Economists mastered the art of tweaking numbers a long time ago by stating some facts while ignoring others. Through this they confuse causes and consequences. Listening to President Jacob Zuma’s State of the Nation (SONA) address to the joint sitting of Parliament last week, one realised how South Africa’s first citizen has mastered the art of obfuscation mainstream economists are often associated with.
The mastery was pronounced when Zuma dealt with the issue of job creation and unemployment. What was striking was how little time the president spent addressing the issue of joblessness. All his words on the topic would use only half of a page. For a leader of a country in which close to a quarter of the population are an unemployed, this is ironic.
In line with his party’s policy of finding a good story where none exists, Zuma gave the nation and the world a picture full of discrepancies and misleading information. Quoting data from Statistics South Africa, the president said the number of employed people reached 15.3 million in 2014 but forgot to say that only 10.9 million of those workers were formally employed. We know that remaining 30% of the workforce is not employed with contracts, have absolutely no benefits, no job security, and most definitely, no decent pay.
Putting his deceitful campaign in top gear, the president then said 203,000 jobs were created in the last quarter of 2014. Yet again, while this number is correct, it only stands in comparison with the previous quarter. If one looked at how South Africa performed in a span of the whole year, the number of jobs created would be almost one and a half times smaller, numbering 143,000.
One may think the numbers look fine even though the president’s information was tweaked a little bit here and there. That is until one compares percentages to see the real trends in employment. The real story is that unemployment has increased. The unemployment rate – which, conservatively, stands at 24.3% and under the extended definition, reaches 34.6% – is in fact increasing year-on-year. What the president also forgot to mention is the difference in unemployment among age and race groups. The unemployment rate for black South Africans is four times higher than for white South Africans and the unemployment rate for young people aged between 15 and 24 reached an incredible 63.6%.
Last year the government introduced the Employment Tax Incentive Act, which is essentially a government grant that covers companies’ labour costs. In his speech to the nation, Zuma reported that 270,000 subsidy claims were made under the scheme and about R2-billion spent on the incentive.
This is another half-truth. Firstly, something reporters picked up long ago is the fact that labour brokers are also entitled to claim the subsidy. Basically, the government’s money is assisting labour brokers in receiving even more profits than they normally do. Secondly, doing the mathematics, it becomes abundantly clear the nation was misled. During the last year, we were told that 143,000 jobs were created in all industries among all ages. At the same time, according to Zuma the amount of claims under the Employment Tax Incentive Act reached 270,000.
How does one explain the discrepancy? There are two possible explanations. The first is that employers are not generating new jobs but are rather using the incentive in bad faith. Under this scenario, labour brokers are placing young South Africans in positions that they would have filled anyway and that no fundamentally new jobs were created. The second explanation has to do with retrenchments. Companies hire younger South Africans and fire their older and more experienced workers. In this case, no new jobs are created and taxpayers’ money is misused. By using misleading and largely inaccurate information, the president attempted to persuade citizens the employment tax incentive is working, that the workforce is increasing and the promised six million promised jobs will eventually materialise.
In South Africa, it takes the majority of jobseekers more than one year to find their next employment. For those without jobs, the reality is somewhat grimmer than the picture Zuma painted. Unemployment is slowly rising and the tax incentive is a misuse of taxpayers’ money on non-working policies that enrich companies. DM
Maqungo, Numsa’s national treasurer, wrote this article issued for the Numsa-initiated United Front (UF)
Mphumzi Maqungo works at General Motors (GM) in Port Elizabeth. He is a full-time Shopsteward at GM. He has been active in the structures of the ANCYL; ANC and SACP in the Eastern Cape. He has served in various positions in Numsa, such as Eastern Cape Regional Treasurer, Acting Regional Secretary and Deputy Regional Chairperson. He is currently National Treasurer of Numsa.