Govt: More job losses coming

Cape Town - South Africa could face another round of job losses as the recession further damages consumer demand, Economic Development Minister Ebrahim Patel said on Thursday.

More job losses could place additional pressure on President Jacob Zuma, elected with strong union support, to fulfil promises to create 500 000 new job opportunities by December as a wave of union strikes and higher-than-inflation settlements rock the economy.

"As retrenchments and job losses increase, they impact on consumption, leading to lower demand which can result in a renewed round of job losses," Patel told parliament.

He said employment data has shown a large increase in unemployment with 179 000 jobs lost in the first three months of the year, and another 267 000 in the following three months.

South Africa has a stubbornly high unemployment level of 23.6%. Including people who have given up looking for work, the jobless rate jumps to more than 30%.

Africa's strongest economy has shrunk for three consecutive quarters, with data this week showing an annualised 3.0% quarter-on-quarter fall in the second quarter, after the first quarter's 6.4% decline.

Analysts say the figure raises hopes the worst of the country's first recession in 17 years may have passed, but officials have warned the recovery may lag other economies.

"The international economic crisis and the local recession threatens to wipe out our economic gains," Patel said.

South Africa's government, in consultation with unions and business, said earlier this month it would offer support to struggling companies in the auto sector and offer a rescue package for the clothing and textile industry.

It also set aside R2.4bn from the country's skills and unemployment insurance funds to help ease the strain on workers retrenched as a result of the global and domestic economic downturn.

"We need to use crisis as an opportunity to mobilise the nation around a programme to defend the economy and to further strengthen it, and to defend jobs," Patel said.

Zuma has promised to create 500 000 temporary jobs this year as part of a labour-intensive public works programme.

- Reuters