Parliamentary Question: DoL: International Monetary Fund Report


Mr D B Feldman (COPE-Gauteng) to ask the Minister of Labour:
(1) whether, in light of the International Monetary Fund (IMF) Report (details furnished), South Africa is facing hard choices on labour reforms; if not, what is the position in this regard; if so, what are the relevant details;

(2) what are his department’s plans to (a) curb and (b) coordinate with the relevant stakeholders, the continuing downward spiral in (i) job losses and (ii) addressing productivity in the job market to create meaningful job growth and labour market efficiency;
(3) what factors have been found to be militating against a positive trajectory?

(1) South Africa is indeed facing hard choices on labour reform because of the high number of unemployed persons and the difficulty of reducing the rate of unemployment. There are a range of factors that contribute to the problem of unemployment, including the fact that many unemployed persons have relatively low levels of skill and work experience.

The fact that the South African economy is not very labour intensive poses a further challenge and limits the options available for short to medium term interventions.

The structural nature of the country’s unemployment challenge has been exacerbated by the effects of the recent global economic challenge and the recession in South Africa during 2009.
(2) In order to prevent massive job losses the Department of Labour was involved in the task team that worked on the Economic Crisis Response Framework. In this team we played a crucial role in the development and implementation of the Training Layoff scheme. In this programme the companies that are in distress and considering retrenchments are encouraged to reach agreement with workers around the implementation of a training layoff scheme. The scheme allows companies to be assisted to keep workers and retrain them in skills that are seen as having potential after the down turn. In doing this, thousands of jobs had been saved since the last quarter of 2008 to date.

The Department of Labour, through the Response Framework team also contributed to the IDC, a developmental fund aimed to offer financial assistance to companies for economic growth purposes. A total of R2 billion had been invested there to help struggling companies and to train some of their employees instead of retrenching them. This training has helped re-skill these workers so that when the economy pick up again, they are easily incorporated back into the labour market. The training that workers are receiving will not only help improve their chances of being incorporated back into the labour market once pick up, but will also improve productivity.

As a result of massive job losses the DoL has, through the Public Employment Services targeted all vulnerable groups for labour market re-entry programmes. Through this unit we register job vacancies and work seekers and match them up so that employers looking for workers can get people and vice versa. This system is also aimed at offering career counseling and other related labour market information.

Another area that we are currently working on to help curb the job loss and bring people onto the labour market is through supporting Worker cooperatives: We are in the process of developing a strategy that will help the DoL to support people or groups that want to start up worker cooperatives.
(ii) In addressing productivity in the job market to create meaningful job growth and labour market efficiency, the Department of Labour is working closely with companies through Productivity South Africa (PSA). PSA assists companies in becoming competitive so that their products can stand against the best in the global market. These are done through collaborative Research and Development, innovation support as well as assisting in skills development aimed at making companies more competitive.
(3) The level of skills available is one big factor because the country’s skills profile is not competitive at all with the giants in the industrialized economies, as such we are unable to match best countries in the products development that call for high level skills. This can be seen in our inability to beneficiate our resources and create more jobs over and above retaining the one created in the development of the resources in the first place.

The cost of searching for jobs is resulting in most of the unemployed being discouraged from further job search because most opportunities are available in the cities and metros. Majority of work seekers are from the former homeland and rural areas and the centrality of job opportunities in city centers make it difficult for the first to know where opportunities are because they will have to travel long and expensive distances or else have to stay in cities to be able to search for jobs.