PRESS RELEASE – The National Employers' Association of South Africa – STRUCTURAL DEFICIENCIES IN LABOUR MARKET NEED TO BE ADDRESSED BEFORE UNEMPLOYMENT CAN BE TACKLED EFFECTIVELY

 

While encouraged by the 0,9% drop in the official unemployment figure to 24,7% and the fact that employment reached levels last seen in 2008, the National Employers' Association of South Africa (NEASA) maintains that a substantial change in job creation won't take place unless structural deficiencies in the market have been addressed. Any improvement must be recognised, but it's not yet time to celebrate.

 

'Neasa points out that although the country is experiencing the same levels of employment as 5 years ago, the working age population has increased by 2,3 million during the same period. In light of these statistics we've not yet chipped away at the tip of the iceberg when it comes to tackling unemployment. Manufacturing, a primary sector for job creation, is still shedding jobs – 68 000 to be precise over this period. Agriculture also still feels the impact of the drastic wage increases earlier this year,' Gerhard Papenfus, Neasa CEO said.

 

NEASA agrees with government that employment, especially among the youth, is a crisis that needs to be addressed. NEASA however disagrees with the method to achieve that.

 

'Finance Minister Pravin Gordhan is spot-on when he says that our bargaining arrangements pushed up entry-level wages and therefore priced-out inexperienced jobseekers. Where we differ from the Minister is the way in which this needs to be addressed,' says Papenfus.

 

Minister Gordhan must be extremely frustrated by the fact that the ANC's alliance partner, COSATU, together with macro employers, enter into collective agreements which cause extreme market inflexibility and, as a consequence, determine wages too high for inexperienced jobseekers.

 

'It is a positive sign for South Africa that the ANC is prepared to make decisions independent of, especially, COSATU. However, instead of confronting COSATU head-on regarding the very important issue of fundamentally changing the labour market, the Minister and the ANC-led government are forced to introduce yet another 'subsidy' to address this crisis. In our view the proposed Employment Tax Incentive Bill, which gives way to a youth subsidy, is not a sustainable long term solution,' Papenfus says.

 

NEASA maintains that what South Africa needs is a restructured labour market which will reduce red tape, invite job creation, encourage entrepreneurship, increase productivity, encourage skills development and create both business and investor confidence. In such an environment, subsidies are not needed. A freed-up labour market and not control from the centre is the answer. If the ANC is serious with what is stated in the National Development Plan, they won't be able to avoid a confrontation with COSATU for too long.

 

In an attempt to address COSATU's fear with respect to the subsidies, Treasury wants to introduce measures that will add a huge amount of red tape and punitive procedures in case employers don't exactly comply with the criteria established by Treasury.

 

'This in itself would be difficult to enforce and will cause even more red tape. For this reason also many employers will be reluctant to participate and it's therefore unlikely that the plan will bring about the envisaged large scale youth employment,' he says.

 

NEASA agrees with NUMSA's position that employees don't need hand-outs to create employment. But that's where agreement with NUMSA on the issue ends. In NEASA's view and in an ideal work environment, what employees need is access to work opportunities and consequently access to opportunities for further training and development. Individuals also need an environment and the opportunity to improve themselves, showcase their abilities and be rewarded with increased payment and benefits. This kind of labour market encourage self-respect and a desire for fulfilment.

 

'But this is not necessarily NUMSA's nor COSATU's view on work and the improvement of conditions of service for employees. When Mr Irvin Jim talks about 'industrialisation and localisation', he can't actually be serious as his organisation's very policies stand in the way of industrialisation. Unless the current approach by COSATU and NUMSA toward collective bargaining outcomes changes and unless labour law changes, for which the support of COSATU is required within the current political dispensation, substantial improvement in terms of job creation will not take place,' says Papenfus.

 

NEASA is adamant that fundamental changes are needed, not mere attempts to patch-up existing serious shortcomings. This in turn will require strong and courageous political leadership which would run the risk of alienating old partners. However, this is a small price to pay for South Africa's political and economic survival.

 

For more information: 

Sya van der Walt

NEASA Media Liaison

082 332 9512

sya@neasa.co.za