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CONTENTS
Unemployment
on the rise
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| Sector | 1980 | 1990 | % change 1980-1990 | March 96 | March 1999 | % change 1996-1999 |
| Mining | 769 000 | 758 000 | -1.4 | 568 914 | 402 759 | -29.2 |
| Manufacturing | 1 460 000 | 1 517 000 | 3.9 | 1 449 301 | 1 334 436 | -7.9 |
| Construction | 370 698 | 424 134 | 14.4 | 332 351 | 248 813 | -25.1 |
| Wholesale/Retail/ Accommodation |
764 443 | 799 232 | 4.6 | 762 764 | 853 341 | 11.9 |
| Transport/Storage Communications |
430 109 | 362 588 | -15.7 | 280 175 | 245 787 | -12.3 |
| Financial Institutions | 123 776 | 189 420 | 53.0 | 212 072 | 210 881 | -0.6 |
Rethinking job creation
South Africa is witnessing a massive retrenchment wave. Many
firms, in both the private and public sectors, are implementing
or announcing job cutbacks. And all this is happening less than
a year after the Presidential Job Summit, where all constituencies,
including government and business, committed themselves to promoting
job creation.
The reasons for the job losses are easy to explain. Government must meet its deficit targets, and it is therefore looking to cut expenditure. Since many public services (such as police or education) are labour-intensive, this means retrenchments even in the context of moderate wage increases. For the private sector, the dynamics of global capitalism require enhanced profitability. This means increasing capital-intensity and reducing unskilled labour.
As a result of these trends, almost 400 000 jobs have been lost since March 1996. In this issue of the Policy Bulletin, we discuss job loss trends in the private and public sectors. The articles point to the need to rethink the overall employment strategies being adopted. It is increasingly clear that there is no chance of South Africa creating 'more and better jobs' on its present path.
We also look at the job creation debate in the European Union and find familiar labour flexibility arguments being touted there as a solution to unemployment. As in South Africa, such arguments hold no water. Our policy makers can learn from such international experience. It is not simply a question of labour market flexibility as a solution being foisted on South Africa, but rather that this solution is not creating jobs anywhere in the world.
Ravi Naidoo
Director, NALEDI
Revision
of GDP figures
by Claire Horton
In June this year South Africa implemented the system of national accounting which was adopted internationally in 1993. The figures produced in terms of the new system show that our economy performed better than was previously thought.
Previous GDP estimates (the total Rand value of all final goods and services produced in South Africa) had put South Africa in a recession (which is technically defined as two consecutive quarters of negative growth) with -2,5% and -0,3% for the third and fourth quarters of 1998 The revised figures show a decline in the third quarter of -2,3% and 0,2% for the fourth quarter.
The revised figures for 1993 to 1998 show that average annual growth in real GDP (after inflation) increased from 2,2% to 2,7%. This growth trend has, however, slowed since 1996.
Changes
This year's revision goes further than the normal five yearly revision,
which involves the 'rebasing' of the reference year as well as the
'benchmarking' of economic activities, which enables comparisons
to be made independently of the influence of inflation.
The base year has been adjusted from 1990 to 1995. A change in the base year can change the aggregate real GDP growth rate. This is because the weighting (or contribution) of sectors changes. For instance, the weight given to gold is smaller in the 1995 constant prices, than for 1990.
More accurate and new sources of information are now available. This allows for better coverage of different sectors, such as the informal taxi industry. The activities of rapidly expanding sectors, such as cellphones, the internet and micro-lenders have also been better captured. Sectors which were previously excluded from income accounts (for example, financial corporations, non-financial corporations and households), are now taken into account.
Other changes allow for depreciation of infrastructure such as roads and the inclusion of timber while it is still growing. These changes, together with improvements in methodology and the adoption of new international guidelines, have resulted in:
- A revised GDP for the period 1993 to 1998 which is approximately 11,5% to 14% higher than the previous estimates.
- An average annual real economic growth rate for this period of 2,7%, compared with the previous estimate of 2,2%.
- A smaller contribution to GDP of goods producing industries, with a higher contribution for service producing industries.
- As a result of higher GDP, the debt:GDP ratio is expected to decline from 5,6% to 48% for the fiscal period 1997/98. Similarly, the deficit:GDP ratio is expected to decrease from 3,3% to 2,9% for the fiscal period 1998/99.
Job losses and service delivery
by Ebrahim-Khalil Hassen
Job losses in the public sector impact on every aspect of our
lives. They make effective and sustainable service delivery more
difficult to achieve. If we are to extend services to the poor and
realise the goals of the RDP, we need to build better links between
service delivery plans, budgets and staffing.
