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SA's rising unemployment shows labour model inadequate

SA’s rising unemployment shows labour model inadequate

JOHANNESBURG – South Africa’s rising unemployment rate is evidence that the country’s current labour model is inadequate to stem the shedding of jobs, a labour expect said on Thursday.

Unemployment rose to 29 percent of the labour force in the second quarter of 2019 from 27.6 percent in the first, the highest since a quarterly labour force survey was introduced in 2008, Statistics South Africa said earlier this week.

The data points to the overt failure of the country’s current labour market scheme, making it necessary to revisit internal policies and take inspiration from the successes of other countries, director of the employment practice at Cliffe Dekker Hofmeyr Hugo Pienaar said.

He said it was important to understand what role the business and labour could play in creating jobs and stimulating an ailing economy.

“It would be a futile exercise for either labour or business to blame each other for the rise in South Africa’s unemployment rate,” said Pienaar.

“A more productive approach would be for all parties to find a middle ground where there is no exploitation of labour, on the one hand, and no alienation of investment on the other.”

A useful example was Ireland, where government, business and labour formed a social accord during the 1990s which yielded positive results for job creation. Lessons would also be learned from Germany where the government imposed labour market reforms between 2003 and 2004 to quell rising unemployment.

But Pienaar warned it would be a mistake to simply replicate international labour markets or trends in South Africa as each country had its own unique labour market climate and challenges.

“It is, however, useful that (government, business and labour) are mindful of the workings of the international labour markets. They must accept that current practices and policies are not achieving the desired results,” he said.

World trends had shown that the growth in the creation of employment did not necessarily lie in the formal sector, making it important to have employment-friendly legislation in place, Pienaar said, urging the government to also address the lawlessness of strikes.

“This is a particularly fundamental challenge for business. It would not be unreasonable to expect the government to ensure that the police enforces the law without employers having to incur huge expenses in approaching courts for strike interdicts,” he said.

“It has become a sad reality that employers settle wage negotiations because of violence, rather than on pure economic principles.”

 He urged businesses to help minimise retrenchments by providing for multi skilling and mechanisms for productivity bargaining. Another consideration would be wage freezes for executives and even pay cuts and bonus reduction for top earners.

On the labour front, Pienaar stressed the need to democratise the workplace by introducing ballots before employees embarked on strikes. 

“I suggest that the parties enter into some form of social accord, which will be based on the lessons learned from other countries,” he said. “It is crucial for there to be mutual trust and integrity between all parties for the proposed model to be successful in South Africa.”

Earlier on Thursday, labour union Solidarity said the official unemployment rate of 29 percent, although alarming, still painted a rosier picture than the reality.

Stats SA data showed that joblessness was even higher at 38.5 percent in the second quarter when using the expanded definition which includes people discouraged from actively looking for work.

Morné Malan, a senior researcher at the Solidarity Research Institute, said while the use of the narrow definition of unemployment was common practice around the world and recommended by the International Labour Organisation, it was inaccurate for South Africa.

“South Africa has an exceptionally large gap between the narrow definition of the unemployment rate and the expanded definition (and) we have a particularly low labour absorption rate (42.4 percent),” Malan said.

“A 2013 study at the University of KwaZulu-Natal indicates that so-called discouraged jobseekers, who are not counted as unemployed in the official rate, are in no way less likely to be employed than so-called active jobseekers,” he added.

Solidarity said a 38.5 percent unemployment rate demanded even greater action from government to tackle the challenges of structural unemployment.

“The government is causing the problem with counter-productive policies such as minimum wage, strict labour legislation, intensified enforcement of black economic empowerment, and many more,” he said.

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Originally appeared on on 01-08-2019. The views expressed herein are those of the author and do not necessarily reflect those of estome. estome accepts no responsibility for the accuracy, completeness or fairness of the article, nor does the information contained herein constitute advice, legal or otherwise. About the Author: African News Agency (ANA) Reporter. Feature image credit: Photo: File.

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