we’re honest, I think a lot of people don’t.”
One answer to the problem might be higher pay, and it seems curmudgeonly, at best, to begrudge workers a pay hike.
Yet higher wages aren’t yet evident. As the FT writes elsewhere, “in the US, the quarterly Employment Costs Index showed the biggest jump in wages for 14 years in the first quarter of 2021, but it lags behind events on the ground and can be volatile. In the eurozone and the UK, headline measures of wage growth have been distorted by the large number of low-paid workers still out of work and by reductions in working hours because of furlough and short-time work schemes.”
As The Economist points out, there are “snarl-ups” aplenty in a shortage of staff. “A bidding war between employers could yet cause an inflationary spiral. And shortages ricochet around the economy. A builder that cannot find labourers will put up fewer new houses, in turn hitting decorators. Businesses that are still recovering from the crisis may face another financial blow,” it wrote.
In other words, wage pressure may be a crucial metric for the world’s central bankers to watch in the coming months as they grapple with rising inflation.
But when you stack that against the devastation explicit in SA’s incredible shrinking jobs market, this seems a nice problem to have.
Talevi is the FM's Money & Investing editor.
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