STEEL SECTOR DECLINE: A microcosm of economic devastation.

by Gerhard Papenfus

The Steel Sector has always been an important cog in the South African economy.

The broad Manufacturing Sector, of which the Steel Sector is a major component, contributes approximately 13% to South Africa’s GDP and is an important marker of economic growth and -health.

In this context, the extraordinary decline in employment numbers, as well as the number of employers in the Metal and Engineering Industry Bargaining Council (MEIBC), should be a rude awakening for those tasked with the economic destiny of the country.

The most recent employment figures in the MEIBC show that, over the last 5 years, the number of employers in the Sector declined by approximately 1300 (12%) and the number of employees declined by a startling 110 000 (23%).

These figures are further reflected in the national unemployment rate, which sits at almost 43% (expanded definition), and a youth unemployment rate of 62%, which are among the highest in the world for measured countries.

The rapid decline in the Manufacturing Sector is the direct result of the deficiency of a very lopsided, SMME-hostile collective bargaining arrangement, culminating in wages that are not market-related. Furthermore, Government’s interference through protectionist duties and tariffs and its inability to balance the various competing interests of the stakeholders in the Sector, led to uncompetitive steel prices, further decimating the Sector.

In addition to the unique challenges that the Steel Sector faces, it is also confronted with a myriad of other challenges facing the broader economy, such as an overall lack of investor confidence, poor industrial and business-hostile policies, unchecked crime and corruption, race-based transformation legislation, and crumbling infrastructure. 

These realities apparently do nothing to awaken Government from its ideological delusions. On the contrary, they seem to double down on their destructive policies, all under the thinly veiled guise of an equality struggle that is benefiting only the ANC elite and their cronies.

It is now time for decisive, economically prudent leadership to lead the country into an economic renaissance, failing which, South Africa is destined to become nothing but a destitute dustbowl at the southern tip of Africa.

Gerhard Papenfus is the Chief Executive of the National Employers' Association of South Africa (NEASA).

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