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Business Leadership South Africa CEO Busisiwe Mavuso has told Fin24 that the unemployment figures released by Statistics South Africa were dismal but inevitable, as a result of South Africa's "unclear" approach to economic policy.
On Tuesday, Stats SA said the country’s official unemployment rate jumped to 29% in the second quarter of the year, up from 27% in the first quarter. This is also the highest jobless rate since the start of 2008.
The unemployment figures were met with great dismay but not much shock from economic and political observers. Following the release of the jobless rate, Mavuso told Fin24 that government left many policy questions in the air for too long, putting investors off from deepening their investments in South Africa.
"For us this belabours the point we have been making all along as BLSA about how close we are to the precipice as a country. There are many tough decisions we have put off and ignored for too long," said Mavuso.
Mavuso repeated that while government’s catalytic investments aimed at kick-starting the economy were well-intentioned, these were no substitute for organic investment from the private sector.
"We need foreign direct investment but until we make the difficult decisions, we will fall into the pit. We need to deal with policy uncertainty. This is a wake-up call for government that they need to do things differently," Mavuso said.
Mavuso said critical policy gaps that undermined investor confidence included a lack of clarity on the details of land expropriation without compensation, restrictions in visa requirements and the provision of spectrum to unlock data for South Africans as well as businesses.
She said companies have been pricing challenges such as load shedding and labour instability into their operations for years, but that tough conversations were needed between business and labour.
"You can't demand 18% salary increases in an economy that is barely growing at 1%. Labour is a disincentive when they engage in this way with employers. They simply cannot continue doing the same thing and expecting different results," she said.
She concluded that it was time for government leaders to appreciate that labour market instability hits unskilled, poor labour the hardest. She said this had an impact on businesses as households spend less, but that the cycle leaves the country rife for economic as well as social instability.
