According to the report only 41% of South Africans aged 16 to 64 have any kind of a job, while in China the figure is 70% and in high-growth developing nations like Indonesia and Brazil is around 65%.
The research behind the report found that South Africa’s stringent labour market regulations made it expensive to employ people and that mostly skilled and experienced people were employed. Thus the country is sinking deeper into unemployment. The report calls for allowing young, unskilled and inexperienced people to be employed at lower wages, something current labour legislation prohibits, while labour costs were driving up unemployment.
And, Richard Pike, CEO of one of South Africa’s biggest employment services groups, Adcorp, says militant trade union activism is one of the major contributing factors to South Africa’s high unemployment rates. He also defended the contract employment of 3.9 million workers, saying rising contract employment was not unique to South Africa.
Unemployment could grow to 12m in the next five years.
JOHANNESBURG – Recruitment giant Adcorp says restrictive labour laws are the major obstacle in the creation of jobs in South Africa with unions making unrealistic demands and pushing up entry-levelwages for first time job seekers. While this might not be new, Adcorp CEO Richard Pike says should the current trend continue, the number of unemployed could grow to a staggering 12m in the next five years.
Pike says the overwhelming majority of unemployed are black and under the age of 24. He says research has shown that while wages have increased, productivity has decreased significantly, prompting many companies to opt for automation instead of employing a workforce which is largely unreliable, often due to industrial action.
Pike says while the official unemployment rate has been set at 25%, the unofficial level is more realistically fixed at 37% amounting to between 6 and 8m South Africans being without work. He says some companies have ceded to exorbitant wage demands, only to ultimately be forced to retrench workers to make up for the financial shortfall. He says labour intensity fell by 8.1% in 2009, meaning it took 36% fewer workers to produce a given level of production.