A matter of numbers

May 22 2012 07:36
*Marc Ashton

I FOLLOWED with some interest last week's DA march for the youth wage subsidy. Not so much because I think the subsidy is a good idea, but rather that the idea of a clash with the Congress of South African Trade Unions (Cosatu) gets the journalist in me excited.

Personally I have a view that trade unions in South Africa are losing relevance. Leon Louw from the Free Market Foundation sums it up quite well when he says: "One person's minimum wage is another's zero wage."

Trade unions make it quite difficult to confirm whether they are losing their relevance, as they are very cagey about releasing financials and membership statistics. We therefore need to look at other data points to try to confirm whether they remain a pertinent factor in South Africa.

So let's find a starting point. The years 1994–2008 were effectively the best economic period the country has experienced in the last 50 years.

Our gross domestic product grew at about 3% and we added roughly 1 million jobs by the end of 2007. Then the global financial crisis came along and eliminated these 1 million jobs.

By January 1 2012 we were sitting with a net job creation of somewhere around 250 000.

I am no economist, but I think the last five years tell a very interesting story. From 2007 to January 1 2012, the net loss is roughly 750 000.

Cosatu and its affiliates would probably argue that it could have been a lot worse without their intervention, but let's throw in a stat from the Bureau of Economic Research which says that while 3% growth was good, we needed 6% over that period to make a dent in unemployment.

If we apply the same logic over the last five years it would suggest that real job losses are nearer 1.5 million to 2 million per year, taking into consideration discouraged workers and those who are coming into "working age" but with no real chance of employment.

Which brings me to an interesting statistic from Adcorp economist Loane Sharpe, according to which roughly 900 000 black South Africans over the same period moved into the "high-income bracket".

So 900 000 black South Africans got richer, while 750 000 people lost their jobs and another 1 million or so can't get into the labour force?

That number doesn’t add up. Factors like a bloated public service and home ownership impact this figure, but anecdotally South Africans are getting richer without being part of a structured labour force.

That suggests they are either working on a contract basis, freelancing or building small businesses to sustain them.

My question to Cosatu and its members, as well as those students who are being prejudiced by not getting the youth subsidy, is: in the last five years have you been part of the group who lost their jobs and/or are going through the trauma of multiple retrenchments, or are you part of the 900 000 whose incomes rose substantially?

That will probably answer the question about whether your trade union still has relevance.

 - Finweek 

* Marc Ashton is the editor of Finweek magazine, South Africa's leading financial news publication. Follow him on Twitter @zamarcashton; you can follow Finweek on Twitter @finweek or visit www.fintalk.co.za.

cosatu  |  da  |  sa economy  |  job creation  |  youth wage subsidy



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about: STEINHOFF

Steinhoff International, once the darling of fund managers, risks falling out of the JSE top 100.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

If SARB keeps interest rates the same this afternoon, how will this affect your personal finances?

Previous results · Suggest a vote