Wednesday, November 23, 2016

COSATU’s Response to the Unemployment Statistics
22 November 2016

The Congress of South African Trade Unions has noted that South Africa’s jobless rate rose to a new record of 27.1% in the third quarter, according to the Statistics South Africa’s third quarterly labour force survey. According to the Statistics South Africa’s report the number of people without jobs rose by 239 000 to 5.9 million, (and 9 million including discouraged workers) ,while those employed increased by 288 000 to 15.8 million.

We are not surprised by this report because we have long argued that the unemployment problem in South Africa will not be addressed if the flawed structure of the South African economy is left intact.

It has been often argued that jobs will be created in the small business sector in this country.

However, due to the legacy of concentration and domination of the South African economy by a few monopolies, there is little space for SA small firms to succeed and create jobs for the 9 million unemployed workers in a short space of time. This is in addition to high administered prices such electricity, transport costs, non- availability of cheap finance, and contractionary macroeconomic policies which stifle the impact of industrial policy.

Investment in South Africa through mergers and acquisitions has increased but similar to international experience, these investments have resulted in the loss of jobs over time in the acquired companies. Despite an increase in investment both local and foreign, there has not been an increase in the rate of job creation.

We are worried by the continuing investment strike by big business, especially after recent estimates show that cash held by all JSE companies is now close to R600 billion, and other estimates that in total SA corporations hold up to R1,3 trillion in deposits in South African banks and that this has increased since the 2008 financial crisis. Despite the ongoing job losses due to economic stagnation, companies have continued to increase their profits.

Instead of increasing their investment in SA ,companies such as SASOL, Life Healthcare, Steinhoff have invested in other developed countries. The federation remains unwavering in its assertion that some of these mergers and acquisitions are often done to increase the egos of the CEO’s, increase their bonuses rather than to increase the technological capacity of their companies or create jobs. It has to be noted also that most of these transactions have resulted in more jobs losses.

COSATU calls for stricter investment laws to ensure that Merger & Acquisitions transactions do not result in job losses. The Competition Act should be amended to prohibit job losses 10 years after the merger. It is not enough to make it a condition that there will be no job losses only in 2 years and this should also include section 189A retrenchments. The flexibility around retrenchment of workers have allowed employers to abuse workers as retrenchment under section 189A. This section can be used to do anything that is prohibited under LRA as long as it can be proved that the retrenchment is within this section.

COSATU wants to see courts being actively involved in determining whether or not reason/s given for retrenchment is true. Most companies use section 189A to hide the reasons for retrenchment knowing that courts will defer to employer’s declared reasons for retrenchment. This takes away the workers’ right to fair labour practice.

We are proposing a regulation of retrenchment procedures under the LRA to ensure that they are not abused and used to retrench for the sake of profits. The federation also demands that there should be a requirement for mandatory investment target by investors to invest a portion of their profits in productive assets and creation of jobs.

Business should not be allowed to make profits whilst not giving back to the society by hiding behind the so-called lack of confidence in the government. There cannot be a question of policy uncertainty, when the SA government has adopted the National Development Plan, the New Growth Path and the Industrial Policy Action Plans. Therefore we view business’s reluctance to reinvest profits in SA as a form of political pressure rather for business reasons.

South Africa has the highest jobless rate of more than 60 emerging and developed countries according to Bloomberg. This is unacceptable when you consider that billions have been made in profits by companies that have benefitted from our resources, labour and to a certain extent policies.

We reiterate our call for a decisive state intervention in strategic sectors of the economy, including through strategic nationalisation and state ownership, and the use of a variety of macro-economic and other levers at the states disposal, which can be deployed to regulate and channel investment, production, consumption and trade to deliberately drive industrialisation, sustainable development, decent employment creation, and regional development, and to break historical patterns of colonial exploitation and dependence.

We need a radical overhaul of our macro-economic policy in line with the radical economic shift which we all agree needs to happen. This requires that institutionally the Treasury, which constitutes the biggest obstacle to the government`s economic programme, needs to be urgently realigned; and a new mandate to be given to the Reserve Bank, which must be nationalised.

We maintain that there will be very little by way of change if we continue to give all state owned enterprises and state development finance institutions a new mandate.

Government needs to take urgent steps to reverse the current investment strike and export of South African capital. We need capital controls and measures aimed at prescribed investment, and that will penalise speculation.

Issued by COSATU

Sizwe Pamla (National Spokesperson)

Tel: +27 11 339-4911 Direct 010 219-1339
Mobile: 060 975 6794- 082 558 5962

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