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What do we do with another 14000 unemployed?

By Aidan Prinsloo

In my previous contribution, I made a fairly simple point: the retrenchments proposed by the big mining companies in South Africa are unavoidable. The only way our mines can offer competitive prices and look after their employees properly is if they move from the outdated and inhumane many people, low-tech model to the higher tech, fewer people model. The alternative is that mining companies crash and burn while trying to please everybody, because it’s simply unsustainable to employ as many people as they have while offering them a decent wage. The government will face the same dilemma if it nationalises the mines as the Association of Mineworkers and Construction Union proposes it should.

So, what then do we do with the new lot of unemployed? One thing is certain: they cannot simply go to another sector and find jobs. As it is, our unemployment rate sits at 25.5% of our current labour force. The IMF predicts the current trend of policy making and urban unrest will hamper any attempts at job creation. So an extra 14 000 plus unemployed will definitely not be able to ”help themselves” or find employment elsewhere. Instead, they’ll have to get into a very long queue for work. This is very worrying, to say the least. For those who have to live with being recently unemployed (and having very few skills to boot!), it’s an unimaginable tragedy.

This is where the government actually does need to step in. South Africa currently exports most of the raw materials harvested from the country. We then buy these material back in the form of cars, computers and other finished goods. We have here an incredible opportunity for job creation. If these sectors can be developed — especially sectors that use the raw materials from our own mines — we may be able to absorb not only the recently unemployed from the mines but perhaps some of the others from our large pool of unemployed.

In order for this sector to be developed we need our government to do two things: 1) Create policies that protect and encourage South African companies working in these sectors and 2) provide economic stimuli for companies in this sector by taxing imported goods more than locally produced goods. Government, unlike the mining giants it so happily attacks, is actually in the position to change things for the better for the unemployed. They need to choose a set of consistent policies which work together to strengthen multiple sectors of our economy.

Part of this involves doing whatever it takes to minimise the number of strikes in the country. They won’t be able to minimise strikes through force. Instead the government will have to actively foster a culture of realistic dialogue between itself, employers and employees. Strikes generally decrease a country’s ability to create more jobs and are therefore counterproductive. Most people realise this but are unable to come up with alternatives. What we need to learn now is how to encourage employers to employ more people without undermining the basic rights of South African workers. This is where government needs to listen to researchers and analysts and foster informed debate. Only when we have the facts and figures as a country can we have a meaningful (and hopefully fruitful) debate on labour relations.

The government needs to incentivise good business practices so that employers will have less reason to take shortcuts with their labour forces. Workers strike in response to these shortcuts because they feel powerless against their employers. The government needs to grant workers the power to approach their employers in a way that does not create an atmosphere that is toxic for job creation.

The government also needs to take better steps to protect South African industries from outside competition. Countries such as China may offer us cheaper goods than we can currently produce ourselves but we only hurt ourselves by importing their goods at prices that prevent South African companies from producing the same good. For this reason, one of the best things we can do is tax imported goods more and subsidise South African produce more.

Of course, these are all merely suggestions, but my point remains the same: the South African government can avert the impending disaster caused by a necessary shift in the mines by stimulating growth in other sectors of our economy. It’s the only way we’re going to combat our already high unemployment rate.

Aidan Prinsloo is master’s student in philosophy at Rhodes University. He is actively interested in the country in which he lives. He believes the only way we can overcome our current predicaments is through careful planning and rigorous, informed debate.

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  • 36 Responses to “What do we do with another 14000 unemployed?”

    1. The Naked Worker #

      @Aidan

      Very interesting read, thank you.

      “one of the best things we can do is tax imported goods more and subsidise South African produce more.” The old National Party was very good at that and it worked very well. It certainly runs counter to the principals of capitalism, the free market, and free trade though.

      The ANC did away with South Africa’s trade and tariff barriers far too quickly during an era when the prevailing ideology thought that free market capitalism solved everything.

