The steel and engineering sector, the mainstay of the South African economy for years, is shedding jobs, leaving communities across the country devastated.
This is according to the National Employers’ Association of SA, which used to represent 1,800 businesses employing 65,000 workers in engineering industries. The association says its affiliation has shrunken to 1,500 companies, employing 55,000 people. It attributes the decline to poor economic conditions, unaffordable wage rates and high input costs such as steep steel and electricity prices and what it deems unfair competition from finished goods imported into SA without duty.
Steel giant ArcellorMittal has cited similar factors for its decision to shut down later this month. About 3,500 jobs at its plants and a further 100,000 jobs downstream are at risk.
Last week, yet another blow to SA’s industrial backbone was announced, with Rio Tinto placing its Richards Bay Minerals (RBM) operation under strategic review. RBM has been a cornerstone of KwaZulu-Natal’s economy for nearly 50 years.
RBM is a global leader in the extraction and refining of mineral sands and a producer of zircon, rutile, iron and slag – all vital to building industries worldwide.
The company also operates the largest titanium smelter in the southern hemisphere, employing about 5,000 workers, supporting thousands more through indirect jobs and is the largest taxpayer in KwaZulu-Natal.
Yet despite this enormous contribution, Rio Tinto, like many foreign investors before it, is rethinking its future in SA. This should be a wake-up call for our government. High operational costs are part of the equation, but they are not the whole story.
State corruption, failing infrastructure, violent crime and lawlessness are eroding investor confidence. Companies that should be powering SA’s growth are instead shutting down or scaling back, taking jobs and tax revenues with them.
The consequences of continued decline are clear. SA already suffers from one of the highest unemployment rates in the world and every lost job pushes another family into poverty. Every departure of a multinational investor sends a chilling message to the world: that SA is no longer a place to do business.
This trend must be reversed. The government must cut red tape and create a business environment where investors feel welcome and secure.
Yesterday, the employment and labour minister Nomakhosazana Meth issued a media statement on the crisis. However, her statement does not discuss plans for urgent interventions to save jobs in the engineering sector. We call on the government to act – before it is too late.
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