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Labour policies driving poor from jobs - IRR

Cape Town - Poor South Africans will continue to pay a heavy price until it is more broadly accepted that only labour market reforms, matched with investor-friendly policies, can ease the unemployment crisis, Frans Cronjé of the SA Institute of Race Relations (IRR) said on Wednesday.

"In SA's high gross domestic product (GDP) growth years of 2004 to 2007, employment also peaked. This is why the IRR has long maintained that investment-driven growth, and not gimmicks such as wage subsidies and public work schemes, is the only sustainable solution to South Africa’s unemployment," the IRR said in a report on labour market trends.

The number of South Africans with jobs increased from 7 971 000 in 1994 to 15 657 000 in 2015.

"Not enough jobs were created, however, so unemployment has remained stubbornly high and labour market absorption has fallen," said the IRR.

READ: Employment up by 0.1% - StatsSA

The number of people employed at a professional level increased the most between 2001 and 2015, more than doubling from 385 000 to 750 000. The number of people employed in skilled agriculture decreased most over the same period, with a loss of 116 000 jobs at this occupational level in the last 14 years. This reflects a more general shrinking of the agricultural sector, according to the IRR.

Data reveal that the number of skilled employees is increasing faster than that of unskilled employees.

According to the IRR this is a result of a labour regulatory environment that has driven poor people out of jobs and correlates with broader de-industrialisation trends.

"Again, it is apparent how misguided labour policies have been the architect of high unemployment levels among poor people," said the IRR.

The report shows a significant proportion of employed people rely on part-time jobs or employment of an "unspecified duration".

"This is part of a global trend that sees employees move away from traditional full-time jobs. Unfortunately, South African policy makers have yet to understand and embrace this natural evolution of the labour market," said the IRR.

"Steps to encourage further informal employment should also be taken as it offers one of the most direct routes for poor households to start improving their living standards without reliance on the state."

The data show that the increase in the number of people who have been jobless for more than five years is much greater than that for people who have been jobless for between one
to three years. According to the IRR this suggests - as corroborated by international research - that the longer one stays jobless, the less likely you are to find a job.

"South Africa’s unemployed are, therefore, highly unlikely to find employment in the current economic and policy climate," cautioned the IRR.

At the same time the government sector has experienced significant job growth. Since 1990, broader government employment has increased by 54.8%, from 1 310 484 to 2 028 825.

"Other than incubating the black middle class, the expanded civil service has been of little benefit to South Africa and is now the primary reason for the government’s fiscal crisis," said the IRR.

"Essentially, the public service has become a welfare scheme for the middle class. The government will in time have to slow and even scale down public service employment."

ALSO READ: Labour Court rules on temporary employment

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