Jobs+data,+Dutch+disease,+Makgetla,+Business+Day




 * Business Day, Johannesburg, 27 January 2006**

=Jobs data show symptoms of Dutch disease=


 * Neva Makgetla**

AT FIRST, the latest Labour Force Survey seemed a cause to break out the champagne, with reports that employment grew a massive 5,7% in the year to September last year.

But our rejoicing was short-lived. It turns out that more than half the reported new jobs are actually for hawkers — which in itself makes the data suspect. Even if true, growing this type of work will do little to address poverty, boost productivity or underwrite accelerated growth.

Some 55% of the reported 600000 jobs created in the past year are informal retail work — better known as hawking. Most of the remainder are in construction and formal shops.

Generally, jobs in these three sectors are insecure, without much in the way of skills development, benefits or growth prospects. Close to half of informal workers earn less than R500 a month, compared with 5% of formal workers.

In any case, the data jump around very oddly. The Labour Force Survey says that hawking expanded more than a quarter in the six months to September, adding 250000 positions. In the three years to March last year, in contrast, employment in the industry rose only 1,4% a year.

Certainly it is conceivable that the consumer boom suddenly moved massively into pavement markets. Soaring commodity prices, with the associated influx of speculative capital and delirious consumerism among the rich, could have generated an extraordinary multiplier.

This fond belief falls in the face of relatively slow growth in formal employment. The survey says formal jobs rose just 3% in the past year, by 250000 positions, mostly in retail. Manufacturing and agriculture lost 45000 jobs each, while mining remained virtually unchanged.

In the light of restrained formal-sector expansion, it seems the Labour Force Survey is likely counting not new hawkers but vendors whose activities previous surveys ignored.

In contrast to the situation in hawking, growth in both formal and informal construction jobs reflects real economic trends. The decline in the nominal interest rate has boosted high-income housing, which is funded primarily by mortgage bonds. In the past three years, close to half of construction investment has been residential.

Hopefully, as vast new plans for public investment come on line, the proportion will shift towards infrastructure, providing a basis for longer-term expansion.

Still, the overall picture remains bleaker than at first sight. In particular, the loss of jobs in manufacturing suggests SA is suffering from the so-called Dutch disease. This syndrome means soaring commodity prices and the related speculative capital inflows overvalue the exchange rate at the cost of other exports.

The problem is that mineral production is unlikely to generate much in the way of jobs. We could end up with growth on the model of the 1960s and ’70s, doing little to overcome inequalities and exclusion or to diversify the economy. If commodity prices crash, whether in one year or 10, the structural problems of poverty and unemployment would come roaring back.

The spatial distribution of the reported employment growth underscores the risks. Half of the new jobs were reported in Gauteng, which accounts for only a quarter of total employment.

In contrast, employment fell in Limpopo (already the poorest province) and Mpumalanga. It is not surprising rural-urban migration is inflating the population of the Gauteng metropolitan areas by nearly 5% a year.

In contrast, stagnant manufacturing has come home to roost in Western Cape, where total employment rose only 2,1% in the year to March, against an average of 2,6% in the previous three.

These findings again suggest the commodity boom is driving growth, and not genuine structural transformation towards equity and economic diversification. The employment data suggest we have not turned the corner, but rather found a temporary downhill on a road that continues straight ahead.

Some economists suggest that the world is now in a commodities super-cycle, driven by growth in China and India. In that case, there may be little that SA can do to diversify.

Accelerated shared growth would have to rely not on hi-tech exports but on development of production to meet local and regional needs, with investment in human and social capital and support for agrarian reform.


 * **Makgetla is an economist with the Congress of South African Trade Unions.**


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A144955**

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