Jobs and promises of jobs – beyond the noise.

In his recent State of the Nation address pres Jacob Zuma promised that 500 000 “employment opportunities” would be created before the end of the year.  This was translated as “500 000 jobs would be created” and it caused quite a stir.  The president’s promise was shot down quite quickly by various commentators as unachievable. 

Indeed, 500 000 is a stretch.  But what did the president actually say? 

In his speech to Parliament president Zuma referred to 500 000 “employment opportunities”.  Those were the words he used.  The media then translated that into “jobs”.  Normally one should be skeptical of claims that “the media” has created this or that impression.  But in this case various media unanimously replaced “employment opportunities” with “jobs”. 

Employment opportunities

What then is the difference?  “Employment opportunity” refers to low-paid, temporary and at best part time jobs, created under the government’s public works scheme.  In the official jargon the public works scheme is known as “EPWP” – extended public works scheme. 

It was first launched in 2004 by then pres Mbeki and the target was to create 1 million employment opportunities (that is where the formulation comes from) within 5 years.  In fact, the 1 million target was reached after 4 years and a total of 1,4 million employment opportunities were created over the five years.  Well known projects run under the public works programme include “Work for Water” and “Work for Fire”.  A large number of such jobs have been created around construction activities.  (Noticed those men and ladies standing on road construction sited operating the “stop/go” signs?)

The distinguishing feature of these “jobs” is that they yield low productivity and thus low pay; and they are mostly not permanent.  The intention is to provide people with some basic skills and contacts so that they can enter the formal labour market. 

Public works is thus more poverty relief and training than job creation.  The HSRC has found from research that a typical public works job is worth about 1/3 of a full-time job.  That illustrates the difference between a job and an employment opportunity. 

However, Trevor Manuel did argue in a parliamentary debate that these jobs pay more than some farm workers earn.  At the bottom end of the labour market there is probably an overlap between low-level formal employment and these public works jobs.

Ramping it up

With the success of the public works programme since 2004, an expanded programme was launched for the period 2009 to 2014 and Trevor Manuel increased the budget allocations for it to R4,1 billion. 

The target now is to create 4 million job opportunities by 2014.  The interim target is 500 000 employment opportunities by December 2009, which is also where the president’s target comes from. 

This strikes me as a stretch and I would expect the 500 000 to be reached by the end of this fiscal year, which is 31 March 2010.  Either way, it would be a solid performance.

Two aspects distinguish this phase from the previous phase of public works.  The non-state sector, like community organizations and the private sector, can now also access funds and initiate public works programmes. This will create more operators and help to extend the programme. 

Secondly, an incentive bonus is now offered to municipalities and provinces to undertake infrastructure projects that create employment opportunities.  This will cover  labour intensive projects that also create infrastructure like roads, parks and buildings.

Decent jobs

All of the above should not be confused with the “decent jobs” so prominently propagated in the ANC’s election manifesto.  The manifesto defines “decent work” as “both the quantity and quality of work”. 

Pres Zuma repeated the pledge in his State of the Nation address:  "The creation of decent work (my underlining) will be at the centre of our economic policies and will influence our investment attraction and job-creation initiatives.”

“Decent jobs” has also been Cosatu’s mantra for a long time.  Unlike the ANC, however, Cosatu does not emphasise the quantity aspect of decent jobs too strongly, they just focus on their demand for “quality jobs”.

It was thus interesting to read that the former Cosatu leader and now cabinet minister Ebrahim Patel recently said decent jobs is “a process” .  That seems to me like a bit of a come down from the pure view of quality jobs only.  It also reflects the more realistic view of Trevor Manuel that job creation is difficult enough all on its own, without ruling out some jobs as not good enough.

Decent jobs can only come from a long period of growth with ever increasing levels of skills, technology and productivity.  That takes us to the “normal economy” with the “normal labour market”.

Normal jobs

The “normal” labour market consist of about 13,6 million people of whom some 70% work in the formal sector; 16% in the informal sector; 5% on farms and 9% as domestic servants in private households. 

In the first quarter of this year 179 000 people lost their jobs (taking the total down from 13,8 million to 13,6 million ).  More job losses will occur before this recession is over and the economy starts growing again.  That will probably only be by 2010.  Not only are we losing a year’s growth (in the last four years before this recession we created 500 000 jobs per annum) but we will also lose jobs already created.

 Assuming (say) 400 000 jobs lost this year plus the 500 000 not created, leaves one with a shortage of 900 000 jobs.  Assuming 3% growth, it will take about four years to make that up. 

That is quite a price to pay for the shenanigans of bankers in the developed world!

In the short term, and until economic growth resumes, the only job creation of note will be taking place through the “employment opportunities” of the government public works scheme. 

So What?

·         The president promised 500 000 employment opportunities under the extended public works scheme by December 2009.  The target can probably be met by March 2010.

·         In a country with SA’s desperate unemployment and poverty every bit helps and public works will certainly help with poverty relief and social stability.

·         The ANC’s election promise of “decent work” is clearly being packaged as work in progress which is a healthy correction and will help to promote stability.

·         The private sector will only make a contribution to job growth once the recession is over and growth resumes.  That will probably only be by 2010 – if all goes well.