Crisis of jobs in a recession

Kgabo Moabelo talks to StateOfSA about being laid off. Picture: Cedric Mboyisa


ALTHOUGH he is one of the latest retrenchment casualties in the recession-hit South Africa, Kgabo Moabelo (37) from Alexandra township (north of Johannesburg) is optimistic about his future, which is without secure permanent employment.

“I have confidence in myself. I will never go to bed hungry,” says Moabelo, a man originally from Polokwane (Limpopo) who came to the City of Gold for greener pastures. Last month he had to part ways with the company he had worked for for 12 years. Due to the global financial crisis, he had no choice but relinquish his position as the warehouse manager for Replication Technology Group, a Wynberg-based company specialising in the entertainment industry. His duties included being in charge of distribution, allocation, storage and managing some of the company's employees.

Wynberg is a few minutes away from Alexandra, so he used to walk to and from work... thereby saving a substantial amount of money on transport expenses. With his comfortable salary he was able to live in one of Alexandra's decent places. Together with his immediate and extended family they live in a block of flats, which is part of the billion-rand presidential Alexandra Renewal Project. Not so far from his flat, between 11th and 12th avenues, is the famous Joe's Butchery, which is frequented by the country's black diamonds and who's who of the entertainment industry. The same area is surrounded by shacks, for most people in this populous township live in poverty. According to the youth wing of the Greater Alexandra Chamber of Commerce and Industries, the township has almost 60% unemployment rate, of which 40% is the local young people.

As the sole breadwinner, the retrenched Moabelo not only looks after his son and extended family in Alexandra, but he also has to send money back home in Polokwane. He says he's not in a panic mode as he has his retrenchment package to bank on. He adds that he plans to use some of his pension fund payout to start a business in order to generate some consistent income. “I have always known that I had a potential to do it on my own, without having to rely on being employed by someone else forever,” he says. He is in the process of opening an Internet Cafe in the township.

But, Moabelo points out, he is not investing all his package on the venture because he has found himself a business partner. In what is more like a coalition of the retrenched, he is partnering up with a woman who was retrenched earlier this year, in February, by the same company (Replication Technology Group). The woman was euphemistically offered a “voluntary package” as the economic meltdown started taking its toll on the company. Moabelo says he is not bitter about being retrenched. Instead, he states, he sees his retrenchment as an opportunity to grow as an individual and look for creative ways to be self-reliant. “It's not the end of the world for me,” he adds.

Speaking to StateOfSA, Colen Garrow, chief economist at Brait, says the country's biggest challenge is the “massive unemployment rate”. SA has an unemployment rate of 23.5%. It is time, Garrow states, for business and government to think out of the box to create sustainable jobs in the “unconventional environment (recession) we find ourselves in”. He says trade unions must be active in the economy by creating an enabling environment for employment. Garrow stresses that people must skill themselves to be employable because “the economy is bad out there”. He is in support of the Reserve Bank's inflation targeting policy, but he says there must be changes to food and fuel component of inflation targeting. On the brighter side, Garrow believes that we are halfway through recession, and that the economy and markets will stabilise by the end of the year.

According to Statistics South Africa, job losses were recorded in most industries between the last quarter (October-December) of 2008 and the first quarter (January-March) of 2009. The trade industry led the way in the job losses stakes with 143 000, followed by construction with 65 000, then manufacturing with 62 000 and in the fourth place agriculture with 26 000. Stats SA announced in May that South Africa was in a technical recession, the country’s first recession in 17 years. SA's economy, which had experienced some measure of stability and growth in the past decade, had finally fallen victim to the global financial crisis, which has its genesis in the United States of America – the world's superpower.

Despite job losses and retrenchments from left to right as companies are cutting down on costs, President Jacob Zuma has committed his government to creating 500 000 job opportunities through the Expanded Public Works Programme between June and December this year. The current economic downturn notwithstanding, the Zuma administration remains resolute on its goal to create five million jobs during its five-year tenure.

The Centre for Development and Enterprise (CDE), in conjunction with Business Leadership South Africa, recently commissioned four papers in their effort to help the country create jobs and weather the economic storm. The joint initiative has put forwards proposals to assist government to achieve its mission of creating five million jobs. The proposals include focusing on the youth, relaxing labour laws, introducing tax breaks, creating special economic zones and employment guarantee schemes. “Seeking to create 5 million jobs while being battered by a global recession is going to require a new boldness from policy-makers,” says CDE executive director Ann Bernstein. Bernstein points out: “75% of the unemployed are under 35 and over 70% of these young unemployed people have never had a job”.

Genetics Analytics CEO Stephan Malherbe, an expert in competition and regulatory economics practice, has made five recommendations to help the country navigate through the economic turmoil. One of his recommendations is that inflation targeting remains in place. “At this point, abolition or perceived weakening would be reckless,” he says. ANC tripartite alliance partners, SACP and Cosatu, have repeatedly called for the scrapping of inflation targeting. Malherbe also recommends that SA “take out insurance in the form of a large and unconditional borrowing facility with the International Monetary Fund”.