      How are the World Bank and International Monetary Fund going to accept South Africa breaking with their dogma of structural adjustment in favor of free markets?

      One last comment, your article does not address a fundamental problem, all the people of South Africa own (should own) the mineral wealth of this country jointly, they should all get their fair share of the dividends of this mineral wealth.

      The current SA government is incapable of running nationalized mines properly, please can you give some guidelines on how all South Africans can rightfully enjoy the wealth that is their heritage?

      January 21, 2013 at 2:00 pm
    2. Lennon #

      Glad to know I’m not the only person who wants protectionist economic policies.

      January 21, 2013 at 2:12 pm
    3. The Creator #

      The trouble is that the only major force calling for protectionism and industrial development are the unions whom this guy wants to crush. Once they’re out of the way, big business will be able to roll right over the lot ot us.

      In fact, because big business is responsible for our lack of protectionist policies (it’s cheaper to build shops than to build factories) without a government stronger than big business, there’s no hope of any coherent economic policy — just a corporate wish-list like the current supposed growth path.

      January 21, 2013 at 3:46 pm
    4. Aidan Prinsloo #

      #The Naked Worker. I’m not sure we can easily say that all South African’s own the land’s mineral wealth. It’s certainly a nice ideal, but I think we’ll run into a number of logical and social problems if we follow this train of thought too zealously. The examples you gave of other countries with nationalised mines in your comments on the previous article got me thinking. I don’t think there would be much trouble with say 75% nationalisation in principle. It seems that some form of partial nationalisation is the key to success.

      The problem really is that we cannot currently trust the government. Governments such as the Swedish government are held to very high standards of accountability – such as we don’t really see in South Africa. No Swedish statesman would get away with even half the things our government is said to do. To be honest, I don’t believe most people in the country really believe we can hold our government accountable for how it runs things. If we did, the ANC would be fighting much harder to keep its place (it seems to take its leadership for granted these days…) So, to answer your question, I think we as a country need a fundamental shift with regards to how we view democracy before nationalisation can be tabled as a viable option. This should incentivise us to foster a sense of moral accountability in our kids and to turn the heat up on the government.

      January 21, 2013 at 3:50 pm
    5. Momma Cyndi #

      Some good suggestions. It would, however, depend on the ability of the country to handle the production (electricity, transportation etc) and our ability to stitch up the sieve that currently passes as our borders.

      January 21, 2013 at 5:21 pm
    6. Momma Cyndi #

      The Naked Worker

      Providing that a case can be made for protection of an industry, the World Bank won’t say a word. Most countries have tariff protection (including the USA, Germany etc)

      As for the mineral wealth, we already own it. The government is in charge of managing our minerals and, at their discretion, who may or may not have rights to mine those minerals. That is why farmers dread the idea of someone finding minerals on their property. They may own the property but the government owns the minerals so the mielie fields be damned – the mine opens up with or without his okay.

      Those rights to mine come at a high cost which goes directly into the general fiscus so we should all be benefiting from them

      January 21, 2013 at 5:26 pm
    7. With due respect to a well meaning contribution- it reads like a wish list to the tooth fairy- not considering the present political climate & that an equation has to balance on 2 sides!

      Good ideas are in ample supply. When it comes to actual implementations and one only depends on the present unruly party, slogans alone so far did not solve these problems.

      A simple answer would be: needed is a different management team throughout, who is capable to implement all good ideas effectively and honestly.

      It is the other side of the equation needed to be ‘researched’ & answered by Aiden:

      * what to do with the flood of many unskilled, illegal economic refugees from the
      rest of Africa & Asia- occupying activities which could be made ‘beneficial’ to locals?

      * how to stem the mushrooming of inhuman settlements and turn them into
      reasonable living quaters- being close to work and connect them with public
      transport ?

      * dishonesty: e.g. present ‘Vivian Reddy the JZ benefactor’, scandal around the
      dubious e-meter tender- overprized imports instead of local content! Any solution?

