Johannesburg - The growing army of unemployed South Africans is not going to be whittled down any time soon.
Economists say the economic recession and labour's stubborn approach in ongoing wage negotiations will certainly scare companies away from labour-intensive investments which have the potential to alleviate the country's jobs plight.
"Labour seems to be non-bending when it comes to wage negotiations. It has looked at personal development rather than at what is happening in the economy," says Mandla Maleka, chief economist of state-owned power monopoly Eskom.
"In the current environment businesses will look at innovative ways of substituting labour with capital because they have no incentive to press on with labour-intensive projects."
Employers in the private and public sector are reeling from a punishing economic downturn that has pulverised profits and significantly reduced government?s tax collections. They are also faced with a mounting expense bill due to big wage demands and a huge 31.3% electricity price hike by Eskom.
South Africa is currently in the grip of intensive arm-wrestling between employers and workers over wages. This week above-inflation wage increases were announced in the coal and gold mining sectors, and on Friday municipal workers ended a five-day strike after agreeing to a 13% wage increase with the South African Local Government Association.
The increment is significantly above the official consumer inflation rate of 6.9%. There have also been wage hikes in the petroleum (9.5%), construction (12%), and diamond industries (9%). The gold sector settled at between 9% and 10.5%.
Alan Fine, spokesperson for gold producer AngloGold Ashanti, says though the firm's overall operating expenses have gone up as a result of increases in wages and electricity costs, it is not planning to shed jobs.
About 40% of AngloGold Ashanti's costs in South Africa are related to labour while electricity accounts for 15% of its overall costs.
"The wage and electricity price increases will have an impact on overall costs. We are working very hard to enhance our efficiencies. We believe the wage settlement is fair and the workers are entitled to it.
"We don't have any plans to retrench workers and we are not expecting any sharp decline in the price of gold," Fine says of the company that employs 37 000 in its South African mines.
Construction workers vulnerable
Official employment figures published last week by Statistics South Africa show that the mining sector shed 14 000 jobs in the second quarter of this year as commodity prices and some prices of precious metals, such as platinum, continue to be in the doldrums due to a slump in global demand.
Worries about job losses in the local economy come at a time when the number of discouraged job seekers has grown by 302 000 to 1.5 million people in the second quarter of this year.
Solomon Sekele (22), a travel and tourism graduate from Waterberg EFT College, is among the disillusioned job seekers.
"I have been out of a job since December last year. If you don't have any connections you will not be successful in finding a job," he says.
Platinum mines have shed the most jobs as the metal's price has halved to about $1 204 an ounce within 12 months.
The higher gold price, which traded close to $940 an ounce on Friday, has benefited the likes of AngloGold Ashanti and its peer, Gold Fields. In October 2007, when the US-triggered credit crisis started to stoke the world?s financial markets, the gold price was trading just above the $650 an ounce mark.
There are fears that the construction industry, which has been the main source of employment, may start shedding jobs once some of the projects related to the 2010 Soccer World Cup are completed next year.
About 22 000 of the one million employed in the construction industry are involved in the construction of 2010 World Cup stadiums.
"Workers employed in 2010 projects are vulnerable. We may see unemployment rise after the construction of these projects has been completed next year," predicts Eddie Cottle, co-ordinator at the International Labour Research Service.
In the second quarter of this year the construction industry shed 9 000 jobs, but Eduard Jardim, spokesperson for the country's largest construction company, Murray & Roberts, is not entirely sure the completion of World Cup projects will lead to job losses next year.
He says his company's strategy is to redeploy its workers to new projects once old projects have been completed, to minimise job cuts.
The company, which employs 40 000 people in South Africa, has already redeployed some of its staff from the R25bn-plus Gautrain project and 2010 Greenpoint Stadium in Cape Town to the construction of the Kusile and Medupi power stations. The two power stations will cost R170bn to build.
- City Press