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Record unemployment rate: South Africans pay a high price for ANC’s bad choices

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Dear MyPE

The DA notes with despair the announcement today by Statistics South Africa (StatsSA) that 2.2 million people lost their jobs in the 2nd quarter and that the expanded unemployment rate increased by 2.3% to an unprecedented 42% in the same quarter.

By its own admission, StatsSA points out that the decline in the official unemployment rate from 30.1% to 23.3% in the 2nd quarter is not a reflection of an improvement in the labour market but rather an effect of the lockdown, since the official definition of unemployment requires that people look for work and are available for work.

In real terms, unemployment did rise exponentially in South Africa as ‘the national lockdown hindered people from looking for work’. This rise in unemployment is a classic case of the ANC government’s chickens coming home to roost. A decade of economic policy incoherence and uncertainty, exacerbated by the Covid-19 pandemic and the draconian lockdown that accompanied it, has exacted a heavy toll on already struggling South Africans.

The catastrophic impact of the strict lockdown on economic activity has already been reflected in the 2nd quarter GDP figures, which contracted by 51% on a quarter-on-quarter annualised basis.

The bad news for unemployed South Africans is that there isn’t going to be a quick recovery in the job market as long as the government fails to move beyond rhetoric and start pursuing a genuine economic structural reform programme. The rapid absorption of unskilled workers into employment should be SA’s number one policy priority, and for that we need to remove state-imposed constraints to economic growth.

President Ramaphosa’s draft NEDLAC economic recovery plan, while containing welcome concessions on energy sector reform and digital migration, still contains anti-growth proposals that could kibosh the plan.

The draft plan’s call for the strengthening of employment equity and empowerment related legislation clearly shows that racial bean counting still remains at the heart of government economic policy thinking. This is despite widely available evidence showing that BEE policies have done nothing to expand opportunities and promote inclusion for the majority of South Africans.

In addition to a cocktail of bad policy choices, the ANC has been working tirelessly to throttle public works programmes that have the potential to offer short-term employment relief. Recently, it was reported that the R19.5 billion that was set aside in the supplementary budget to create mass public employment jobs could now be at risk of being diverted towards bailing out SAA.

That 3 million South Africans have lost their jobs as a result of Covid-19 does not bother the ANC; instead the ruling party is intent on driving them further into poverty and deprivation to fund a defunct airline which has already gobbled R57 billion in bailouts since 1994.

When President Ramaphosa presents his final NEDLAC economic plan, he has an obligation to announce pro-growth policies that would attract investment and create jobs. Similarly, when Minister Mboweni presents his Medium Term Budget Policy Statement in late October he must resist the temptation to divert funds meant for employment relief towards funding failing State Owned Enterprises.

Regards

Dr Michael Cardo MP
DA Shadow Minister of Employment and Labour

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