      * the assumption to absorb more unskilled labor in the privat sector- just to help a
      reckless government out of their predicament- is an illusion!

      * the future demands a reduction in unskilled labor, more skills, higher
      productivity, better pay, more automatization and less hostile rhetoric.

      * protectionism can cause retaliatory actions.

      January 21, 2013 at 6:02 pm
    8. Comrade Koos #

      This debate is cool. Don’t tell comrade Karl Marx but I am also a fan of John Maynard Keynes (Keynesian Economics), love Nobel Prize winner Professor Joseph Stiglitz (modern day economics hero), and think Naomi Klein’s book ‘Shock Doctrine; The Rise of Disaster Capitalism’ is compulsory reading.

      January 21, 2013 at 9:14 pm
    9. Mr. Direct #

      Government will sit back and do nothing, other than blame the situation on the investors and mine management.

      Oh, we are surprised, oh, we want to nationalise, oh, we think the management have made the wrong choices. Oh, we cannot be to blame for this absolute shambles. It must be the evil that we dare not speak it’s name…………

      Yes, people that earn money must be very clever, but surely they are no better than the minds that toppled apartheid and saved the masses.

      January 22, 2013 at 1:44 am
    10. robert in sydney #

      the underlying problem is simply “there are simply too many people in south africa chasing the limited number of vacancies available”. beautification and infrastructure spending will takes decades to implement – and in the sa context – is unlikely to happen at all. at present the only job growth is in the government sector – which of course will translate into higher taxes in due course – hardly a blue print for job creation.

      the first requirement is to get rid of all illegal immigrants – that is all of them. at the moment visas are being sold at beit bridge for R200 for illegals to enter south africa. in my humble opinion any other talk of getting unemployment down is exactly that – talk

      January 22, 2013 at 4:18 am
    11. The Naked Worker #

      @Aidan

      “I’m not sure we can easily say that all South African’s own the land’s mineral wealth. It’s certainly a nice ideal, but I think we’ll run into a number of logical and social problems if we follow this train of thought too zealously. ”

      1) So should some of our citizens not have access to the law?
      2) Some should not have access to basic education?
      3) Some not have access to the air we breathe?

      I think you misunderstood what I said. The mineral wealth belongs to all South Africans, not just the shareholders of mining companies. You cannot say the air we breathe belongs to such and such a corporation.

      January 22, 2013 at 9:56 am
    12. The Naked Worker #

      @Momma Cyndi

      Yes the government has the mineral rights (we do own them) , then South Africans “should all get their fair share of the dividends of this mineral wealth.”

      But only shareholders of international mining corporations get dividends from this mineral wealth.

      January 22, 2013 at 10:18 am
    13. Joe Soap #

      @proactive

      “* protectionism can cause retaliatory actions.”

      Speak to the farmers in the Western Cape Winelands or the shop/business-owners of Sasolburg, would they choose the current civil unrest or possible ‘retaliatory action” from protectionism.

      We are going to wake up to a South African spring unless we address the wealth gap between rich and poor very soon.

      January 22, 2013 at 10:33 am
    14. MrK #

      First, tax the heck out of the mines, or nationalise them.

      * Use that money to build human capital like free education and healthcare.
      * Make cheap money available to entrepreneurs
      * Infest in infrastructure – dams, roads, etc.
      * Redistribute land to millions of small farmers.

      This will not only deal with unemployment, it will straighten out the economy itself into something that is sustainable forever.

      Healthy economies depend on hundreds of thousands or millions of small businesses and farms, to protect against market shocks and eliminate the biggest boom/bust cycles in the economy.

      Diversification is nature’s lesson and leads to resilient systems.

      January 22, 2013 at 10:45 am
    15. Honkie Tonk #

      South Africa has 50 million people, what percentage of them are illegal immigrants? Many illegal immigrants bring good skills and entrepreneurship to this country.