Contrary to media reports, the size of the public sector has not grown under the democratic government. Between 1995 and 1998, 169 328 jobs were lost a decrease of 13%. At the same time, the democratic state has set itself the goal of extending services. It has attempted to do more with fewer personnel. The experience in the education and justice sectors shows that a re-think is necessary.
Personnel are important
The Department of Education policy on 'outcome-based education'
is modelled on international best practice. Unfortunately, the implementation
of these proposals is being hindered by a narrow financial approach
to staffing. According to an international study, countries with
the best math scores had an average class size of 18. The study
also indicates that South Africa has one of the worst math scores
in the world, and has very large class sizes, as high as 50:1 in
many cases. The target is 35:1.
The Department of Safety and Security says that crime has stabilised, but at exceedingly high levels. One of the reasons we can't reduce crime is that there are 9% fewer police today than there were in 1994. Fewer people are dealing with a much larger work load.
Improving the performance of the courts hinges on the availability of skilled and committed professionals. The Department of Justice says it has over 1 000 court vacancies, but there is no money to fill the posts. Prosecutors have less time to prepare cases, and victims of crime have to wait longer periods before judgement is handed down.
Government is attempting to do more with fewer personnel
Why the decline?
Public sector job losses can be explained by two trends:
- Retrenchments and retirements. The public sector unions and the government agreed to voluntary retrenchment through a severance package. It was hoped that this would release financial resources and build a public service committed to democracy. Employees have also been leaving the service due to age or health requirements for retirement.
- Government has not filled vacant posts. Government budgets have decreased in relation to inflation. The state has prioritised various macro-economic targets, which has resulted in curtailed government spending.
Consequences
Poor South Africans are hardest hit, as they cannot afford private
health care and education. If we are to build a better life for
all, the state will have to find a sustainable relationship between
its service delivery plans, the budget to achieve this and the number
of personnel required. This will require a shift from narrow fiscal
goals to more developmental ones.
Ebrahim-Khalil Hassen is the Co-ordinator of NALEDI's Public Sector
Transformation Project.
Job losses and union membership
by Ravi Naidoo
South Africa has one of the fastest growing union movements
in the world. Amidst this union growth, however, changing employment
patterns are undermining the traditional base of unionism. These
changes require unions to develop new organising strategies, or
face a eventual collapse.
For the South African union movement as a whole, membership has increased by approximately 131% since 1985 (COSATU membership has increased by 330% since 1985); in contrast most union movements elsewhere in the world have seen their membership decline. Cosatu membership has grown from 1,3 million in 1994 to over 1,7 million today, an increase of 30%.
Unions do not, however, have an even presence throughout the economy. Traditionally, unions have been stronger in the manufacturing and export sectors of the economy. They have tended to be weak in agriculture and services, where workers are dispersed across many small firms.
Changing patterns
The dilemma for unions is that traditional 'union-strong' sectors
are shedding jobs, and the hard-to-unionise sectors are expanding.
South African unions are feeling the impact of this changing employment
pattern. The graph shows the changing pattern of union membership
in COSATU.
Today, public service unions are the largest sector within the federation, representing 37% of all membership. The manufacturing and mining sectors are in second and third places, with 27,9% and 15,3% of membership respectively. The service sector is fourth, with 10,7%, and the transport (5,8%), construction (1,7%) and agriculture (1,6%) sectors follow.
The sectoral breakdown for 1999 is very different to the picture in the early years of COSATU. Ten years ago, manufacturing was the largest sector, with 55% of total membership, mining 23% and public services only 6%. The decline in the manufacturing unions has been dramatic, falling to 28% of total membership in 1999.
The rapid growth of the public service unions has counterbalanced the decline of some of the other unions. The main unions behind this remarkable growth are Nehawu and Sadtu which have collectively increased by over 300 000 members.
Among COSATU manufacturing unions, membership was 530 625 in 1994, and has fallen to an estimated 484 258 in 1999. Changes in employment in these sectors are occurring on a wide scale and at a rapid pace. Slow economic rowth and industry and workplace restructuring have resulted in job losses of about 3-5% each year since 1996.
Future trends
Can this rapid increase in public service membership continue, and
will it compensate for the declining manufacturing sector unions?
The answer to the first question is 'maybe yes', and 'probably not'
to the second.
- There is every chance that public service membership growth will continue for the next few years, as job insecurity rises. Despite the rapid growth of these unions, the vast majority of public service workers are still either un-unionised or in non-COSATU unions.
- The older manufacturing unions have accumulated considerable valuable experience of worker struggles and strategies, qualities that cannot be easily replaced.
