Minimum wage debate must focus on youth unemployment – Business Day, 9 February 2015

By John Kane-Berman 

No doubt it was unintentional, but the parliamentary portfolio committee on labour could not have picked a better time than right now for its hearings on a national minimum wage.

First, figures just released by Statistics SA show that despite the resumption of economic growth since 2010, the unemployment picture is in many respects bleaker than it was in 2008. Second, newspaper photographs showed that many of the people looting the shops of foreign traders in Soweto in broad daylight on weekdays last month were people between the ages of 15 and 24 not in education, employment or training.

Those arguing for a minimum wage are drawn mainly from trade unions, which represent about 3.72-million workers, less than half the number of jobless. So the committee will have to decide whose interests to put first — the unionised constituency or the much larger constituency supposedly represented by a democratically elected Parliament and who actually have no other voice.

This column pointed out a fortnight ago that unemployment rates in SA compared unfavourably with those of Greece, sub-Saharan Africa and the world as a whole. A Statistics SA report released at the beginning of this month suggests that our unemployment problem is getting worse. One key trend is that the rate of absorption of people into work has dropped from 45.7% of the workforce in 2008 to 42.6% last year.

Partly as a result of this declining demand for labour, long-term unemployment has increased. In 2008, the number of people unemployed for a year or longer was 2.6-million. By last year it had risen 31% to 3.4-million. The increase in very long-term unemployment over the same period was even larger. In 2008, nearly 1-million people had been looking for a job for more than five years. By last year, that figure had risen 50% to 1.5-million.

Statistics SA figures on youth published last year confirm their bleak prospects. Although some young people have opted to continue their education to improve their prospects, others have become discouraged. "In every province," says the agency, "their level of education attainment has improved over the period (2008 to 2014), but their labour market prospects have deteriorated".

Another worsening trend is that the number of youths living in households in which no one is employed increased from 4.3-million in 2008 to 5.2-million last year. Countrywide, one in four youths now lives in a household where no one is employed. There are major regional discrepancies in the proportions of youth living in such households — ranging from less than 12% in the Western Cape to more than 41% in the Eastern Cape.

Statistics SA’s figures show an increase of nearly 1-million in the number of jobs filled by adults and a decline of 257,000 in those filled by youths. This means youths’ share of jobs is dropping while the adult share is rising. A national minimum wage may reinforce this trend, to the detriment of younger would-be workers, even more of whom would risk being priced out of the labour market.

The latest job figures are no advertisement for the National Development Plan, which sounded the alarm about the potentially destabilising effects of youth unemployment more than three years ago but came up with proposals as mealy-mouthed as they were self-contradictory.

• Kane-Berman is a consultant at the South African Institute of Race Relations.