      Maybe we should look at the bigger picture of a boom bust global capitalist economy that right now is spiralling down right now causing job losses.

      How do we make people self sufficient and not dependent on the whims of international corporations and fickle free markets?

      January 22, 2013 at 10:49 am
    16. Lennon #

      @ The Naked Worker: “You cannot say the air we breathe belongs to such and such a corporation.”

      This reminds me of the “original” Total Recall movie in which one coporation controll all of the breathable air in the Martian colony and went out of its way to prevent the colonists from using alien terraforming tech to make the entire atmosphere breathable.

      I suspect that you will be able to say this one day – Al Gore would certainly make a profit from it. ;)

      January 22, 2013 at 1:22 pm
    17. Lennon #

      Perhaps we ought to start by taking back control of the privately-owned SA Reserve Bank.

      January 22, 2013 at 1:27 pm
    18. Enough Said #

      Here is one of my favorite paragraphs out of economics Nobel Prize winner Professor Joseph Stiglitz work;

      “In East Asia, government took an active role in managing the economy. The steel industry that the Korean government created was among the most efficient in the world-performing far better than its private-sector rivals in the United States which, though private, are constantly turning to the government for protection and for subsidies). Financial markets were highly regulated. My research shows that those regulations promoted growth. It was only when these countries stripped away the regulations, under pressure from the U.S. Treasury and the IMF, that they encountered problems.”
      http://www.thirdworldtraveler.com/Global_Economy/Globalisms_Discontents.html

      January 22, 2013 at 1:52 pm
    19. Comrade Koos #

      Spot on MrK, spot on. Now we’re getting somewhere with this debate. Progress at last.

      January 22, 2013 at 2:15 pm
    20. Momma Cyndi #

      The Naked Worker

      Define ‘dividends’
      The royalties and mineral rights duties are paid to the government before the shareholders even get a smell of their share. PIC may be a major shareholder and they may be putting up the cash to make the mine run but they don’t see a cent until the government gets their share. They also don’t see a cent if the mine is running at a loss. The government, on the other hand, still gets their slice. Essentially, the government always gets their money but have none of the risk factor.

      In 2011, SARS netted about 6 billion in mineral royalties alone (that isn’t even taking tax into consideration) so I fail to see how we aren’t seen as benefitting

      January 22, 2013 at 4:28 pm
    21. @Joe Soap

      not sure if we are on a similar wave length?……… “protectionism” meant in terms of a government import-export trade / punitive tax policy…….of course not referred to protection against violence- by police or private security companies……..!

      ……what distorts markets & prices artificially (e,g. food, oil, gold, currencies..etc) are the worlds speculators sitting behind trading screens doing nothing ‘productive’, except selling anything tradeable under the sky- either short or long- that should be stopped! The global economy has been turned into a global casino effecting everything!

      The scope to consider all pro & cons fairly are too wide and complicated staying focused on the set theme & allowed space!

      January 22, 2013 at 10:02 pm
    22. Joe Soap #

      @proactive

      I know what protectionism is, I learned it in economics at university.

      Economic protectionism works well. All the major economies used it when they needed it to become the G8 etc. Now they are big and strong they don’t want modern day developing countries to use economic protectionism to develop their economies.

      However if you as a person were faced with a rioting mob that were poor and hungry, and you were a business person or farmer in South Africa, would you not risk the wrath of upsetting the International Monetary Fund or World Bank and their Wall St backers to use trade and tariff protectionism to get your economy going and do away with unemployment, rioting, pillage and plunder, and political instability?

      January 23, 2013 at 10:18 am
    23. The Naked Worker #

      @Momma Cyndi

      You say: “In 2011, SARS netted about 6 billion in mineral royalties alone (that isn’t even taking tax into consideration) so I fail to see how we aren’t seen as benefitting”

      Mining industry review:

      The total market capitalisation of the 39 companies (2010: 41 companies)
      included in the review increased by 6% (2010: 32%) from R879 billion in 2010 to R929 billion in 2011.

