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Reform labour laws to curb unemployment crisis

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Reform labour laws to curb unemployment crisis

Photo by Reuters

23rd February 2021

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The sky-high unemployment rate revealed by the Quarterly Labour Force Survey (QLFS) for the 4th Quarter of 2020 (which stands at 42.6% on the expanded definition of unemployment) underscores the need for urgent legislative changes to make the labour market more flexible and absorptive.

That is why the DA will be submitting significant amendments to the Labour Relations Act in Parliament in support of the economic reform agenda, to help create an environment more conducive to job creation.

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The key takeaway from today’s QLFS is that between the 3rd quarter and 4th quarter of 2020, the number of unemployed people increased by 701 000 to 7.2 million. This excludes 2.9 million discouraged work-seekers.

The official unemployment rate increased from 30.8% to 32.5% between the third and fourth quarters, or by 1.7 percentage points. This is the highest unemployment rate recorded since the start of the QLFS in 2008. The unemployment rate for those aged between 15 and 24 stands at an alarming 63.2%. The unemployment rate for those aged between 24 and 34 rose by over 3 percentage points to 41.2%.

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Despite paying lip service to the private sector as the main jobs-generator in his State of the Nation Address, President Cyril Ramaphosa and his administration continue to focus myopically on the public sector to stimulate employment.  We have been told that since the announcement of the Presidential Employment Stimulus in October 2020, more than 430 000 jobs and “livelihood opportunities” have been created through public employment schemes like teaching assistant programmes, municipal infrastructure maintenance programmes and the like. This is a drop in the ocean. These “jobs” are short-term and piecemeal and will have very little effect in helping to overcome the unemployment crisis in South Africa.

Only the private sector can create jobs at scale and rapidly absorb predominantly unskilled workers into the economy. That means freeing business from the chokehold of state regulation. Yet, the trends are not good. Small business continues to suffer because of the extension of collective bargaining agreements to parties that didn’t sign them in the first place.

The recent extension of an agreement with the Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades to all employers and employees in the industry will cripple small businesses in the sector and lead to job losses. On the other hand, the recent double-digit, above-inflation hikes to minimum wages in the agricultural sector (a sector which has the ability to absorb large numbers of unskilled workers) are going to lead to another jobs bloodbath.

It is all very well for President Ramaphosa to make the right noises about private sector-led job creation. But until his government agrees to a programme of legislative reform to free up the labour market, the unemployment crisis is only going to get worse.

Issued by DA

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