Shock+new+job+losses+give+COSATU+high+ground,+B.+Day

Business Day, Johannesburg, 29 June 2005
=Shock new job losses give Cosatu high ground=


 * Kevin O'Grady, Economics Editor**

MORE than 130000 formal jobs were lost in the nonfarming economy in the first three months of this year, Statistics SA said yesterday, a day after workers took to the streets to protest against mounting job losses caused by the strong rand.

Although the decline in employment can be attributed partially to seasonal factors — such as the release of casual workers in the retail and security industries after the festive season — the figures give extra ammunition to the Congress of South African Trade Unions (Cosatu), which organised Monday’s strike.

They also undermine President Thabo Mbeki’s promise, made early last year, that the unemployment rate would be halved by 2014.

The release comes ahead of this week’s national general council meeting of the African National Congress, at which economic reforms, including possible changes to labour laws, will be discussed with a view to creating jobs. Cosatu has already rejected the proposed interventions, which include a dual labour market system, saying they will shed jobs instead of saving them.

The new figures are published in Stats SA’s Quarterly Employment Statistics, a new, expanded survey of business that replaces the Survey of Employment and Earnings, which was published for the last time yesterday.

The number of businesses surveyed has more than doubled — to 24000 from 10000 — in the new publication. All businesses registered as taxpayers are questioned, whereas its predecessor targeted only those with an annual turnover of more than R300000 and which paid value-added tax. As a result it includes many more small businesses than before, and should paint a more accurate picture of employment in the formal nonagricultural sector — although it is not as extensive as the Labour Force Survey, which is conducted among 30000 households every six months and provides the official unemployment rate.

Yesterday’s publication of a 1,9% decline in employment also showed a reduction in the gross earnings of employees by 8,4% quarter on quarter, to R146bn.

Most of the job losses were in the financial intermediation, insurance, real estate and business services sector, which shed 125000 jobs — an 8,1% drop.

Next worst was the category comprising wholesale and retail trade and hotels and restaurants, which lost 30000 jobs, or 2,2%.

Stats SA said losses in both these categories were due in part to large numbers of casual workers employed in the security and retail sectors in December.

There were 3000 jobs lost in the mining and quarrying sector and 2000 in manufacturing, both of which have been hit hard by the rand’s strength.

Cosatu spokesman Patrick Craven said it was “ironic” that the figures came a day after Cosatu’s strike, and they gave “renewed weight to the call by millions of workers for urgent action to address the unemployment crisis”.

“Cosatu has long warned that the expansion in employment in the past two years was not sustainable, since it was due largely to growth in construction and retail jobs, while the productive core of the economy stagnated. The latest data reinforce these concerns,” Craven said. The Stats SA report said 8000 jobs were created in construction in the first quarter, 2000 in electricity, gas and water supply and 15000 in community, social and personal services. The relatively large number of jobs created in the latter category “may be due to the hiring of employees in provincial departments, local governments, universities and technikons”, Stats SA said.

Nedbank chief economist Dennis Dykes said the decline in jobs called into question the “potential longevity of the upswing”.

Standard Bank economist Rashika Lalla said that although the rand had played a role in exposing certain industries to tough competition, “lack of competitiveness is ultimately responsible for disappointing growth in these sectors”.

But Craven said: “Calling on companies to compete while the currency remains overvalued is like asking our Olympic swimmers to participate with their hands tied together.”

Labour law was “at the centre of the unemployment debate”, Lalla said. “Labour market regulations, which set minimum wage requirements and provide increased protection for workers, are regarded by some as unduly rigid and preserving current jobs at the cost of new jobs.”


 * From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A61963