      So the value of the shares of shareholders increased by R 50 billion between 2010 and 2011, plus the shareholders were paid dividends on their shares. (Look up dividends on shares in a dictionary if you need a further explanation.)

      The only significant dividends paid were Kumba Iron Ore’s R8,2 billion and
      Impala Platinum’s R2,6 billion. Apart from Exxaro and Gold Fields, no other companies paid dividends that in aggregate exceeded R1 billion.

      Yes the government also recieved tax, but there is a huge amount more wealth/money the people of South Africa could enjoy if the mines were nationalized and run well.

      January 23, 2013 at 11:13 am
    24. @Joe Soap
      @ Aidan

      ……great!

      maybe Aidan could choose as his next theme a study over trade protection policies- their pros & cons at different intensity levels, its probable effects if applied in the 21th century, by 1st, 2nd and 3rd world economies- compared to historical policies set in an environment prevailing after WW2?

      January 23, 2013 at 5:27 pm
    25. Momma Cyndi #

      The Naked Worker

      Share prices are not money. They are simply the amount that someone is CURRENTLY prepared to pay for a piece of paper giving you a slice of a company. Ask any of the people who were invested in Enron what their net worth did within 24 hours.

      I trust you that your figures are correct. That would mean that the dividends paid were about 12bn or so (round number to work with). That means that the SA government actually got MORE in royalties than any one shareholder got in total. That is pretty damn impressive seeing as they don’t even have money tied up in the industries.

      I also don’t see the government being better at mining than the professionals are. They have shareholders looking over their shoulders making damn sure that there is no wastage. No government can be as profitable without that kind of sword over their heads.

      Grubbing in the soil is not where the money is. It sounds impressive but turnover and profit are two very different things. Until we are exporting finished goods, the minerals aren’t worth much.

      January 23, 2013 at 6:42 pm
    26. Jack Sparrow #

      @Naked worker. I think you are being disingenuous. Government effectively sold SA’s mineral deposits to the companies that mine them in exchange for royalties, tax, rates and adherence to the law. It’s done already. If government has to make the same investment (and has the skills) using tax payers or borrowed money it should get the same returns, less the interest and adhere to the same conditions. Nothing is stopping it. There is already a state owned mining company.

      But on past performance; maybe google Alexkor (let alone Eskom, SAA, Denel, Transnet etc etc), it has no hope of paying anything back. Great in principal, hopeless in practice.

      Practically I believe the ANC does not mind relatively organised and responsible mining companies pulling out of SA. They can then sell off the mineral rights to “friends” who have more flexible principals like the Gupta’s and create a multitude of Aurora’s.

      January 24, 2013 at 6:06 am
    27. The Naked Worker #

      To me the bottom line is the mineral wealth of this country belongs to all its inhabitants. If government were competent enough to run a nationalized mining industry, the people would over and above the asset of the mineral wealth of the country have a business with a value of R929 billion in 2011 if it were sold on international stock markets. It would however make sense to hold onto that asset to create even more revenue in the future.

      The total income from these assets would go a long way to building new infrastructure, creating new jobs, education and health care and other basic services, if the government spent the proceeds wisely, like Iain Karma wisely invests the profits of the Botswana governments 51% share in that countries diamond mines on the people of Botswana.

      Right now South Africa cannot dream of nationalization until it can run a para-statal efficiently like for example Sweden, or like the old National Party ran Eskom, Iscor, or the old South African Railways.

      January 24, 2013 at 10:56 am
    28. The Naked Worker #

      In addition, the state owned mining company (AEMFC) Zuma launched, is to focus on minerals like coal and uranium. Both devastating to the environment, while progressive industrialized countries like Germany are phasing out both coal and nuclear energy to build capacity in solar, wind and other renewable energies energy. So how clever a move of the Zuma government was that?

