Government needs to urgently focus on job creation efforts as it tries to revive the economy, and key to addressing this challenge will be the speedy implementation of government's economic policies to address the bottlenecks in the economy, industry organisation the Steel and Engineering Industries Federation of Southern African (Seifsa) chief economist Chifipa Mhango says.
“The Statistics South Africa (Stats SA) Quarterly Labour Force Survey data released on August 24 is a sign that efforts to reverse the impact of Covid-19 on the economy and employment will continue to be a bumpy ride unless there is a focus on government policy implementation,” he notes.
Seifsa remains concerned about the job losses experienced in the metals and engineering sector. The sector’s contribution to overall total manufacturing employment has dwindled from 37.9% in 2008 to 35% today. The sector lost 35 000 jobs in 2020.
Challenges facing businesses in the metals and engineering sector, such as high electricity costs, unreliable energy supply and disruption in raw material supply, rising logistics costs and cheap imports, have continued to weigh negatively on the industry.
“While government, businesses in the sector and other stakeholders have partnered to address these challenges through the implementation of the Steel and Metals Fabrication Master Plan, there needs to be a sense of urgency to implement the interventions.”
According to Statis SA, South Africa's unemployment rate worsened to 34.4% in the second quarter, from 32.6% in the previous quarter. The largest number of job losses was recorded in finance, which lost 278 000 jobs, followed by community and social services losing 166 000, and manufacturing 83 000 jobs.
“In these negative circumstances, unemployment is now indeed the cruellest tax on vulnerable sectors of the population and job creation continues to demand top priority,” says North-West University School of Business and Governance Professor Raymond Parsons in separate commentary on the unemployment figures.
"There is no quick fix. Given the current uncertainties in the economic outlook, the immediate overall job situation is therefore likely to get worse before it gets better.
"The latest unemployment figures nonetheless send a renewed message that the balance between lives and livelihoods in handling the pandemic remains an acute dilemma which needs to be carefully managed in the period ahead," he says.
Existing job support measures must, in the meantime, be intensified. The unemployment situation injects urgency into the implementation of the various important existing short-term economic support measures, so as to offset, to some extent, the hardships being experienced by companies and workers who have been economically badly hit. It also highlights the importance of expediting the vaccination programme to speed up economic recovery, says Parsons.
“As the bulk of future job creation must come from the private sector, the business-friendly environment required for private fixed investment to flourish needs to be expedited.
“The latest statistics show private capital formation remains at a low ebb and is currently inadequate to support the much higher growth that South Africa needs. To get the South African economy onto a far higher job-rich growth path now needs a sense of urgency and consistency in implementing the right remedies and reforms required to rebuild business confidence and boost investment,” says Parsons.
The level of unemployment in South Africa is far higher than in economies such as Brazil at 14.7%, Russia at 4.9%, India at 9.2% and China at 5%, which are all part of the Brics economic development partnership, alongside South Africa, says Seifsa.
“It is important that the government continues to engage with the sector to identify obstacles that could prevent the speedy implementation of the masterplan,” notes Mhango.