Monday, June 04, 2012

Wage Subsidy or Not?


SHOULD EMPLOYMENT OF YOUTH BE WAGE-SUBSIDIZED?

FLOYD SHIVAMBU

The recently released Labour Force Survey by Statistics South Africa (Stats-SA) illustrates that the unemployment crisis in South Africa is deepening, with no foreseeable hope to address this crisis with sustainable mechanisms and interventions. This crisis will never be addressed as long as government leaders continue to turn a blind eye on what workers and the youth say should be alternate sustainable solution to the crisis of unemployment and poverty in South Africa. The crisis of persistently high levels of unemployment seems to be the crisis of clear ideological and political leadership of the ANC government. The recent confrontation of the liberal Democratic Alliance and COSATU was not just about who could throw stones the furthest, but a reflection of the contending class forces in society.

Patently choosing the side of the ruling class, the South African government under the ideological leadership of President Zuma will ultimately introduce and implement the wage subsidy option, with the false hope that such will reduce unemployment. This again is the directionlessness we have identified, and which will lead to a deeper crisis for South Africa’s youth and workers. Time and again, big businesses in South Africa complain about the cost of labour and whine over the fact that unions exist to rightfully protect workers from brutal exploitation by those who own and control the means of production.

Attempts to introduce wage subsidy is a way of reducing the cost of labour for business, and this has been attempted in the past, with guaranteed devastating outcomes and dismal failure. Wage subsidy means that private corporations will accommodate job-seekers in their corporations and the State will pay those job-seekers for the duration they are in those corporations. When the Sector Education and Training Authorities (SETAs) were introduced, the South African government subsidised many internships and learnerships in the public and private sector. Most private sector corporations and at times the public sector and civil society replaced paid for employees with subsidised workers, because it was cheaper for them to do so or created office space for them to serve as messengers and tea-girls and boys. Very little or no effort was put in place to address the issues of skills transfer and real apprenticeship, which should have been definitive of all subsidized youth employment.

The current wage subsidy as promised does not have clear mechanisms on how replacement of paid labour with wage subsidised workers will be avoided, because the phenomenon of corporations retrenching workers in favour of wage subsidized will be a reality. This will be a reality because in South Africa, most private corporations complain and whine about the cost of labour, which they say is very high, and should be reduced through trimming unions and allowing some labourers to be exploited with no rights. Attempts to introduce cheaper labour have never won political support in South Africa, particularly in the ANC and the progressive Trade Union movement, under the stewardship of COSATU. The ANC rejected this notion at its 2nd National General Council in 2005 held at the University of Pretoria. Ironically, those who rejected the two-tier labour system and cheapening of labour for private corporations did so in support of alternate leadership represented by then Deputy President Zuma. Only if we knew that the same neo-liberal approach to the unemployment question will define what ultimately the Polokwane victors became.

The perspective contained in the ANC Youth League 24th National Congress resolutions on economic transformation on State led and labour absorptive industrialisation holds more weight than anything else. This is correctly linked to the fact that the State should own and control strategic sectors of the economy such as Mines, land, banks and monopoly industries. In the resolutions, the ANC YL argues, “the nationalised mineral wealth will effectively constitute a very firm basis for beneficiation of these products in both heavy and light industrial process in South Africa, which could be left to industrial and manufacturing entrepreneurs, co-operatives and Small and Medium enterprises, so as to develop productive forces of the South African economy, which is still reliant on production of primary commodities”.

Another valid point raised concerning industrialisation is the whole notion of import substitution industrialisation, which should be an immediate policy option for the South African government. Import substitution can be effected and realised through many means such as procurement policies, tariffs and buy-local campaigns, but these should be located within a clear strategy to build domestic capacity to manufacture goods and services. Import substitution is not an alien economic practice in the world, particularly in developing economies. Import substitution has in the East Asian Tigers, India and Latin American countries significantly boosted industrialisation and creation of local employment.

The resources allocated for wage subsidy can and should be alternatively used for youth targeted developmental and entrepreneurial projects and programmes. This obviously entails that more capacity should be given to the National Youth Development Agency and a culture of adhering to the National Youth Policy directives be cultivated across all government departments and spheres. Youth should be positioned to be in charge of local economies, and all spaces opened for development and growth. These views are obviously not an all-solution to all problems and all people should contribute to the solutions on how to address youth unemployment. The wage subsidy is not a solution.

The ANC led government should sooner acknowledge that the causes of South Africa’s unemployment is not the cost of labour, it is a result of joblessness. Elementary to the reasons why many young people are not employed is the reality that the South African economy, its growth and development are jobless. A supposition that young people do not have jobs because they are risky to employ is not true. A supposition that young people do not have jobs because they are incapable of doing work is also not entirely true. The major reasons why young people are not employed is because the economy of South Africa is unable to absolve the entirety of its workforce.

This is so because the number of vacancies in both the private and public sector that exist because of lack of skills, knowledge and expertise do not exceed 200 000 in South Africa, whilst the unemployed population is above 5 million. A supposition that unemployment is a result skills shortage altogether misses the point, because it supposes that if the 5 million people who are currently unemployed can be equipped with skills and experience urgently, they will find jobs. There are many countries with an over-supply of skills and no job opportunities for the skilled people to work, and Zimbabwe falls within that category.

Statistics South Africa says “in the official definition, the unemployed are those people within the economically active population who: did not work during the seven days prior to the interview; want to work and are available to start work within two weeks of the interview; and have taken active steps to look for work or to start some form of self-employment in the four weeks prior to the interview” if this is the definition and understanding of unemployment, then a perspective on job creation should move from a premise that all unemployed people are capable of performing wage-labour. The question is where these jobs should be created.

A closer attention to the ANC Youth League 24th National Congress resolutions, which have now been submitted to the ANC leadership, provides clearer and more durable solutions to the question of unemployment. Obviously, the phobia of the youth of the ANC will lead to these options being rejected, because those in power see it fit to associate with the capitalist class and their political representatives whose aim is to make more profits through subsidised workers, who will be employed by them and paid by the State. To address unemployment, the State should own and control strategic sectors of the economy and through that, drive massive labour-absorptive industrialisation, which is less-skill intensive because as a matter of fact, more than 90% of the unemployed are not highly skilled, but can receive intermediary training for sustainable employment in the industrial, mining, agricultural, creative, and community based work opportunities.

Wage subsidy will lead to shedding of permanent jobs for many people who are currently employed because private corporations will opt for subsidised workers, instead of those with no subsidy. No amount and extent of regulation and monitoring will effectively combat this because universally, the business of doing business is to make more profit and the lesser the costs in doing business, the better. Lack of ideological clarity on the part of the leadership will cost South Africa again because President Zuma will expectedly believe what the DA and his neo-liberal economic cluster advises him and further damage the integrity of the ANC government in the face of millions of South Africans. We are not surprised.

FLOYD SHIVAMBU—ANC Youth League 24th National Congress Spokesperson and head of Policy, Political education and research: 

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