'Economic policy failure: Fewer jobs in manufacturing than 52 years ago'
As the the National Union of Metalworkers of South Africa (Numsa) goes on strike over a wage dispute, Economist Mike Schussler has drawn attention to the destruction of the country's manufacturing industry.
"We need an honest discussion about South Africa’s economic policy and the disaster that is taking place in much of our manufacturing industry" he writes in an article published on Moneyweb.
Schussler notes that manufacturing production levels over the three months to July were lower than at the start of 2005.
Bruce Whitfield interviews the Chief Economist at Economists.co.za on The Money Show.
Schussler says that in 1969 - 52 years ago - more people were employed in South Africa's formal manufacturing sector than in the second quarter of 2021.
Not only do we have the highest unemployment rate in the world (and that's the standard one of 34.4%), if I look at it more broadly, I can say we're in the bottom four or five countries as a percentage of the population over 50 that's employed... It's now less than 35% whereas about 15-and-a-half years ago it was about 42%.Mike Schussler, Chief economist - Economists.co.za
Ever fewer people are working and ever more people are not working. The dependency ratio's really gone through the roof!Mike Schussler, Chief Economist - Economists.co.za
When a country only produces 62% of what it did in 2011 while others produce 115% and 166% but yes we must strike for more pay. This is the cause of poverty in SA. BTW SA produces less than half of what in did in 2005. pic.twitter.com/TS4iKGbYkB— mike schussler (@mikeschussler) October 6, 2021
And we've now got manufacturing employment back at levels we last had in 1969 - that's 52 years ago. It's really shocking and yet we're not producing - we're producing 15% less than we did in 2008...Mike Schussler, Chief Economist - Economists.co.za
... but because we get paid more, more and more people lose their jobs... The poverty increases, the unemployment increases and the inequality increases.Mike Schussler, Chief Economist - Economists.co.za
While many economies have evolved from being manufacturers, has South Africa done enough not only for its own development but to replace jobs that have been lost?
I think everybody has grown their services sector more than their manufacturing, but we're the only emerging market other than Russia that's lost jobs in its manufacturing sector in the last decade to 2017. These are World Bank figures that take a while to collect...Mike Schussler, Chief Economist - Economists.co.za
On this continent today, Egypt and Ethiopia and Nigeria have more people in manufacturing than we do... If you think back, Ethiopia was seen as a basket case and today they have a 600% increase in employment in manufacturing....Mike Schussler, Chief Economist - Economists.co.za
He notes that South Africa is being carried by mining thanks to the commodities boom and also by agriculture, which manufacturing is unable to do.
It's a really bad sign for us going forward because manufacturing produces the things that you transport, you store, you sell, you earn money from... It adds value to agriculture, to your mining... That's not happening in South Africa.Mike Schussler, Chief Economist - Economists.co.za
It's very difficult for many of our firms to compete because we don't have the power supply... we don't have the water supply, we have high labour costs, we have huge regulations...Mike Schussler, Chief Economist - Economists.co.za
... and then we have BEE, which is just another way of saying 'Black Economic Impoverishment' because it is elite-driven and it does not benefit most people.Mike Schussler, Chief Economist - Economists.co.za
Discussing wages, Schussler notes that local manufacturing workers are getting paid on average as much as those in Eastern European countries.
"They are not the cheapest in the world but they produce a lot more than us."
South Africa needs honest discussions on the questions of wages, regulations and general attitudes towards business to slow down disinvestment he says.
Listen to Schussler's passionate argument in the audio clip below:
This article first appeared on CapeTalk : 'Economic policy failure: Fewer jobs in manufacturing than 52 years ago'
Source : https://pixabay.com/photos/welder-welding-industry-industrial-673559/
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