The latest dreadful unemployment data from Stats SA’s Quarterly Labour Force Survey has again reaffirmed the urgency of accelerating the revitalisation of labour-intensive sectors and unlocking the potential of the micro, small and medium enterprise (MSME) sector as a catalyst for job creation.
South Africa has the ignominy of being ranked in the top three countries in the world with the highest unemployment figures, which peaked at a staggering 16.8-million people after the displacement of 345,000 people to the ranks of the unemployed in the first quarter of this year.
The picture looks apocalyptic for young job-seekers. According to the latest statistics, the total number of unemployed youth increased by an astounding 181,000 to 4.7-million, while the number of employed young people fell by 258,000 to 5.6-million.
Behind these statistics are weary job-seekers with hopes, dreams and aspirations to clothe and feed their families, and escape the vicious cycle of generational poverty.
In the period under review, discouraged job-seekers increased by 178,000 to 3.9-million, ramping up the expanded rate of unemployment from 32.7% to an unendurable 43.1% if we include those who have given up looking for a job.
Considering 44.2% of the country’s population comprises young people under the age of 25, the statistics on youth unemployment are catastrophic at best and loom as a tinderbox that can detonate with disastrous consequences at worst.
The reasons behind the stubbornly high unemployment vary, but the primary reason is the erosion of the country’s manufacturing sector, which has decreased steadily over the years due to a lack of investment and fierce competition.
To put this into perspective, the once-thriving furniture manufacturing sector, for example, saw the number of factories decline from 3,500 in 1999 to 1,100 (and shrinking) in 2020, with half the total number of direct jobs displaced.
This decline in furniture-making production capabilities has had a multiplier impact on adjacent industries down the value chain, including leather, textile, sawmill and particle board, and metal, paints and adhesives from the chemical sector. The ripple effect of the decimation of the furniture manufacturing industry has been devastatingly far-reaching.
There is a rich body of data that supports the assertion that a significant dent in unemployment can be made if we ramp up our manufacturing capabilities.
Proudly South African commissioned a study with respected economist Iraj Abedian, founder and chief executive of Pan African Investment and Research Services, which found a 10% increase in investment into the manufacturing sector would generate a projected GDP contribution of 13%.
The study further found the investment will create an estimated 75,300 jobs in manufacturing, 11,500 in mining and 10,100 in agriculture. Overall, the report forecasts an 8% increase in employment creation.
The National Development Plan (NDP), the country’s economic growth blueprint, forecasts MSMEs to create 90% of new jobs by 2030 and set an ambitious target of reducing unemployment to 6% for the target year. Four years away from the target date, it appears highly unlikely these audacious goals will be achieved.
Currently, MSMEs contribute about 35%, or R2.5-trillion, to the country’s yearly GDP, account for 50% of all formal employment and create 60% of the new jobs each year. This is modest by global standards. In many economies, the sector accounts for up to 90% of the workforce.
MSMEs can play an important role in reigniting economic growth and absorbing hordes of unemployed South Africans.
There is ample data that proves thriving economies are built on the back of strong MSMEs. Broad-based Black Economic Empowerment is critical in bringing in new players and transformed entities that can grow the base of the much-needed MSMEs.
Correspondingly, localisation can unlock the potential of the MSME sector and significantly accelerate its productivity growth to enable it to invigorate economic growth, beef up our manufacturing capabilities and generate job opportunities on an industrial scale.
They say extraordinary challenges require extraordinary solutions. Some countries have leveraged the power of localisation to revive their labour-intensive sectors and claw back the jobs lost due to unfair trade practices such as dumping and under-invoicing.
The success of our buy local campaign has not gone unnoticed. We have been instrumental in assisting countries in the region with establishing their buy local campaigns, namely Buy Zambia, Buy Swazi, Buy Malawi and Buy Zimbabwe.
We have also had exploratory discussions with Mauritius, Tunisia and, most recently, Saudi Arabia, which have all embarked on launching and growing their respective buy local initiatives.
South Africa can no longer afford the luxury of shedding jobs at this scale. The proliferation of a myriad of social ills such as crime, gender-based violence and drug and alcohol abuse, is sounding the alarm bells that unemployment is a national crisis that should be treated as such.
We can no longer treat the pandemic as an academic or electioneering tool.
- Mashimbye is CEO of Proudly South African
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