On the positive side, there are signs that some COSATU unions are alive to the challenge, and have begun to revise their strategies. Examples include efforts to recruit casual dock workers. A similar upward trend is also emerging internationally. In short, for the union movement all over the world, there is only one real option: defend existing jobs and develop strategies to organise the unorganised.
This article is an excerpt from NALEDI's forthcoming book, Unions
in transition: Cosatu into the New Millennium.
COSATU gender structures
by Liesl Orr
NALEDI's Women and Work Programme has undertaken research on gender
structures in COSATU. The report highlights a number of issues regarding
the co-ordination, role and influence of gender structures. This
article highlights some issues on the concept of gender.
An important role of gender structures and unions is to promote a radical theoretical perspective that reflects the organisational and workplace challenges facing women. Women should take the lead in developing this perspective. One of the critiques of the concept of gender is that it shifts the focus from the real issue women's oppression:
"If you're forever saying gender relations, gender subordination, gender oppression, it's possible that the actual reality that it's women who are suffering gets lost and forgotten, especially by men." Furthermore, it does not emphasize central concepts like patriarchy, women's subordination and the sexual division of labour.
Gender is still used as a synonym for women. In its crudest form women are referred to as 'genders' or 'comrade gender'. The assertion that women's oppression is a societal issue based on unequal gender power relations, is often not appreciated: Gender relations refers in essence to women's subordination and male domination, with a clear power dynamic involved. The relationship between gender and power in the union context is illustrated by the following quote:
"The attitude of a lot of males is that gender is fine as long as it knows its place but if my position as chair is challenged we'll deal with this thing called gender." There is a naïve view that if men are drawn into gender structures they will become champions of change.
Even more problematically: "Some men in COSATU have successfully promoted the idea that both men and women suffer equally because of gender power relations". Gender is useful as an analytical tool, but it can be misinterpreted and misused (like any other concept or perspective) in the interest of maintaining the status quo.
Involving
men
While it is important to develop strategies and approaches to involve
men, there should be clear objectives for their participation, and
the predominant patriarchal thinking amongst men should not be underestimated.
Time and again in interviews, men placed limitations and conditions
on gender struggles. They argued, for example, that "gender is fine,
but the problem is that women want to abuse power" and that "if
we go to far it will threaten marriages and disrupt homes".
There is a growing emphasis on conscientising men, in the hopes, as one shopsteward put it, that "maybe that stiff neck will turn." While the conscientisation of men should be part of an overall trade union programme, the central role of gender structures is the empowerment of women. Having more active women will contribute to conscientising men:
"You need women being more vocal and more organised, women refusing to be pushed around, women saying we want a firm campaign on maternity leave." Since unions still have a long way to go in taking gender issues and women seriously, and given the prevalance of patriarchal thinking amongst men in the unions, there is a need to focus on organising and mobilising women first and foremost.
Liesl Orr is the co-ordinator of the Women and Work project at NALEDI.
All quotes are from interviews undertaken with officials and shopstewards
as part of the research project.
Will flexibility create jobs?
As a centrepiece of neo-liberal globalisation, the labour flexibility argument tends to pop up all over the world. This article examines this 'global' wisdom by looking at how the 'dynamic' United States/ United Kingdom-type, de-regulated labour market compares to the 'over-regulated' European one.
Does a 'hire and fire' labour market create more jobs? Those who want to minimise or even remove protections against unfair dismissal argue that this would encourage employers to hire people, because they know they can fire them easily. But those employers who might be more willing to hire for this reason when the economy is doing well will get rid of people just as quickly when the downturn comes. Boom and bust economies with hire and fire labour markets do not create more jobs they create more unstable labour markets. Between 1990 and 1998 the 'hire and fire' UK labour market did not create a single net new job: total employment was still lower in 1998 than in 1990.
Are 'hire and fire' labour markets more "dynamic? In fact, the evidence suggests that European workers can, and do, move just as freely within national labour markets as in the US. European Union Commission estimates show that one in six of the EU workforce changes his or her job or moves in or out of the labour market each year. And productivity performance in Europe has caught up with, and in the core European economies surpassed that of the US.
Do US-type labour markets price vulnerable workers into jobs? It is said that European style social protections harm the job prospects of the young and women wanting part-time jobs, by pricing them out of the labour market. However, in March 1999 youth unemployment rates in Denmark, Germany, Ireland, Luxembourg, the Netherlands, Austria, and Portugal were lower than in the US.
Do 'hire and fire' labour markets provide more types of employment? It is said that the growth of 'flexible' forms of employment, such as temporary work and self-employment, makes labour markets more flexible. Yet the US has fewer 'non-standard' jobs than most EU labour markets. In 1997 self-employment and temporary employment accounted for about 27% of employment in the EU, compared with just over 10% in the US.
