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The Congress of South African Trade Unions has noted the Quarterly Employment Statistics for the first quarter of 2021 that show employment decreased by (-0,1%) quarter -on-quarter and also decreased by (-5,4%) year-on-year between March 2020 and March 2021.These unemployment numbers reflect not just the devastating impact of COVID-19 but also of the government’s misguided austerity strategy that is geared towards containing public-debt and reducing budget deficit, instead of achieving structural economic transformation through diversifying and building the productive capacity of the economy.

The unemployment statistics show that there is no real commitment to accelerating shared economic growth and in transforming the structures of production and ownership by government.

Government continues to hand over generous and unconditional tax breaks and employment subsidies like Employment Tax Incentive (ETI) and Youth Employment Scheme (YES)Programme to the private, and they use that money to accelerate automation and mechanisation and, in some situations, to replace older workers. In an era of mechanisation and automation, we cannot overly rely on big corporations to help us with employment creation.

To make a dent in unemployment and close the growing inequality, we need an activist government and a democratic developmental state that is capable of intervening effectively to transform economic relations. This is impossible in an environment where State Owned Entities and Development Finance Institutions have been weakened and have become ineffectual. The current privatisation and fragmentation of SOEs will only worsen unemployment.

In our view, government needs to ensure that the parameters of fiscal policy are consistent with employment creation and retention strategies; and avoid imposing rigid and rapid deficit reduction targets which limit public expenditure and infrastructure development.

The source of the macroeconomic quagmire is stagnation and not debt, therefore, rather than choking the economy with austerity measures, government need to implement policies that support economic growth. Using growth enhancing fiscal and monetary measures is the most sustainable way of reducing the budget deficit and drawing down the public debt.

It is important to ensure that macro-economic policies encourage employment growth by, among others, facilitating the implementation of the appropriate industrial, investment, labour market, and public sector policies.

Government needs to create an environment conducive to boosting the productive capacity in the economy, increase investment to ensure that increased demand can be met through domestic production, and not through greater levels of imported goods.

This may entail the need to maintain and expand demand for domestically produced goods and services; meet increased demand through an expansion of production, which in turn would generate new jobs.

There is an urgent need to fix Eskom as the economy needs reliable and affordable electricity; and tackle corruption and wasteful expenditure that bleeds the state and economy of billions.

However, these will only work when government and the private sector ramp up the vaccination roll out.  The economy will not be able to emerge from the lockdown if we have not reached the 67% population immunity level and we continue to shut it down every time there is another wave of COVID-19 infections.

Issued by COSATU