Real Unemployment Rate of 43% shows need for a Basic Income Grant and a Massive Public Jobs Programme

Real Unemployment Rate of 43% shows need for a  Basic Income Grant and a Massive Public Jobs Programme

AIDC Statement | 12 November 2020

Stats SA’s release of the Quarter 3 unemployment statistics showing that ‘real’ unemployment has risen to 43.1% (more than 11 million people without work) should be yet another wake up call for the Cyril Ramaphosa administration. Even the conseravtive estimate of unemployment, that only considers people who are actively looking for work as unemployed, has shown a massive rise of 7% and is now sitting at over 30%. Young people and women are among the most adversely impacted, with youth unemployment rising by 9% to 61.3% and the unemployment rate for women being 6.9% points higher than for men at 46.8%. The public jobs cutting exercise employed by Tito Mboweni will only exacerbate the country’s structural unemployment woes. 

As the AIDC, and countless others in social movements, labour, civil society and academia, argue – austerity cannot and will not reduce South Africa’s debt problem and it will magnify the dire socio-economic conditions faced by the majority of the population. Instead, in order to deal with mass unemployment and unparalleled levels of inequality, requires massive levels of investment towards the improved delivery of services, the employment of as many people who are willing and capable, and the implementation of a decent Basic Income Grant are all necessary. All this while remaining cognisant of the climate crisis and facilitating a just energy transition. As argued by the Eskom Research Reference Group (ERRG) in its Eskom Transformed report this will require significant structural and organisational changes to Eskom towards transforming it into a fully-public renewable energy utility. Part of these changes will have to feature a massive long term jobs programme both at the public utility and in the South African government in general. 

Earlier this year, the mass movement, the Cry of the Xcluded called for a programme to create 3 million jobs, but with the effects of covid-19 on the unemployment rate more will need to be done. While jobs are key in fighting the scourge of unemployment, on their own they remain a limited measure in fighting the rising levels of impoverishment facing the majority of the country as money dries up and food becomes more expensive. The urgent implementation of a basic income grant is necessary to avoid deepening hunger and the further collapse of the social fabric. As the likes of the Assembly of the Unemployed have argued, this basic income grant must be dignified and allow its recipients to meet their basic needs.

Unfortunately, this is not the path that Cyril Ramaphosa and Tito Mboweni have chosen. Following the implementation of one of the most draconian lockdowns in the world -imprisoning thousands for petty violations, killing countless others like Collins Khoza- the Ramaphosa administration has removed the child grant caregivers grant top, and is beginning the phasing out of the limited and hard to get R350 covid grant. 

An alternative path is possible, doing so however will require the government to stop coddling the private sector and pursue bold measures in the public interest. Despite the liberal commentariat’s commitment to the claims that the government has no funding sources available, the only impediment to accessing them is political will. To fund the massive public programme that is needed, the government must:

1. Implement a progressive net wealth tax of at least between 5% and 7% percent, to raise more than R140 billion
2. Fight tax and wage evasion measures employed by large corporations that robbed the country of nearly R200 billion rand in 2019 alone. 
3. Utilise its authority and employ prescribed assets on the trillions that are used to do nothing but enrich the few billionaires and millionaires while the majority suffer in poverty. 
4. Begin to unlock the Government Employees Pension Fund (GEPF), managed by the Public Investment Corporation, and begin to run them in the public interest as argued by the AIDC in a 2020 report. 
5. Insource procurement, to end the losses of between thirty per cent and forty percent of the R800 billion procurement budget is lost to the private sector due to inflated prices and fraud.
6. Expand the role of the South African Reserve Bank (SARB) to allow it purchase domestic bonds from the primary bond market.

Failure to follow these and other crucial policy pathways will only result in the constant rise in unemployment and the deepening unravelling of our social fabric. It is inexplicable to have more than 60% of young people without jobs or income, totally excluded from the economy as well as more than 11 million people without jobs, or an income. It’s time for the government to commit to a programme and policy agenda that reverses this trend. The millions of the Xcluded can only take so much.