      January 24, 2013 at 11:29 am
    29. Momma Cyndi #

      The Naked Worker

      To me, the government is there to GOVERN and the business is there to do BUSINESS. The government is not some kind of benevolent father figure who must instill rules, bring home the bacon and then cook it too. They are simply our servants who do our bidding regarding the large civil projects that need co-ordination whilst we get on with building the economy. We even give them substantial chunks of our hard earned money to do those projects even though they are not physically producing anything of tangible marketable value.

      Government, business and labour have to get back to having a symbiotic relationship or who owns the mines is completely irrelevant as they won’t benefit anyone anyhow

      January 24, 2013 at 7:05 pm
    30. The Naked Worker #

      @Momma Cyndi

      That is capitalism, the global system that is currently going down the drain. Enjoy it while you can. :-)

      January 25, 2013 at 11:02 am
    31. Momma Cyndi #

      The Naked Worker

      Going ‘down the drain’? Are you sure about that? Seems like China is doing much better since swinging more towards the capitalism mold and, for all their ills, America isn’t doing too badly. In fact, I’d rather have the unemployment rate of under 10% in a capitalistic country than the unemployment level nearing 50% in a socialist country.

      January 25, 2013 at 7:36 pm
    32. -Sterling Ferguson #

      @Naked Worker, the South African government doesn’t have the capital nor do they have the technology to run the mines. Most of the government owned industries are losing money and do not make a profit. The government in SA should be promoting industries around their resources to add value to them.

      January 25, 2013 at 11:43 pm
    33. -Sterling Ferguson #

      @Enough Said, Korea was dumping their goods in the US and killing the US market. China has been doing the same thing to SA by dumping goods in this country and killing the industries in SA. China has been manipulating her currency to give her export an unfair advantage.

      January 25, 2013 at 11:59 pm
    34. -Sterling Ferguson #

      @The Naked Worker, if you want the people in SA to own the mines, the government should give all of their citizen shares in the mines like Norway has done with her oil. Every year in Norway the people are all given a check from the profit of the oil. When the government owns the mines it doesn’t mean the people will benefit from the resources. Russia has more resources than SA and the government ownership of the mines in that country led to widespread corruption. In Angola, the Santo family are the ones benefiting from the oil industry. In Nigeria, the government owns the oil industry and the electric company in that country, billions have been stolen from these companies and the people in that country are dirt poor. Capitalism isn’t perfect but, it’s the best thing out there now.

      The ANC finest hour is to list all of the state owned companies on the stock market and sell shares in them to the investors. Eskoms should be broken up and let the electric providers compete to provide energy to the people. Sasol was sold off and look at how much taxes they are paying the government and it’s a world class company.

      January 26, 2013 at 7:30 am
    35. Soge #

      What about the next 14,000 jobless that will be listed this year, as the employer cannot afford the luxury of incapable workers. Day by day better skills and more honesty is required, and the opposite is happening, and that is the reason why matriculants do not get employment.

      The ANC post 1994, ignored the FARMER. The result is that Farmers dwindled from over 400,000 to 32,000. Each farmer had housing and food and work for the family. That is why 25% of the workforce is unemployed, while under apartheid, there was virtually no unemployment. OH YES, these families were not rich, but they had a job and food and medicine and school and a good relationship. That was killed by the ANC-regime’s evil democratic system of allowing the majority to rule, without wisdom, righteousness, fareness, and equity.

      With costs soaring in petrol and electricity, more will close the Employment Generator.

      There is a scheme that solves all problems, but the modern historians had distorted the facts, and that is: Controlled Legalised Slavery.

      In the Bible were strict rules and regulations to protect slavery, and every 7th year the slave and his family was free to go, and mostly what happended? . . .they opted to remain loyal to their Owner, who looked extremely well after his workers.

      If those 400,000 farmers can be activated again, and each farm, carries up to ten families, a great problem will be solved.

      Even if the Mines were given to the Black ANC-Government, all mines will…

      January 26, 2013 at 4:40 pm

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