Are Europe's 'high non-wage costs' undermining job creation? It has also been claimed that high 'non wage costs' such as social security contributions and other labour taxes discourage European employers from taking people on. However, for manual workers in manufacturing, non-wage costs are just as big an element of total costs in the US as they are across the EU. And within the EU, countries with similar levels of non wage costs have very different unemployment rates. In 1997 non-wage costs accounted for 21,5% of labour costs in the US, and just under 25% averaged across the EU. The Netherlands, with unemployment of 4%, had a similar share of non-wage costs as Spain, with unemployment of 17%.
Unemployed
rates in the European Union
| 1975 | 1985 | 1990 | 1997 | |
| Unemployment rate | 4% | 10% | 8% | 11% |
| Youth unemployment | - | 22% | 16% | 21% |
| Long-term unemployed (% of unemployed) | - | 54% | 51% | 49% |
Conclusions
The almost exclusive focus on labour flexibility overlooks one of
the most obvious reasons for low job growth in Europe the low
economic growth rate. Unemployment in Europe has been caused by
three big macroeconomic shocks over the last 25 years (two oil prices
shocks and the monetary crises of the early 1990s) and the lack
of a growth oriented co-ordination of economic policies.
The job losses that occurred were concentrated in three periods of recession spanning seven years; 1975, 1981-83 and 1992-94. In fact, Europe achieved employment growth during 18 of these 25 years. In short, the European case once again reflects the need to avoid simplistic conclusions about labour market regulation and flexibility.
This article is based on research by David Foden of the European
Trade Union Institute. This is an excerpt from a longer article
in NALEDI's forthcoming book, Unions in transition: Cosatu into
the New Millennium.
NALEDI research report
This research round-up lists recent NALEDI research and highlights forthcoming work.
Restructuring
of state assets
The restructuring of state assets is likely to pick up pace. To
facilitate the development of COSATU strategy, the COSATU executive
committee commissioned NALEDI to assess the developments of the
last few years. A NALEDI team (with inputs from Khanya College)
developed a report, State asset restructuring: an assessment.
The report comprises case studies of eight state owned enterprises, including Telkom, Safcol, Aventura, Safcol, Sun Air and Eskom. It also includes an overview of restructuring trends, with particular emphasis on employment, affirmative action, outsourcing, profits and investment and service delivery.
Among its findings, the research concludes that while the National Framework Agreement is an important space for engaging restructuring, unions still require effective strength to get and implement good agreements. A coherent, co-ordinated union approach has yet to emerge. Another finding is that many cash-starved enterprises (with reduced subsidies) have begun to consume themselves through asset-stripping and declining investment.
COSATU
since 1994
The dawning of a New Millennium is an opportunity for organised
labour to 'take stock' of its options. What is it that unions can
and should do in the 21st century? In 1994, NALEDI published Unions
in Transition. This second 'edition', Unions in transition: COSATU
into the New Millennium, reviews changes that have occurred to union
membership in the last five years.
It also provides an expanded debate on key challenges facing COSATU and unions in general. These include the rising tide of 'flexible' labour; the need to both create jobs and raise labour standards; organising new forms of employment; developing stronger international solidarity; and an assessment of unions' engagement with state and capital.
As before, this book is based on research conducted by NALEDI. Most of this research was conducted in 1999. We conducted several surveys of union membership, interviewed union leadership, and drew on the research and knowledge of experts. Other pieces are included where they add valuable insights into the challenges facing unions. The results are of interest not only to unionists but to all observers of South African and international labour issues.
NALEDI
Resource Centre
The Resource Centre caters mainly for trade unions and NALEDI research
staff. The Resource Centre offers the following services:
- Database searchers we have a computerised database of approximately 4 000 indexed items.
- Monthly lists of new material received and indexed.
- A monthly dossier of selected relevant articles.
- Ongoing monitoring services letting you know the latest material on a subject (including the national legislative process).
- NALEDI research reports.
NALEDI undertakes labour and economic research. Its main focus is policy research which will build the capacity of the labour movement to engage effectively with the challenges of our new society.NALEDI is an initiative of COSATU, but is controlled by an independent board.
NALEDI's main focus areas are labour markets, economic, trade and industrial policy, union organisation and women and work. Our activities include the production of research reports and policy memos, facilitating workshops and training and library facilities and resources.
Contact NALEDI at:
6th floor COSATU House, 1 Leyds Street,
Braamfontein, Johannesburg. PO Box 5665
Johannesburg 2000
Tel: (011) 403-2122
Fax: (011) 403-1948
email: naledi@naledi.org.za
website:http://www.naledi.org.za
